Monday, November 11, 2013
Market Commentary
Last week Industrial metals had a rough time, trending
lower as they get stuck between bettering demand and a
stronger dollar. Copper prices fell by more than 1%,
remaining firmly within a $7,000-7,420 trading band on the
LME which it has been in since early August. After the good
economic data from the US and down trending imports
from China, markets were seen waiting for the Chinese
leadership meeting to get over on November 12th that may
offer clues on the upcoming economic policy. For the week,
LME nickel was the biggest loser, facing a drop of 4.5%.
Copper- Weekly Market Data
Exchange
LME
LME
Contract
Cash
3M
Open
7175
7255
Close
7170
7158.5
Change
2.5
-78.5
% Change
0.03%
-1.08%
Open Int.
Change
Pivot
7179
7172
Resistance
7198
7250
Support
7154
7148
MCX
Nov-13
456.85
457
1.1
0.24%
12872
2706
453.9
462.0
447.4
Context
On the US front, last week’s data showed a drastic
improvement even with the government shutdown in
October. Growth data showed that the US economy grew
by a 2.8% annual rate in the third quarter, the quickest
pace since the Q3 of 2012, as businesses were restocking.
However, the slowest expansion in consumer spending in
two years suggested an underlying loss of momentum.
The US nonfarm payrolls data surprised on the upside as
there were 204,000 new jobs added last month against
expectations of 120,000 new jobs. The unemployment rate
ticked up to 7.3% from an almost five year low of 7.2% the
previous month. The jobs report paints a better demand
picture for metals. However, the improvement in the labor
market countered concern that the Federal Reserve will
curb fiscal stimulus, which weakens the price picture for
metals.
Copper prices also took support from the ECB's cutting its
benchmark interest rate to 0.25% from 0.5%. The surprise
move stoked hopes lower borrowing costs would spark
demand for the industrial metal from the world's second-
largest copper consumer.
Copper- Weekly Market Data
Exchange
Open
Close
Change
% Change
Open Int.
Change
Pivot
Resistance
Support
COMEX
3.271
3.2625
-0.03
-0.91%
584
-318
3.25
3.28
3.23
Shanghai
52110
51600
-700
-1.34%
37090
-9930
51723
52027
51297
LME
Inventory
474,675
465,650
-9025
-1.90%
Shanghai
Inventory
178,343
177,903
-440
-0.25%
LME 3 Month Forwards – Other Metals
Commodity
Nickel
Zinc
Lead
Aluminium
Open
14567
1939
2183
1846
Close
13899
1908
2141.5
1816.5
Change
-631
-28.5
-41.5
-26.5
% Change
-4.34%
-1.47%
-1.90%
-1.44%
Please refer to the disclaimer at the end of the report.
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Moving on to China, data showed that exports grew faster than
expected last month, adding to signs the economy is picking up.
Copper imports in October rose 26.4% from October 2012,
although they fell 11.2% from September, when they hit an 18-
month high. The imports were lower due to poor price
differentials between domestic and international copper markets
and a week-long holiday in October which cut shipments. More
data released over the weekend showed that Chinese industrial
output also rose in October, while consumer price inflation inched
up modestly.
Copper inventories monitored by the LME have extended their
slump to the lowest since March, while the ones on the SHFe are
down to 177,903 tons. CFTC data showed that hedge funds and
money managers broadly cut bullish bets in futures and options
of U.S. copper in the week to Nov. 5, showing that the overall
trend still remains bearish.
Elsewhere, the LME announced changes to its warehousing policy
aimed at cutting the time users have to wait to gain access to a
metal. Warehouse bottlenecks materialized at LME-registered
warehouses after metals like aluminum became a financing tool
in the wake of the global financial crisis.
Outlook
In the week ahead, investors will be closely watching Thursday’s
Senate hearing to confirm Janet Yellen as the first chairwoman of
the Federal Reserve. On the economic data front, the markets will
be watch growth numbers from the euro-zone and some
manufacturing numbers from the US. The metals market are now
stuck in listless territory, pressured lower by excess supply, a
stronger dollar and perceptions that global growth, while
improving, still does not seem strong enough to sop up the
excesses seen in a number of base metals.
Copper
The trend on the LME continues to be weak for most metals,
while the INR has been doing the damage n the MCX. For the
week, we expect it to trade sideways to up as its hovers around
supports on the LME and a deprecating INR will keep lending
support to prices. The broad range on the LME is expected to
continue. MCX copper had resistance at 457 which is already
breached, the next support now is around 464, while supports is
around 447.
Please refer to the disclaimer at the end of the report.
2

Lead
MCX lead prices have been trading with a sideways bias and is
seeing pullback on dips. Momentum still continues to be firm and
upside towards 140 looks likely. On the downside, supports exist
at 131 levels.
For any details contact:
Commodities Advisory Desk - +91 22 3958 3600
commoditiesresearch@motilaloswal.com
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Please refer to the disclaimer at the end of the report.
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