18 August 2011

METALS INSIGHT
A Daily Report on Base Metals
REVIEW AND OUTLOOK
After largely consolidating during most part of the day, base metal prices moved higher and ended with gains of more than a percent. Equity markets largely consolidated but the bias remained on the positive side. Economic data releases in the form of Euro zone current account deficit widened further in the month of June while the consumer prices declined thereby providing respite to the ECB and it might not raise interest rates further in the near term. Producer prices in US rose by 0.2 percent. Dollar index ended lower with losses of 0.3 percent. US equity markets ended largely flat while NASDAQ remained under pressure weighed by technology stocks. Asian equity markets though trading lower are not witnessing major decline. Dollar index is trading modestly higher near 73.8 levels. In the morning session on LME, base metal prices are trading modestly higher. On the economic data front, data from US, especially the housing data, would be keenly watched. Existing home sales are expected to come in higher while the Philadelphia Fed manufacturing activity is expected to indicate moderation in activity. Jobless claims might however increase thereby reversing previous weeks decline. Consumer prices might have also increased in the month of July as higher energy prices might have pushed the CPI higher. Overall, base metal prices might largely consolidate initially but expectation of better housing data might keep the bias on the higher side.
Technical Recommendations* Commodity Copper COMEX Copper LME 3M Copper MCX Lead LME 3M Lead MCX Zinc LME 3M Zinc MCX Nickel LME 3M Nickel MCX Aluminum LME 3M Aluminium MCX Steel Long NCDEX Contract Aug-11 Fwd Aug-11 Fwd Aug-11 Fwd Aug-11 Fwd Aug-11 Fwd Aug-11 Sep-11 S3 398.3 8707 397.5 2333 106.4 2158 97.6 20963 974.6 2341 105.6 29477 S2 399.4 8756 399.0 2345 106.9 2167 98.0 21105 978.0 2353 106.0 29522 S1 401.0 8840 401.7 2371 107.6 2189 98.6 21274 985.2 2374 106.9 29601 CLOSE 402.9 8935 404.8 2401 108.4 2213 99.4 21460 993.4 2398 107.8 29690 R1 404.7 9013 407.2 2421 109.2 2228 99.9 21697 998.6 2418 108.5 29764 R2 406.2 9084 409.4 2439 109.8 2241 100.3 21909 1003.3 2436 109.3 29830 R3 407.4 9141 411.2 2456 110.3 2256 100.8 22025 1008.1 2450 109.8 29884 Recommendations Buy at 401 TP 408 SL 398 Buy at 8910 TP 9050 SL 8860 Buy at 402.50 TP 409.50 SL 400 Range 2340-2430 Range 107.50-110.50 Range 2190-2280 Range 98.80-101.20 Buy at 21750 TP 22120 SL 21620 Buy at 988-990 TP 1015 SL 977 Buy at 2390 TP 2430 SL 2370 Buy at 107.40 TP 108.80 SL 106.30 Sideways

*NOTE: The calls shown above are purely INTRA-DAY and should NOT be carried forward

Major Economic Events Today

Date Time 18/08/2011 18:00 18/08/2011 18:00 18/08/2011 18:00 18/08/2011 19:30 18/08/2011 19:30 18/08/2011 19:30 Region US US US US US US Initial Jobless Claims Continuing Claims Leading Indicators Philadelphia Fed. Existing Home Sales Event Consumer Price Index (MoM) Period JUL 13-Aug 6-Aug JUL AUG JUL Survey 0.20% 400K 3700K 0.20% 2.0 4.90M Actual ------Prior -0.20% 395K 3688K 0.30% 3.2 4.77M

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METALS INSIGHT
A Daily Report on Base Metals ALUMINIUM
Aluminium prices ended with gains of nearly a percent on LME and 0.8 percent on MCX After increasing by 21,675 tonnes on the previous day, aluminium stocks on London Metal Exchange declined by 7,100 tonnes
Cancelled Ratio

OPEN HIGH LOW CLOSE % change

11.00%
10.00% 9.00%

ALUMINIUM LME ($/MT) 2370.00 2420.00 2361.00 2398.00 0.97%

MCX Aug (`/Kg) 107.00 108.65 106.35 107.75 0.84%

2650
2600 2550
LME Prices ($/MT)

Aluminium (Prices Vs Cancelled Ratio)

2500 2450

Open interest declined along with increase in prices which is in contrast to the previous day indicating short covering which sent prices higher

8.00%
7.00% 6.00% 5.00%

2400
2350 2300 2250 2200 2150

Price and Open Interest Analysis of MCX Contracts

ALUMINIUM Aug Sep Close 107.75 108.75 % Change 0.84% 0.79% Open Interest 2063 523 % Change -3.73% 11.99%

Calendar Spread on MCX

ALUMINIUM Aug Sep Aug 0.00 1.00 Sep 0.00

BASIS CHART (LME 3 MTH FWDLME CASH PRICES) {$/Tonnes)

CALENDAR SPREAD ON MCX (FAR MONTHNEAR MONTH) {Rs/Kg)

Aluminium
45 40 35 30 25 20 15 10 5 0
13-Jun 16-Jun 29-Jun
21-Jun 24-Jun

Aluminium
CONTANGO 1.40

1.20
1.00 0.80

0.60
0.40 0.20
2-Aug
5-Aug

4-Jul

7-Jul

10-Aug

15-Aug

8-Jun

12-Jul

15-Jul

25-Jul

28-Jul

20-Jul

0.00
10-Aug 16-Aug
13-Aug

26-Jul

29-Jul

23-Jul

4-Aug

BACKWARDATION

7-Aug

1-Aug

METALS INSIGHT
A Daily Report on Base Metals

COPPER
Copper was the top gainer among the base metal pack as it ended with gains of 1.5 percent on LME and 1.2 percent on MCX
OPEN HIGH LOW CLOSE % change
6.00%
5.00%
Cancelled Ratio

COPPER LME ($/MT) 8826.00 9019.25 8785.00 8965.00 1.53%

MCX Aug (`/Kg) 399.90 407.30 399.90 404.35 1.28%

10000
9800 9600 9200 9000 8800 8600 8400
LME Prices ($/MT)

Copper stocks on London Metal Exchange witnessed decline of 650 tonnes as against build-up of 4,675 tonnes on the previous day

Copper (Prices Vs Cancelled Ratio)

4.00%

9400

3.00%
2.00% 1.00% 0.00%

Though cancelled warrant ratio has moved higher slightly it continues to remain uneven thereby giving no clear indication about inventory change in the near term

8200
8000 7800

Price and Open Interest Analysis of MCX Contracts

COPPER Aug Nov Close 404.35 408.35 % Change 1.28% 1.03% Open Interest 18219 4570 % Change -3.1% 16.8%

Calendar Spread on MCX

COPPER Aug Nov Aug 0.00 4.00 Nov 0.00

BASIS CHART (LME 3 MTH FWDLME CASH PRICES) {$/Tonnes)

CALENDAR SPREAD ON MCX (FAR MONTHNEAR MONTH) {`/Kg)

Copper
30 CONTANGO
6.50

Copper
6.00
5.50 5.00 4.50 4.00
2-Aug

25
20 15 10 5 0
13-Jun 16-Jun 29-Jun
21-Jun 24-Jun 5-Aug

4-Jul

7-Jul

10-Aug

15-Aug

8-Jun

12-Jul

15-Jul

25-Jul

28-Jul

20-Jul

3.50
11-Aug 12-Aug 13-Aug 15-Aug 16-Aug 17-Aug
10-Aug 14-Aug

30-Jul

31-Jul

1-Aug

3-Aug

4-Aug

5-Aug

7-Aug

8-Aug

BACKWARDATION

9-Aug

2-Aug

6-Aug

METALS INSIGHT
A Daily Report on Base Metals

LEAD
Lead stocks witnessed draw-downs of 650 tonnes after witnessing huge build-up of 10,925 tonnes on on the previous day Cancelled warrant ratio on LME continues to remain at lower levels, near 3 percent of total stocks, thereby
Cancelled Ratio

OPEN HIGH LOW CLOSE % change

12.00%
10.00% 8.00%

LEAD LME ($/MT) 2370.00 2405.00 2352.25 2366.00 0.42%

MCX Aug (`/Kg) 107.70 109.40 107.30 108.40 0.93%

2800
2700
LME Prices ($/MT)

Lead (Prices Vs Cancelled Ratio)

2600
2500

indicating that in the near term build-up might be witnessed

6.00%
4.00% 2.00%

2400
2300 2200

Market continues to remain in backwardation with cash trading at a premium of $5/tonne thereby giving contradicting view from the warrant ratio

2100 2000

0.00%

Price and Open Interest Analysis of MCX Contracts

LEAD Aug Sep Close 108.40 108.95 % Change 0.93% 0.93% Open Interest 3056 466 % Change 5.56% 2.87%

Calendar Spread on MCX

LEAD Aug Sep Aug 0.00 0.55 Sep 0.00

BASIS CHART (LME 3 MTH FWDLME CASH PRICES) {$/Tonnes)

CALENDAR SPREAD ON MCX (FAR MONTHNEAR MONTH) {`/Kg)

Lead
25 20 15 10 5 0
1-Aug
4-Aug

Lead
CONTANGO 0.90 0.80

0.70
0.60 0.50 0.40 0.30
10-Jun 15-Jun 28-Jun
20-Jun 23-Jun 9-Aug

1-Jul

6-Jul

12-Aug

-5 -10

17-Aug

7-Jun

11-Jul

19-Jul

22-Jul

27-Jul

14-Jul

0.20 0.10

0.00
10-Aug 16-Aug
13-Aug

26-Jul

29-Jul

23-Jul

4-Aug

BACKWARDATION

7-Aug

1-Aug

METALS INSIGHT
A Daily Report on Base Metals

NICKEL
Nickel prices also recovered and ended with gains of more than a percent on both LME and MCX. Open interest declined by nearly 5 percent indicating short covering Nickel stocks on London Metal Exchange
Cancelled Ratio

OPEN HIGH LOW CLOSE % change

7.00%
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%

NICKEL LME ($/MT) 21600.00 21989.00 21500.00 21950.00 1.15%

MCX Aug (`/Kg) 980.00 996.40 978.30 993.40 1.15%

26000
25000
LME Prices ($/MT)

Nickel (Prices Vs Cancelled Ratio)

witnessed modest decline of 24 tonnes as against build-up of 6 tonnes on the previous day Basis though continues to remain higher has drifted modestly lower towards $40/tonne mark thereby supporting prices

24000
23000

22000
21000 20000 19000 18000

Price and Open Interest Analysis of MCX Contracts

NICKEL Aug Sep Close 993.40 998.60 % Change 1.15% 1.08% Open Interest 7560 1386 % Change -4.64% -4.41%

Calendar Spread on MCX

NICKEL Aug Sep Aug 0.00 5.20 Sep 0.00

BASIS CHART (LME 3 MTH FWDLME CASH PRICES) {$/Tonnes)

CALENDAR SPREAD ON MCX (FAR MONTHNEAR MONTH) {`/Kg)

Nickel
60 CONTANGO

Nickel
10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00
10-Aug 13-Aug
16-Aug

50
40 30 20 10 0
2-Aug 13-Jun 16-Jun 29-Jun
21-Jun 24-Jun 5-Aug

4-Jul

7-Jul

10-Aug

15-Aug

8-Jun

12-Jul

15-Jul

25-Jul

28-Jul

20-Jul

23-Jul

26-Jul

29-Jul

1-Aug

4-Aug

BACKWARDATION

7-Aug

METALS INSIGHT
A Daily Report on Base Metals

ZINC
Zinc stocks from London Metal Exchange witnessed draw-downs of 1,700 tonnes for second consecutive day
OPEN HIGH LOW CLOSE % change
14.00%
12.00% 10.00%
Cancelled Ratio

ZINC LME ($/MT) 2167.25 2220.00 2167.25 2215.00 1.51%

MCX Aug (`/Kg) 98.00 99.70 98.00 99.40 1.58%

2600
2500
LME Prices ($/MT)

Cancelled warrant ratio remained near the 12 percent of total stocks indicating that in the near term draw-downs might continue

Zinc (Prices Vs Cancelled Ratio)

2400
2300

8.00% 6.00% 4.00% 2.00% 0.00%

2200
2100 2000 1900 1800

As expected, the lead-zinc spread declined to levels of 9 from 9.55 from previous day. In the near term, this spread might decline further

Price and Open Interest Analysis of MCX Contracts

ZINC Aug Sep Close 99.40 100.35 % Change 1.58% 1.47% Open Interest 2796 611 % Change -1.24% 10.89%

Calendar Spread on MCX

ZINC Aug Sep Aug 0.00 0.95 Sep 0.00

BASIS CHART (LME 3 MTH FWDLME CASH PRICES) {$/Tonnes)

CALENDAR SPREAD ON MCX (FAR MONTHNEAR MONTH) {`/Kg)

Zinc
35 30 25 20 15 10 5 0
2-Aug 13-Jun 16-Jun 29-Jun
21-Jun 24-Jun 5-Aug

Zinc
CONTANGO 1.20

1.00
0.80 0.60 0.40 0.20
4-Jul
7-Jul

10-Aug

15-Aug

8-Jun

12-Jul

15-Jul

25-Jul

28-Jul

20-Jul

0.00
10-Aug 13-Aug 16-Aug 23-Jul 26-Jul
29-Jul

BACKWARDATION

7-Aug

1-Aug

4-Aug

METALS INSIGHT
A Daily Report on Base Metals
Performance Snapshot at LME
Metal \ Period Copper Zinc Lead Aluminium Nickel Today's Range Close-1 Day 8900-9100 1.59% 2190-2280 1.51% 2340-2430 0.42% 2380-2430 0.84% 21700-22200 1.15% Close -1 Week 1.13% 3.90% 4.53% -1.33% 2.33% Close -1Month -7.26% -8.32% -12.74% -7.08% -7.19% Close -3 Month -8.69% -11.01% -15.56% -11.12% -19.03%

Performance Snapshot at COMEX

Metal/% change Copper (cents/lb)

Date 17/08/11

Close Price 402.9

1-day (% Change) 0.88

5-day (% Change) 3.69

Performance Snapshot at SHANGHAI Futures Exchange

Metal/% change Copper (CNY/MT) Aluminium (CNY/MT) Zinc (CNY/MT) Date 17/08/11 17/08/11 17/08/11 Close Price 66860 17565 16725 1-day (% Change) 0.03 0.29 0.6 5-day (% Change) -0.33 -1.82 1.8

Global Equity Snapshot Currency Snapshot Currency Exchange Rates Equity Markets' Performance Currencies Open High Low Indices 17/08/11 16/08/11 % Change USD/INR 45.3350 45.4625 45.3300 Dow Jones Indus Avg 11,410.21 11,405.93 0.04% 1.0486 1.0602 1.0433 S&P 500 1,193.89 1,192.76 0.09% AUD/USD USD/SGD 1.2008 1.2050 1.2002 Brazil Bovespa 55,073.02 54,323.61 1.38% EUR/USD 1.4407 1.4518 1.4325 FTSE-100 London 5,331.60 5,357.63 -0.49% USD/JPY 76.8000 76.8400 76.4100 DAX Germany 5,948.94 5,994.90 -0.77% GBP/USD 1.6456 1.6592 1.6349 NIKKEI Japan 9,057.26 9,107.43 -0.55% USD/CAD 0.9824 0.9846 0.9775 Hang Seng China 20,289.03 20,212.08 0.38% USD/SEK 6.3940 6.4299 6.2902 SENSEX India 16,840.80 16,730.94 0.66% USD/CHF 0.7962 0.8017 0.7825 Nifty India 5,056.60 5,035.80 0.41% Dollar Index 74.0600 74.2150 73.4520 Major Economic Events Yesterday
Date Time 17/08/2011 13:30 17/08/2011 14:30 17/08/2011 18:00 Region Event EC ECB Euro-Zone Current Account SA EC US Euro-Zone CPI (MoM) Producer Price Index (MoM) Period JUN JUL JUL Survey --0.60% 0.10%

Close % Change 45.4100 0.05% 1.0550 0.61% 1.2015 0.06% 1.4426 0.13% 76.6000 -0.26% 1.6543 0.53% 0.9807 -0.17% 6.3296 -1.01% 0.7901 -0.77% 73.7800 -0.31%

Actual -7.4B -0.60% 0.20%

Prior -5.2B 0.00% -0.40%

METALS INSIGHT
A Daily Report on Base Metals

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