Posts Tagged ‘COMMODITY INDICES’

LEAD “The Element of Earth’s crust”

Lead is a heavy, malleable, bluish grey metal. It is one of the metals most resistant to common corrosion problems. Lead has some important properties, in particular malleability (i.e. it can be hammered into shape), ease of production, ease of melting and joining, and good corrosion resistance.

Applications


There are many different uses of Lead. It may be used as a pure metal, alloyed with other metals, or as chemical compounds. The main end-uses for lead are as Batteries (80%) mainly cars, also industrial uses, Sheet (6%)- roofing, Lead compounds – stabilisers for plastics, Pigments – manufacturing of paints, Lead alloys – specialist alloys, Cable sheathing – power cables, Miscellaneous – includes radiation shielding, balancing weights.

Supply

The world’s top refined lead producing countries in 2009 were as follows:

1. China – 3.708 million tonnes

2. United States – 1.240 million tonnes

3. Germany – 388,000 tonnes

4. United Kingdom – 312,000 tonnes

5. South Korea – 290,000 tonnes

World production of refined lead totalled 8.815 million tonnes in 2009.

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Capacity Production Figures in tonnes (1000s)

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Demand Global lead demand this year is estimated at about 8.7 million tonnes, compared with 8.2 million tonnes in 2009. About 80 percent is used by battery producers. Demand for lead is less cyclical than that for most other base metals as about 40 to 50 percent is for replacement batteries, which makes it very resilient.

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The top five lead consuming nations in 2009 were as follows:

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China – 3.860 million tonnes, United States – 1.426 million tonnes, South Korea – 320,000 tonnes, Germany – 314,000 tonnes, Spain – 233,000 tonnes. In India about 75 per cent of total demand is from the domestic battery industries.

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Tug Of War………..stocks V/s Price

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Benchmark lead on the London Metal Exchange at around $2,221 a tonne is up more than 160 percent since hitting $850 a tonne in December 2008 when markets started to fear economic recession could turn into a 1930s style depression.

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Since the beginning of the year 2009, lead prices as well as lead stocks are both increasing. The reason could be anything from large banks which are manipulating the market to gain profit on a short term to a big country which want to lower their USD currency reserves by stepping into metals.

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In the year 2010, the graph of the lead price compared with the world stock of lead seems to look quite healthy. Lead stocks are getting up and as a reaction the lead price is going down. The basics of supply and demand seem to work.

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News from Industry

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·Xstrata’s sizeable Brunswick mine in eastern Canada is due to become depleted in 2011. It produced around 66,500 tonnes of lead in concentrate last year.

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·Ivernia expects to produce about 60,000 tonnes of contained lead in concentrates in 2010 and expects that to ramp up to 85,000 tonnes a year from 2011 onwards.

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DID YOU KNOW….???

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Lead makes up only about 0.0013% of the earth’s crust.

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IDFC, KRIBHCO Buy 5% Stake Each in ICE :)

IDFC-KRIBHCO-buy-5%-stake

IDFC and Krishak Bharati Cooperative Limited (KRIBHCO)have purchased a stake of  5% each in Indian Commodity Exchange, which jointly promoted by Indiabulls Financial Services and MMTC.

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According to sources, the bourse will apply to Forwards Markets Commission, the regulator, after the completion of the formalities of the shareholding agreement.

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With the latest divestment, the current holding of Indiabulls stood at 40% while MMTC has 26%. The other shareholders include HDFC Bank, Yes Bank and Indian Potash.

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FMC guidelines stipulate a maximum shareholding of 40% in a commodity exchange by an anchor investor.
This has to be reduced to 26% within a period of two years starting with the fourth year from the date of exchange’s recognition.

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Earlier, FMC (Forward Markets Commission) rejected United Stock Exchange’s proposal to pick up 10% stake in Indian Commodity Exchange since it was yet to receive full recognition from capital markets regulator SEBI.

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The bourse is the latest entrant into the commodity futures space and will vie with the predominantly metals and energy bourse MCX and agri bourses NCDEX and NMCE.

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In August, FMC had directed the exchange, which had received recognition from the Ministry of Commerce over a year ago, to offer 10 per cent equity of USE to other competent partners and re-submit the application by September-end.

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Inflation Moves into Positive Territory after 13 Weeks !

Inflation-surge-after13weeks

The inflation finally pulled back into the positive territory for the first time since 30th May 2009.

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It remained in negative zone for 13 consecutive weeks.

India’s inflation came in at 0.12 per cent in week ended 5th September 2009, as against -0.12 per cent in the previous week.

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Meanwhile, the rate was 12.42 per cent in the corresponding week of previous year.

During the week, price indices for primary articles, manufacturing products and fuel, power, light and lubricants reported rise.

The index for primary articles increased 1.3 per cent to 274.7 (provisional) from 271.2 (provisional) the week before.

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Similarly the index for manufactured products also went up 0.1 per cent to 208.1 (provisional) from 207.9 (provisional).

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The price index for fuel, power, light and lubricants also rose slightly to 343.4 (provisional) from 343.3 (provisional) for the previous week.
However, the price of naphtha declined 7 per cent.

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The rate turned negative for the week ended 6th June 2009, for the first time since the new wholesale price index (WPI) series started in 1995.

The inflation rate had also turned negative in 1977.

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Inflation touched a high of 12.91% for the week ended 2nd August 2008 and touched a low of -1.74% on 1st August 2009.

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LIST OF LEADING COMMODITY INDICES

 

Commodity index is exactly what the name suggests as it represents the price movement of basket of commodities. The main concept behind composite commodities index is to cumulate economically appropriate materials into single and often tradable index.

LIST OF LEADING COMMODITY INDICES

Reuters/Jefferies CRB Index: The CRB index, which began trading on the New York Futures Exchange in 1986, is the oldest index and is designed to provide a more liquid and economically relevant benchmark that will provide a timely and accurate representation of commodities as an asset class.

Dow Jones-AIG Commodity Index: It started in 1999. The DJAIG is a quantity-based commodity index that predefines a set of criteria to prevent any sector from being dominant in the index. This index allows the investors to track commodity futures by offering a simple way of measurement.

Roger International Commodity Index: It is a kind of commodity index which gives the value of a collection of commodities from 10 exchanges that are used in the economic world. The number of commodities used for the collection is constant and that is 36.

Standard & Poor’s Goldman Sachs Commodity Index: The GSCI index was created in 1992 and is also exchange traded. The SPGSCI is a quantity-based world production-weighted index that currently holds six energy products, five industrial metals, eight agricultural products, three livestock products and two precious metals.

The index has the flexibility to hold any number of contracts as long as the particular contract meets the liquidity criteria. Contracts are weighted by the average worldwide production in the last five years of available data.

MCX COMDEX: It is India’s first composite commodity future Index. This index encompasses future contracts drawn on commodities included in broad categories – metals, energy and Agri, traded on MCX, thus representing diverse sector.