Posts Tagged ‘Lead’

COMMODITY WEEKLY COMMENTARY 4th – 8th October

Once again international gold prices tested their new highs last week as prices breached the psychological level of $1300 and silver marked the 30 year high on COMEX division. However local gold prices were mostly remained sideways during the week amid stronger rupee and profit booking which limited the upside in prices.

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Nevertheless, silver once again overshadowed gold movements and surged high to claim 33000 mark on MCX. In base metal pack copper along with nickel, zinc and lead started the week with positive energy but dull economic data from U.S and Europe economies pressurized the prices in later part. However improved Chinese  manufacturing data once again underpinned the prices and supported copper and nickel to end the week in green zone.


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Earlier, shanghai copper dropped to its lowest in more than a month last week as China’s move to curb property prices dented sentiment, but losses were limited by improving demand prospects and ongoing weakness in the dollar. In energy counter crude oil settled up last week helped by data showing a drop in U.S. crude and product inventories.


Further fall in dollar index also helped the prices to move up. U.S. crude stocks fell 475,000 barrels last week, data from the Energy Information Administration showed. U.S. distillate inventories fell by 1.27 million barrels in the week to Sept. 24, counter to analyst expectations for a 300,000 barrel build.


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In agro commodities spices pack witnessed see saw moves during the week and remained volatile. Pepper futures ended the week with negative impression amid weak exports and low trading activity. As per Spices Board data, pepper exports from India have gone down by 5% in volume term during April-August 2010 as compared to same period last year. Jeera futures also traded on a negative note during the week on extended selling pressure backed by weak domestic and export demand. Expectations of rise in acreage under jeera crop this season have also supported the down side.

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In oil seeds section soya bean and mustard remained under pressure as factors like bumper soya crop expectation and pick up in fresh arrivals to the spot market led the market to show a negative trend. The chana futures traded on a positive note for most part of the week retreating from previous losses on fresh buying from retail sector.

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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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COMMODITY WEEKLY COMMENTARY

Most of the commodities closed in positive territory when Federal Reserve repeated its pledge to keep monetary conditions loose for the longer term. Impact was seen on all metals and energy; despite the rise in dollar index. Base metals complex was no exception, copper traded in upside territory.

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Power distribution problems after a devastating earthquake in Chile also supported the price. Terrific short covering witnessed in nickel on the news that BHP Billiton would take up to two weeks to restart nickel production at its Kwinana refinery in Australia apart from other factors. Both, lead and zinc closed down.

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Event risk made energy complex volatile. OPEC for the fifth time since 2008 decided to maintain its production limits unchanged. Furthermore, crude stocks rose 1 million barrels last week, while distillate inventories fell 1.5 million barrels and gasoline stocks dropped 1.7 million barrels, according to EIA.

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Crude traded in upside territory but could not breach $83 per barrel. Worries about Greece’s debt problems capped the upside. Surplus in inventory gave a jolt to natural gas prices and its futures dropped to the lowest price in more than five months. Vague movements in dollar index and euro resulted in see saw movements in bullions. However, on Friday many commodities including base metals and energy complex erased their previous gains on rise in dollar index.

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Agri commodities on domestic front traded with sideways to bullish bias in the week gone by. Guar pack remained in range due to subdued trading activity in spot as well as future market. In oil seed section; soya bean prices traded in range while mustard seed futures gained smartly on NCDEX.

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Weak trend in overseas market and bearish domestic fundamental factors such as weak export demand for soya meal and ample inventories of edible oils capped the upside in soya bean prices. The sharp decline in Malaysian palm oil futures had also pressurized the prices. However, mustard futures gained on the back of strong fundamentals. Lower production projection for the current year had a positive impact on the market.

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In spices pack; turmeric and pepper shot up like a bullet last week while chilli and jeera futures remained range bound. Pepper futures traded on a positive note due to continued fresh buying on the exchange supported by the factor of tight supply situation amid gaining demand. Despite the expectations of increase in production, arrivals are on the lower side. This is leading to tight supply in the physical markets. Turmeric futures gained consecutively for the sixth week and hit contract highs in the week gone by on firm spot cues and low stocks, but conceded the gains by the end of the week on profitbooking.

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Rising arrivals and ample carry forward stocks were seen weighing on chana futures as prices settled in red zone.

WEEKLY COMMENTARY 1st – 05th March

Series of economic data amid Indian Union Budget resulted in erratic price movements in commodities throughout the week. Market participants indulged actively themselves in the market. Bullions cut some of their losses in the later part of the week on short covering.

Expiry of February contract of base metals also made them very volatile. Most of them surrendered their previous gain on poor outcome of economic data.

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Strong dollar together with the most recent signs that the U.S. economy is still struggling to recover, led bearishness in all base metals. On the date of expiry, lead closed down and the gap between lead and zinc  narrowed down to 90 paisa. Similar to base metals, even energy complex drifted lower on negative economic releases in the middle of strong dollar.

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A stronger dollar makes oil and other commodities less affordable for holders of other currencies. On MCX, it touched the 3722 and moved down towards the level of 3600 on profit booking. Rising number of rigs coupled with rising mercury in Midwest cooled down natural gas prices further. On Friday, commodities recovered marginally on improved US GDP.

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Bears were seen active in agro-commodities last week as most of the future contracts on NCDEX settled in red zone on weekly basis. Guar pack settled in red territory as weak domestic and export demand hammered maize prices on future bourses.

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In oil seeds section, soyabean also ended the week with negative impression as the Indian market moved in line with weak overseas market. Continuation of subdued demand for soy meal from South East Asian countries and ample stocks of edible oil kept prices under check during the week.

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Mustard seed futures traded range bound. Lack of demand and improvement in weather condition had a bearish impact on market in the week gone by.

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In spices pack except turmeric futures all other futures settled in red zone. Pepper and jeera futures maintained their downtrend during the week taking cues from the higher fresh arrivals to the physical market. However turmeric futures ended the week on positive note supported by good export demand. Maize also traded in negative zone due to fresh crop arrivals and higher output estimates. According to latest government estimates the total output of current rabi season will be at 5.64 million tonnes over 5.61 million tonnes last year.

WEEKLY COMMENTARY

Bulls added more strength to precious metals and base metals while energy and most of the agro commodities back pedaled during the last week. Fear of crisis in Dubai resulted in more capital inflow in precious metals, which resulted in nonstop seven week rally in gold.

It made a high of 18294 and $1226.40 on MCX and COMEX respectively. However, in the later part of the week, we saw a halt in rally and prices corrected marginally on Friday. On Friday, December contract expired on MCX, because of which it traded down. Silver followed the footsteps of gold.

Many base metals made higher trading range last week on improvement of economic releases, except nickel. Lead performed better on technical support. Similar to precious metals, base metals saw profit booking on Friday. Red metal copper fell from its 14 months high.

After the release of U.S. inventory data, which showed crude and gasoline inventories jumped last to last week, crude tumbled down. It breached the mark of $76 per barrel last week. Natural gas also slipped for the same reason of inventory rise amid low demand. Guar pack traded sideways to bearish bias in the week gone by.

Upside movement was capped in prices as investors booked their profits at higher levels. However, slack demand in physical market also added bearish sentiment to the market. In spices pack; pepper, jeera and turmeric along with chilli got hammered and settled in red territory.

Chilli futures settled down for the fourth consecutive week on account of reducing participation in the physical market. Harvesting of fresh produce has already been started and the ongoing dry weather is favorable for the post harvesting activities.

Turmeric prices once again settled down as demand is not picking up and traders are waiting for the arrival of fresh stock which may add bearish momentum to the trend. After witnessing three week rally, pepper prices cooled down in the week gone by on an account of profit taking and continuity of weak export demand.

Jeera futures which got under pinned and gained for seven straight weeks also took a breath of relief and settled down in absence of fresh cues due to closure of major spot market at Unjha for some local festivals.

Lack of buying activity on the futures platform also led to the fall in prices. In oil seeds section; soya bean futures started the week with positive note but later on some profit booking at higher levels pressurized prices to settle near the opening price. Mustard seed futures ended the week on positive note on firm demand in spot market.