Posts Tagged ‘United States’

ALUMINIUM… “PRICES ON ONE-WAY TRACK”

Aluminium is a silvery white and dull gray coloured, and the third most abundant element in the Earth’s crust after oxygen and silicon. In nature, it only exists in very stable combinations. Due to its strong affinity to oxygen, it is always found in the form of oxides or silicates. The chief source of aluminium is bauxite ore. Aluminum is lightweight, ductile and soft. Its density is only 1/3 of steel. Aluminum is resistant to weather, common atmospheric gases and a wide range of liquids.

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Global Scenario

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Aluminium ore, bauxite, occurs mainly in tropical and sub-tropical areas – Africa, West Indies, South America and Australia. The leading producing countries are United States, Russia, Canada, the European Union, China, Australia, Brazil, Norway, South Africa, Venezuela, the Gulf States (Bahrain and United Arab Emirates), India and New Zealand. Together they constitute more than 90 percent of the world primary aluminium production. The largest aluminium markets are North America, Europe and East Asia.

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Indian Scenario

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India is the fifth largest producer of aluminium in the world with production capacity of about 3 per cent of the world. India’s reserves are estimated to be 7.5 per cent of the total deposits. India is self dependent for aluminium supply and exports about 82,000 tonnes annually. The primary Indian aluminium producers were BALCO, NALCO, HINDALCO and MALCO.

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India’s per capita consumption of aluminium is 1 kg as against 30 kg in the developed world.

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World Aluminium Markets

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LME, TOCOM, SHFE and NYMEX are the important international markets that provide direction to the aluminium prices.In 2009, aluminium prices gained about 40% with the global combination of stimulus packages and the rapid recovery in demand in emerging markets. The prices and inventory level of metal in international market, such as LME and SHFE, influences the domestic market.

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Facts & Figures

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·World aluminum output in March rose 13% on the month to 2.045 million metric tonnes, according to figures released by the International Aluminum Institute.

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·Primary aluminium stocks in China, the world’s top consumer and producer of the metal, have risen more than 45 percent from January on increased production.

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·Brazil’s output of primary aluminum dropped 0.9% on the year in March to 131,700 metric tons.

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·Global demand rose by 29% in January and February compared with the very depressed levels recorded a year ago.

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Price Movement

Despite the poor news stemming from Euro weakness on Greek debt woes and monetary tightening in China, aluminium halted its downturn and traded sideways for most of last week.

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Most other base metals also traded sideways to higher last week, and aluminium continues to be strongly correlated with copper. Swollen inventories are no longer a problem for the aluminium market, as global demand is helping to push up alumininum prices (arrow line).

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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DOLLAR INDEX “BASKET OF CURRENCIES”

The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies. It is a leading benchmark for the international value of the US dollar and the world’s most widely recognized, publicly-traded currency index. The U.S. Dollar Index is the creation of the New York Board of Trade (NYBOT). It was established in 1973 for tracking the value of the USD against a basket of currencies, which, at that time, represented the largest trading partners of the United States. The baseline of 100.00 on the USDX was set at its launch in March 1973.

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Updated on………

USDX is updated whenever US Dollar markets open, which is from Sunday evening New York time (early Monday morning Asia time) for 24 hours a day to late Friday afternoon New York time.

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Composition

It is a weighted geometric mean of the dollar’s value

compared only with:

·Euro (EUR), 57.6% weight                                    

·Japanese yen (JPY), 13.6% weight

·Pound sterling (GBP), 11.9% weight

·Canadian dollar (CAD), 9.1% weight

·Swedish krona (SEK), 4.2% weight and

·Swiss franc (CHF) 3.6% weight.

The importance of the trade weighted average between the currencies represents a more realistic asset value of underlying commodities than the actively traded dollar.

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Monitoring

By using the Dollar Index, investors can take advantage of moves in the value of the US dollar relative to a basket of world currencies or can hedge their portfolio of assets against the risk of a move in the US dollar in a single transaction. The rise and fall of the US dollar is said to be responsible for many movements in stock and commodity markets. When it looks like the US dollar is getting strong then there is a common conclusion that it will leads to weaker commodity prices.

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A Weak Dollar Can Make Commodities More Profitable

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Gone are the days when the simple fundamentals of demand and supply were used to predict prices. As rules of the game have been modified, the long-term trends are sometimes defined trend of dollar index. The increasing presence of index investors in commodities markets precipitated a fundamental process of financialization amongst the commodities markets, through which commodity prices now become the resultant of spillover effects of dollar index. Rising dollar eventually produces lower commodity prices. A falling dollar has the exact opposite effect; it is bullish for commodities. Importantly, as long as the U.S. dollar index continues to trend lower commodity futures markets are likely to continue to see their prices trend generally higher.

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The price of all US Dollar denominated commodities, like gold, will change to reflect the fact that it will take fewer or more dollars to buy that commodity. So it’s quite possible, in fact it’s almost always the case that a portion of the change in the price of gold is really just a reflection of a change in the value of the US Dollar. Sometimes that portion is insignificant. But often the opposite is true where the entire change in the gold price is simply a mathematical recalculation of an ever-changing US Dollar value.

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Therefore, in order to determine commodity price trends, one needs to develop a comprehensive and holistic approach between U.S dollar index & commodities.

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Stay Tuned for More updates :)

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

CORN………. “The Un-discovered Legend” Part 1

Hello Friends here we come up with another write up on “Commodity Corner Series”.

Here we would touch upon the importance of Maize crop in Indian commodity market and its relevance in the context of Indian Scenario 🙂

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CORN………. “The Un-discovered Legend”

Maize, also known as corn, is a cereal which is an important crop after rice and wheat.

The domestication of maize has been dated back as far back as 12,000 years ago. Today, maize is widely cultivated throughout the world, in a greater size with top producing countries like United States, China, Brazil, France, Indonesia, India and South Africa.

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Indian Scenario:

Andhra Pradesh is now the largest producer contributing around 21% of annual maize production.

India ‘s area harvested of maize and yield have risen by mainly on account of rising production of single cross hybrids seeds, its demand and increasing acceptability among farmers.

In India, its cultivation extends from the hot arid plains of Rajasthan and Gujarat to the wet hills of Assam and Bengal.

There are three distinct seasons for the cultivation of maize:

the main season is kharif;

next is Rabi in Peninsular India and Bihar and

in spring in northern India.

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Normally, higher yields have been recorded in the rabi and spring crops.

Over 85 per cent of the maize acreage is sown under rain-fed conditions during the monsoon when over 80 per cent of the annual rainfall is received.

However, this year due to the erratic monsoon production has been affected, as a result of which maize prices have been in uptrend since the withdrawal of monsoon from the country.

During 2008-9, Indian exported 3 million tonnes of maize and 12,000 tonnes of maize seed worth of Rs 2,400 crore and Rs 2,000 crore respectively.

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Stay Tuned for more on this.

In next blog we would touch upon the issues like Potential source of demand for Maize crop, Industrial Demand and PVO (Price-volume-open Interest) of MAize crops.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Dollar Supremacy to End? New Global Reserve Currency to Set In ?

UN called on Tuesday for a new global reserve currency to end dollar supremacy. Is dollar Supremacy at risk?

UN called for a new global reserve currency to end dollar supremacy. Is dollar Supremacy at risk?

The United Nations has called on for a new global reserve currency to end dollar supremacy, which has allowed the United States the “privilege’’ of building a huge trade deficit.

“Important progress in managing imbalances can be made by reducing the reserve currency country’s ‘privilege’ to run external deficits in order to provide international liquidity,’’ UN undersecretary-general for economic and social affairs, Sha Zukang, said.

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Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he explained:

“It is timely to emphasis that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity.’’

Greater use of a truly global reserve currency, such as the IMF’s special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes,’’ he said.

The SDRs are the asset used in IMF transactions and are based on a basket of four currencies—the dollar, euro, yen and pound—which is calculated daily.

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China had called in March for a new dominant world reserve currency instead of the dollar, in a system within the framework of the Washington based IMF.

Beside this another worrying news for Dollar lovers is floating around that Arab states had launched secret moves with China, Russia, Japan and France to stop using the dollar for oil trades, though denied by many of arab states.

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G-5, G-8..Not Anymore..Its G-20 Now !!

G20-world-economy

For the world, apparently, eight is no longer enough.

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The G-8 group of powerhouse economies, which expanded from the original G-5 one by one over three decades, stepped off center stage Friday with the ascension of the G-20 into the role of overseeing the global economy.

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The Group of 20 will take on the role of caretakers of the global economy.

The shift toward multilateral decision-making is sure to please some emerging economies — China and India in particular — and irritate those Americans who believe the United States shouldn’t be handing off its power to international institutions.

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Heading into the second day of a summit aimed at ensuring the world economy emerges from its worst recession in generations with better safeguards against another crisis, the G20 also vowed to keep emergency economic support in place until a recovery is secured, according to the draft obtained by Reuters.

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The document said G20 countries had a “responsibility to the community of nations to assure the overall health of the global economy” and pledged to try to secure next year a deal in long-running world trade talks.

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Larger G-20 would take over — a council that, by simple virtue of a membership that unites more than 80 percent of the global economy, and would be a force to be reckoned with.

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The group, which also accounts for 90 per cent of the world’s economic output, also agreed to rein in financial industry excesses that triggered the credit crisis two years ago, and to tighten rules on how much capital banks must have to absorb losses.

The new rules aimed at improving the quality and amount of capital should be ready by the end of 2010 and will be phased in in the following two years, the draft said.


World Trade to Slip by 11%; More Trouble for Exporters :(

World trade down

The International trade in 2009 is estimated to decline by 11 per cent in real terms and by more than 20 per cent in current dollars (terms), United Nations Conference on Trade and Development (UNCTAD) report said on Monday.

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This seems to a bad news for the Indian exporters due to the worsening of the global merchandise outlook.

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There was a fall in demand from major developed countries like US and European Union due to the global recession.

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The exports of India stood in the negative zone for the tenth month in a row since October 2008.

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The exports during April-July period of this year, dropped by over 31 per cent.

However, earlier, the World Trade Organisation had estimated the global trade to be slipping by nine per cent in 2009.

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World trade slowed down in 2007 and has been shrinking at a fast pace since November 2008, in both volume as well as value terms.

The trade volume decelerated first in the United States and other developed countries, the report said.

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On the top of this, the report also stated that as the crisis is global, the reliance on exports offers no easy way out, since trade is expected to fell by about 11 per cent in real terms and any expansion of new trade requires a recovery of consumption and investment somewhere in the world.

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