MCX Natural Gas Future Tips

MCX Natural gas futures are trading in a thin manner today as the global prices edged up amid a mixed undertone in the Asian equities and strength in the US dollar. The commodity has been in a downward spiral in last few days and had tumbled to its two week low of $3.828 per mmbtu last week before bargain buying supported the sentiments. The counter quotes at $3.890, up 3.5 cents per barrel or nearly 1% on the day.

Natural gas has been falling down after hitting 10-month highs above $4 per mmbtu earlier in the month but failed to hold onto the watershed mark. Prices constantly slipped thereafter but it seems a rather positive US GDP data and expectations of colder weather in near term are supporting the commodity now.

Gas prices were up even as above-average temperatures in much of the US have tempered consumption. During the week ended October 24, total US gas demand fell 2.9% from the previous week, led by a drop of 4.8% in residential and commercial use, with temperatures averaging about 1 degree Fahrenheit above normal, according to latest update from the Energy Information Administration (EIA).

EIA also reported that working natural gas in underground storage increased to 3.843 trillion cubic feet as of October 19, an implied net injection of 67 billion cubic feet from the previous week, 4.1% over year-ago levels and 7% over the five-year average for that date.

The commodity has been witnessing some buying in Asian trades and the local futures might also edge up after nearing Rs 200 per mmbtu levels. The counter trades at Rs 203, down Rs 0.10 per mmbtu on the day. The open interest is up by a mild 2.2% on the day and some fresh buying could be seen in intraday moves. Prices have tested lows very much near to Rs 200 per mmtbu last week but the counter could not slip under the watershed mark.

Lead Updates

World Bureau of Metal Statistics (WBMS) said that lead market was in surplus by 17200 tonnes in January to August 2012, which follows a surplus of 2600 tonnes recorded in the whole of 2011. Total stocks at the end of August were 54600 tonnes lower than at the end of 2011. Lead mine production was 3.59 million tonnes, which was 23 percent above the total recorded for the first eight months of 2011. The jump in production of concentrates is largely due to abnormally low Chinese output in January and February 2011.

Refined production from both primary and secondary sources was 6.86 million tonnes. Global production rose by 1 per cent and demand was 56000 tonnes higher. Apparent consumption in China totalled 3.08 million tonnes of lead in January to August 2012 which was 109000 tonnes above the comparable period in 2011 and represented 45 percent of the global total. In August 2012, refined lead production was 942900 tonnes and consumption was 952000 tonnes.

MCX Commodity Report

CopperThe inventories of Copper in China continued to move higher as the prices of London Metal was chopped by profit booking and fears of lower GDP growth in the country. China inventories of Copper showed a sharp jump for the week ending 12 October 2012. Shanghai weekly inventory of Copper increased by 18967 metric tones or 11.7% to 181514 metric tonnes on 12 October 2012.This was much more on the expected lines as China is trying hard to increase its local currency versus the Dollar in an attempt to ease inflation in commodities and sourcing it at a cheaper rate.

Meanwhile, ICSG predicted a deficit in Copper for 2012 but said that the rising world supplies and ramp up of production will result in the metal turning into a surplus next year. A supply deficit of 400000 tonnes is estimated in Copper in 2012. International Monetary Fund (IMF) said that the worries of global financial instability were higher due to ongoing European crisis. Higher borrowing costs and declining market confidence was worrisome. This created pressure on the metals during the week.

World Bank slashed its forecast for Asia Pacific economies to 7.2% from earlier forecast of 7.6%. China forecast has been cut to 7.7% this year compared to 8.2% in earlier forecast of May.

Non ferrous metals were trading on a weak note on expectations of dejection from Chinese trade data due to be released on Saturday. The inflation numbers from China will be released on Monday next week. Many investors still opted to stay on the sidelines before the Chinese trade data. China is a major consumer of metals in the world therefore caution before the trade data is quite high.

Today, Shanghai weekly inventory of Copper increased by 18967 metric tonnes or 11.7% to 181514 metric tonnes on 12 October 2012. London Copper inventories declined marginally by 3630 tonnes on Friday to 215900 metric tonnes. LME Copper three month forwards were trading at $ 8164 per tonne, as against $ 8212 per tonne on Thursday.