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| India Infoline Research Team / 18:06 , May 08, 2012 |
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Base metals pared gains at the end of the April, failing to hold on the upside momentum. Slowing economic growth across the globe has made it difficult for metal prices to sustain at higher levels. Market participants are concerned by the state of economic activity in China. In this regard, China’s gross domestic product slowed to 8.1% during the first quarter of 2012, as compared with the growth of 8.9% during fourth quarter of 2011. In the meantime, the World Bank has lowered its forecast for China’s 2012 growth rate to 8.2% from 8.4%. Gloomy credit markets in Europe and stagnating economic statistics from US has also ruled out any substantial upside in the non-ferrous metals pack. In Europe, several economies have tipped in to recession, while conditions in US do not yet suggest any signs of concrete recovery. US Q1 2012 GDP growth rate has been reported at a tepid 2.2%, as compared with the growth reading of 3% during the prior quarter. Unhealthy employment scenario on the both sides of the Atlantic continues to haunt the bulls.
Copper, the leader of the non-ferrous complex continues to face stiff resistance at US$8,450 levels, as the red metal has pared gains from those levels on numerous occasions. Copper prices are expected to trade in a lackluster fashion, as the red metal is caught in a tug-of-war between slowing Chinese metal demand and global tight supply. Declining LME warehouse stocks may provide a support, however bulls are deprived of any substantial impetus as economic conditions in Europe and US are not encouraging. On domestic front, fluctuating Indian rupee should be considered as a caveat, as it could hinder overseas weakness getting reflected in Indian markets.
Base Metals Snapshot
|
May-12
|
Apr-12
|
mom (%)
|
May-11
|
yoy (%)
|
YTD (%)
|
Avg'12
|
Avg'11
|
*Price 3M(US$/ton)
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|
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LME Copper
|
8,220
|
8,400
|
(2)
|
9,215
|
(11)
|
8
|
8,301
|
8,826
|
LME Aluminium
|
2,083
|
2,119
|
(2)
|
2,675
|
(22)
|
3
|
2,183
|
2,421
|
LME Lead
|
2,105
|
2,148
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(2)
|
2,521
|
(17)
|
3
|
2,109
|
2,390
|
LME Zinc
|
1,997
|
2,063
|
(3)
|
2,266
|
(12)
|
8
|
2,033
|
2,212
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LME Nickel
|
17,577
|
17,895
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(2)
|
23,595
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(26)
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(6)
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19,206
|
22,865
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Index
|
|
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|
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LME Index
|
3,488
|
3,588
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(3)
|
4,144
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(16)
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6
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3,595
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3,923
| Source: Bloomberg, India Infoline Research
* Prices as on 8 th May, 2012
Copper: Prices have been constrained within a relatively tight trading range for quite some time, vacillating between US$8,100-8,450/ton.
Persistent drawdown in LME warehouse stocks was witnessed once again this month, with inventories down by 7% on a mom and 38% on YTD basis. However, Shanghai warehouse stocks registered a contrasting trend. SHFE warehouse stocks are up by 111% on YTD basis. However, the percentage of cancelled warrants has eased to 30% from 40% during the previous weeks, suggesting that the pace of withdrawals may be slowing. Effectively, backwardation in LME copper prices has moderated to US$65/ton, as compared with US$150/ton during April. In China, physical demand for copper is reported to be subdued in China and effectively refined copper imports declined during March by 8% on a mom basis. In spot markets, LME copper- Shanghai spot premium has softened to US$40/ton, as compared with US$105/ton during the end of January. Softening spot premiums further convey restrained demand in the world’s largest copper consuming nation.
Copper statistics
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May-12
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Apr-12
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mom (%)
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May-11
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yoy (%)
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YTD (%)
|
Avg'12
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Avg'11
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Price* (US$/ton)
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|
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LME cash
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8,254
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8,535
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(3)
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9,202
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(10)
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9
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8,320
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8,813
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LME 3 month
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8,220
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8,400
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(2)
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9,215
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(11)
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8
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8,301
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8,826
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(‘000 tons)
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May-12
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Apr-12
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mom (%)
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May-11
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yoy (%)
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YTD (%)
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Avg'12
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Avg'11
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LME stocks
|
231
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248
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(7)
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468
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(51)
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(38)
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296
|
437
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SHFE stocks
|
197
|
205
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(4)
|
82
|
139
|
111
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197
|
112
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(‘000 tons)
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Feb-12
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Jan-12
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mom (%)
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Feb-11
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yoy (%)
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YTD'12
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Jan-Feb'11
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yoy(%)
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World Demand
|
1,622
|
1,670
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(3)
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1,476
|
10
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3,265
|
3,074
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6
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World Supply
|
1,644
|
1,709
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(4)
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1,527
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8
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3,318
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3,152
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5
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World Balance
|
23
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40
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(43)
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51
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(56)
|
53
|
78
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--
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China Demand
|
729
|
831
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(12)
|
476
|
53
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1,460
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1,088
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34
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China Supply
|
438
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453
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(3)
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366
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20
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872
|
752
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16
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China Balance
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(291)
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(379)
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--
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(110)
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--
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(588)
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(335)
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--
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(‘000 tons)
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Mar-12
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Feb-12
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mom (%)
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Mar-11
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yoy (%)
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YTD'12
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Jan-Mar'11
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yoy(%)
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Chinese trade
|
|
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Refined Copper imports
|
346
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376
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(8)
|
192
|
80
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1,057
|
596
|
77
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Scrap imports
|
430
|
403
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7
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387
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11
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1,062
|
998
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6
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Source: Bloomberg, WBMS, India Infoline Research
* Prices as on 8th May, 2012
| Aluminium statistics
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May-12
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Apr-12
|
mom (%)
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May-11
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yoy (%)
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YTD (%)
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Avg'12
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Avg'11
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Price* (US$/ton)
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|
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LME cash
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2,028
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2,079
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(2)
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2,662
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(24)
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2
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2,146
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2,398
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LME 3 month
|
2,083
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2,119
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(2)
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2,675
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(22)
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3
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2,183
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2,421
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(‘000 tons)
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May-12
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Apr-12
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mom (%)
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May-11
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yoy (%)
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YTD (%)
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Avg'12
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Avg'11
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LME stocks
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4,990
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5,025
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(1)
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4,699
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6
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0
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5,049
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4,581
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SHFE stocks
|
351
|
349
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1
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333
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5
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69
|
325
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271
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(‘000 tons)
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Feb-12
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Jan-12
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mom (%)
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Feb-11
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yoy (%)
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YTD'12
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Jan-Feb'11
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yoy(%)
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World Demand
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3,515
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3,342
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5
|
3,195
|
10
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7,045
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6,545
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8
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World Supply
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3,710
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3,741
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(1)
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3,425
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8
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7,402
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6,922
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7
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World Balance
|
195
|
399
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(51)
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230
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(15)
|
357
|
377
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--
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China Demand
|
1,583
|
1,497
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6
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1,295
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22
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3,064
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2,564
|
19
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China Supply
|
1,548
|
1,501
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3
|
1,304
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19
|
3,035
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2,588
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17
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China Balance
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(35)
|
5
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--
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9
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--
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(29)
|
24
|
--
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|
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|
|
|
|
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|
(‘000 tons)
|
Mar-12
|
Feb-12
|
mom (%)
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Mar-11
|
yoy (%)
|
YTD'12
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Jan-Mar'11
|
yoy(%)
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Chinese trade
|
|
|
|
|
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AL & Alloy exports
|
68
|
47
|
43
|
67
|
2
|
175
|
158
|
11
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AL & Alloy imports
|
73
|
82
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(12)
|
34
|
116
|
209
|
102
|
106
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AL products exports
|
240
|
190
|
26
|
260
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(8)
|
630
|
630
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0
| Source: Bloomberg, WBMS, India Infoline Research
* Prices as on 8 th May, 2012
Zinc statistics
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May-12
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Apr-12
|
mom (%)
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May-11
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yoy (%)
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YTD (%)
|
Avg'12
|
Avg'11
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Price* (US$/ton)
|
|
|
|
|
|
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LME cash
|
1,992
|
2,055
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(3)
|
2,247
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(11)
|
9
|
2,021
|
2,193
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LME 3 month
|
1,997
|
2,063
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(3)
|
2,266
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(12)
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8
|
2,033
|
2,212
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|
|
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|
|
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(‘000 tons)
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May-12
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Apr-12
|
mom (%)
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May-11
|
yoy (%)
|
YTD (%)
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Avg'12
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Avg'11
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LME stocks
|
926
|
914
|
1
|
855
|
8
|
13
|
868
|
796
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SHFE stocks
|
360
|
358
|
0
|
400
|
(10)
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(1)
|
374
|
379
|
|
|
|
|
|
|
|
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(‘000 tons)
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Feb-12
|
Jan-12
|
mom (%)
|
Feb-11
|
yoy (%)
|
YTD'12
|
Jan-Feb'11
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yoy(%)
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World Demand
|
1,014
|
1,093
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(7)
|
964
|
5
|
2,000
|
1,936
|
3
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World Supply
|
1,093
|
1,148
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(5)
|
1,019
|
7
|
2,149
|
2,057
|
4
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World Balance
|
79
|
55
|
45
|
55
|
45
|
149
|
121
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--
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China Demand
|
431
|
526
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(18)
|
402
|
7
|
850
|
806
|
5
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China Supply
|
403
|
468
|
(14)
|
395
|
2
|
775
|
784
|
(1)
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China Balance
|
(28)
|
(59)
|
--
|
(7)
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--
|
(75)
|
(22)
|
--
|
|
|
|
|
|
|
|
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(‘000 tons)
|
Mar-12
|
Feb-12
|
mom (%)
|
Mar-11
|
yoy (%)
|
YTD'12
|
Jan-Mar'11
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yoy(%)
|
Chinese trade
|
|
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|
|
|
|
|
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Refined Zinc imports
|
45
|
39
|
15
|
38
|
20
|
132
|
87
|
52
|
Refined Zinc exports
|
2.1
|
0.3
|
620
|
5.4
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(61)
|
3
|
9
|
(67)
| Source: Bloomberg, WBMS, India Infoline Research
* Prices as on 8 th May, 2012
Lead statistics
|
May-12
|
Apr-12
|
mom (%)
|
May-11
|
yoy (%)
|
YTD (%)
|
Avg'12
|
Avg'11
|
Price* (US$/ton)
|
|
|
|
|
|
|
|
|
LME cash
|
2,100
|
2,153
|
(2)
|
2,536
|
(17)
|
4
|
2,089
|
2,397
|
LME 3 month
|
2,105
|
2,148
|
(2)
|
2,521
|
(17)
|
3
|
2,109
|
2,390
|
|
|
|
|
|
|
|
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|
(‘000 tons)
|
May-12
|
Apr-12
|
mom (%)
|
May-11
|
yoy (%)
|
YTD (%)
|
Avg'12
|
Avg'11
|
LME stocks
|
358
|
361
|
(1)
|
322
|
11
|
2
|
366
|
321
|
|
|
|
|
|
|
|
|
|
(‘000 tons)
|
Feb-12
|
Jan-12
|
mom (%)
|
Feb-11
|
yoy (%)
|
YTD'12
|
Jan-Feb'11
|
yoy(%)
|
World Demand
|
769
|
881
|
(13)
|
754
|
2
|
1,505
|
1,559
|
(3)
|
World Supply
|
768
|
877
|
(12)
|
768
|
0
|
1,493
|
1,589
|
(6)
|
World Balance
|
(0)
|
(4)
|
--
|
14
|
--
|
(12)
|
30
|
--
|
China Demand
|
312
|
443
|
(30)
|
333
|
(6)
|
580
|
690
|
(16)
|
China Supply
|
309
|
441
|
(30)
|
333
|
(7)
|
576
|
691
|
(17)
|
China Balance
|
(3)
|
(2)
|
--
|
(0)
|
--
|
(4)
|
1
|
--
|
|
|
|
|
|
|
|
|
|
(‘000 tons)
|
Mar-12
|
Feb-12
|
mom (%)
|
Mar-11
|
yoy (%)
|
YTD'12
|
Jan-Mar'11
|
yoy(%)
|
Chinese trade
|
|
|
|
|
|
|
|
|
Refined Lead imports
|
0.5
|
0.6
|
(10)
|
1
|
1
|
1.2
|
1.5
|
(23)
|
Refined Lead exports
|
0.5
|
0.0
|
1,341
|
1
|
(8)
|
0.5
|
4
|
(87)
| Source: Bloomberg, WBMS, India Infoline Research
* Prices as on 8 th May, 2012
Nickel statistics
|
May-12
|
Apr-12
|
mom (%)
|
May-11
|
yoy (%)
|
YTD (%)
|
Avg'12
|
Avg'11
|
Price* (US$/ton)
|
|
|
|
|
|
|
|
|
LME cash
|
17,512
|
17,817
|
(2)
|
23,587
|
(26)
|
(6)
|
19,154
|
22,843
|
LME 3 month
|
17,577
|
17,895
|
(2)
|
23,595
|
(26)
|
(6)
|
19,206
|
22,865
|
|
|
|
|
|
|
|
|
|
(‘000 tons)
|
May-12
|
Apr-12
|
mom (%)
|
May-11
|
yoy (%)
|
YTD (%)
|
Avg'12
|
Avg'11
|
LME stocks
|
104
|
104
|
0
|
114
|
(9)
|
16
|
97
|
109
|
|
|
|
|
|
|
|
|
|
(‘000 tons)
|
Feb-12
|
Jan-12
|
mom (%)
|
Feb-11
|
yoy (%)
|
YTD'12
|
Jan-Feb'11
|
yoy(%)
|
World Demand
|
140
|
147
|
(5)
|
111
|
26
|
279
|
235
|
19
|
World Supply
|
144
|
144
|
(0)
|
119
|
21
|
288
|
242
|
19
|
World Balance
|
3
|
(3)
|
--
|
7
|
(55)
|
9
|
7
|
19
|
China Demand
|
58
|
71
|
(18)
|
36
|
63
|
117
|
81
|
46
|
China Supply
|
42
|
44
|
(4)
|
21
|
96
|
81
|
47
|
70
|
China Balance
|
(16)
|
(27)
|
--
|
(14)
|
--
|
(37)
|
(33)
|
--
|
|
|
|
|
|
|
|
|
|
(‘000 tons)
|
Mar-12
|
Feb-12
|
mom (%)
|
Mar-11
|
yoy (%)
|
YTD'12
|
Jan-Mar'11
|
yoy(%)
|
Chinese trade
|
|
|
|
|
|
|
|
|
Refined Nickel imports
|
14
|
12
|
19
|
19
|
(23)
|
39
|
47
|
(16)
|
Refined Nickel exports
|
2.9
|
4.8
|
(40)
|
5.7
|
(50)
|
8.2
|
9.3
|
(11)
|
Nickel Pig iron imports
|
20
|
25
|
(20)
|
11
|
90
|
69
|
35
|
95
|
Nickel ore imports
|
3,668
|
3,372
|
9
|
2,118
|
73
|
9,810
|
5,641
|
74
| Source: Bloomberg, WBMS, India Infoline Research
* Prices as on 8 th May, 2012
Price Outlook
|
Current price
|
Trading range
|
Bias
|
*Price 3M(US$/ton)
|
|
|
|
LME Copper
|
8,200
|
7,800 – 8,400
|
Downward Bias
|
LME Aluminium
|
2,080
|
2,000 – 2,200
|
Range Bound
|
LME Lead
|
2,100
|
1,950 - 2,175
|
Mixed Tone
|
LME Zinc
|
2,000
|
1,920 – 2,100
|
Mixed Tone
|
LME Nickel
|
17.550
|
16,500– 18,700
|
Weak Bias
| Source: Bloomberg, India Infoline Research
* Prices as on 8 th May, 2012
|
|
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|
|
|
|
|