1. Art and Diseño

INSIDE COMMODITIES
Monday, February 2, 2015
SHANGHAI COPPER- OUTLOOOK
MARKETS SNAPSHOT
Click on the chart for full-size image
Crude prices fell after U.S. unions called a refinery strike. Copper
jumped more than two percent, after an official report showed factory
growth in China shrank while Gold steadied. European markets looked
set to open low tracking Asian market. Wall Street closed negative on
Friday.
To read more, please click here
Contract (AS OF 0714 GMT)
Last
Change
YTD
NYMEX light crude
$47.14
-2.28%
-9.44%
NYMEX RBOB gasoline
$1.46
-1.33%
3.03%
$498.00
4.13%
-6.64%
$2.66
-1.23%
-6.85%
$1,278.80
-0.31%
8.39%
LME Copper
$5,518
0.41%
-12.78%
LME Aluminium
$1,858
-0.32%
0.62%
CBOT Corn
$3.69
-0.41%
-6.80%
ICE gas oil
NYMEX natural gas
Spot Gold
TOP NEWS
CBOT Wheat
$5.02
-0.20%
-14.75%
CBOT Soybeans
$9.52
-0.3%
-9.52%
 China factory sector jolts by shrinking in January
Index (Total Return)
 Workers strike for new pact at 9 U.S. oil, chemical plants
 Saudi Aramco stops red sea deepwater exploration work
-Sources
Latest Close
Change
YTD
Thomson Reuters/Jefferies CRB
219.3848
2.91%
-4.83%
S&P GSCI
2967.0249
3.89%
-7.50%
Rogers International
2529.95
0.00%
-9.41%
 Crisis veteran Naimi stays to hold line on Saudi oil policy
Cont Commod Indx
429.9106
1.28%
-3.91%
 U.S. soyoil open interest suggests further falls ahead
Index (Total Return)
Latest Close
Change
YTD
 Wheat for Egypt stuck at Russian ports ahead of export
US STOCKS (DJI)
tax launch - Sources
 Sugar traders have informal talks about Euro-based
contract
 Codelco aims to cut 2015 costs by $1 bln as copper price
plummets
 Speculators hike bearish copper bets as mood darkens CFTC
 India's JSW steel calls for action against Chinese steel
"dumping"
BEYOND THE HEADLINES
 PREVIEW-Saudi Arabia expected to cut March crude
prices for Asia
CLICK HERE FOR TECHNICAL CHARTS
17164.95
-1.45%
-3.69%
US DOLLAR INDEX
94.85
0.02%
5.02%
US BOND INDEX (DJ)
352.28
0.56%
2.99%
ECONOMIC WATCH
GMT
08:15
Indicators
Unit
Reuters
Prior
ES
Manufacturing PMI
ind
54
53.8
08:45
IT
Markit/ADACI Mfg PMI
ind
48.8
48.4
08:50
FR
Markit Mfg PMI
ind
49.5
49.5
08:55
DE
Markit/BME Mfg PMI
ind
51
51
09:00
EZ
Markit Mfg Final PMI
ind
51
51
09:30
GB
Markit/CIPS Mfg PMI
ind
52.6
52.5
13:30
US
Consumption, Adjusted MM
pct
-0.2
0.6
13:30
US
Personal Income MM
pct
0.2
0.4
15:00
US
Construction Spending MM
pct
0.7
-0.3
15:00
US
ISM Manufacturing PMI
ind
54.5
55.1
INSIDE COMMODITIES
February 2, 2015
MARKET MONITOR
Crude oil prices fell after U.S. unions called a refinery strike and
traders cashed in on strong price gains last week when the market soared on a sharp drop in U.S. drilling. Brent crude oil futures were trading at $51.70 a barrel, down 2.19 percent, while
U.S. WTI futures were at $47.02, down 2.43 percent a barrel.
Three-month copper on the London Metal Exchange traded up
0.4 percent at $5,516 a tonne.
Gold steadied near $1,280 an ounce, after posting its biggest
monthly gain in three years, as a shaky outlook for the global
economy preserved bullion's safe-haven draw. Spot gold was
off 0.3 percent at $1,279.18 an ounce.
The yen briefly touched a two-week high versus the dollar,
while commodity currencies were fragile as worries about the
health of the Chinese economy added to unease following a
selloff on Wall Street. The dollar slid to a two-week low of
116.64 yen in early trade. The euro also reached a one-week
trough of 132.00 yen before bouncing back to 133.16, while the
Australian dollar plumbed an 11-month low of 90.25.
U.S. corn fell for a sixth consecutive session and wheat eased
to trade near a four-month low, with grain markets starting February on a bearish note after a dismal performance last month
under pressure from ample global supplies. Chicago Board of
Trade March wheat had fallen 0.4 percent to $5.01 a bushel,
after dropping to its lowest since Oct. 6.
Shanghai copper jumped more than two percent, after an official report showed factory growth in China shrank for the first
time in more than two years last month, fuelling hopes for increased stimulus from the world's second biggest economy. The
most-traded April copper contract on the Shanghai Futures
Exchange was up 2.4 percent at 40,140 yuan ($6,414) a tonne.
European markets looked set to open lower tracking most of
Asian stocks after soft data on China's factory sector activity
raised concerns over the outlook for the world's second biggest
economy. Wall Street closed negative on Friday.
TOP NEWS
China factory sector jolts by shrinking in January
Workers strike for new pact at 9 U.S. oil, chemical plants
China's factory sector unexpectedly shrank for the first time in
nearly 2-1/2 years in January and firms see more gloom ahead,
an official survey showed, raising expectations that policymakers will take more action to forestall a sharper slowdown.
The official Purchasing Managers' Index (PMI) fell to 49.8 in
January, the National Bureau of Statistics said on Sunday, a low
last seen in September 2012 and a whisker below the 50-point
level that separates growth from contraction on a monthly basis.
The December level was 50.1, and a Reuters poll saw a better
result, 50.2 for January. Only one of 11 economists in the poll
predicted a January contraction.
Most of the PMI indexes "showed a downward trend, indicating
that current economic growth is still in a downtrend," said Zhang
Liqun, an economist at the Development Research Centre, a
state think-tank.
Some economists said the January reading was especially
downbeat as it suggested that factories did not enjoy a usual
spike in business before China's annual Spring Festival holiday,
which falls in mid-February this year.
The poor January official PMI fueled bets that more monetary
policy loosening was in store in the world's second-largest economy.
"China still needs decent growth to add 100 million new jobs this
year, plus China is entering a rapid disinflation process," ANZ
economists said in a note to clients.
"We (think) the People's Bank of China will cut the reserve requirement ratio by 50 basis points and cut the deposit rate by 25
basis points in the first quarter," they said.
Marred by a housing slump, erratic growth in exports and a
state-led slowdown in investment, China's economy has steadily
lost steam in the last year as growth sunk to a 24-year low of
7.4 percent.
Union workers took to picket lines on Sunday after strikes were
called at nine U.S. refineries and chemical plants in a bid to
pressure oil companies to agree to a new national contract covering workers at 63 plants.
The walkouts, the first held in support of a nationwide pact since
1980, target plants that together account for about 10 percent of
U.S. refining capacity. The discord comes as plunging crude
prices force oil companies to slash spending.
The United Steelworkers union (USW) said Royal Dutch Shell
Plc, the lead industry negotiator, halted talks after the union
rejected a fifth proposal from the company.
"Shell refused to provide us with a counter-offer and left the
bargaining table," USW International President Leo Gerard said.
"We had no choice but to give notice of a work stoppage."
Shell said it would like to restart talks.
"We remain committed to resolving our differences with USW at
the negotiating table and hope to resume negotiations as early
as possible," Shell said.
Shell activated a strike contingency plan at its sprawling joint
venture refinery and chemical plant in Deer Park, Texas, to
keep operating normally.
Other companies have said they were calling on trained managers to use as replacement workers, so the strikes are not expected to cause gasoline prices to spike.
Tesoro Corp said management was operating its refinery in
Carson, California, and that managers would take over from
union workers at its plant in Anacortes, Washington, in the next
24-48 hours. It said its Martinez, California, refinery, which was
undergoing maintenance work, would be shut down.
Besides Shell and Tesoro, the USW said strikes were called at
three plants belonging to Marathon Petroleum in Texas and
Kentucky, and LyondellBasell's plant near Houston. At least two
of the plants on the list have a history of deadly accidents.
2
INSIDE COMMODITIES
February 2, 2015
TOP NEWS (Continued)
Saudi Aramco stops red sea deepwater exploration work Sources
Crisis veteran Naimi stays to hold line on Saudi oil policy
The new Saudi king's decision to keep Ali al-Naimi in his job as
oil minister signalled to energy markets that the world's top
crude exporter would not flinch from its policy of refusing to cut
output as it fiercely guards market share.
Naimi convinced fellow OPEC members to pursue such a strategy, regardless of how far oil prices might fall. He was determined not to cede ground to producers outside the group such
as Russia and U.S. shale drillers.
When reshuffling his cabinet on Thursday, King Salman - just
days into his role as ruler - would have found it difficult to find
more experienced hands to guide the kingdom's oil sector
through these turbulent times.
After all, 79-year-old Naimi has seen at least three price crashes
during his two decades as oil minister.
State oil giant Saudi Aramco has put on hold its deepwater oil
and gas exploration and drilling activities in the Red Sea because of high costs as it economises in an environment of low
crude prices, industry sources said on Sunday.
The cost of operations in the Red Sea, a new area for Saudi
Aramco, was around $1 million per day, said two sources, who
declined to be identified because they were not authorised to
speak to media.
"It is related to budget cost reduction in the Red Sea offshore,"
said one of the sources.
Saudi Aramco declined to comment.
The company's chief executive Khalid al-Falih said last week
that Saudi Aramco would renegotiate some contracts and postpone some projects because of the plunge in oil prices over
recent months. The firm has suspended plans to build a $2 billion clean fuels plant at its largest oil refinery in Ras Tanura,
sources told Reuters last month.
Wheat for Egypt stuck at Russian ports ahead of export tax
launch - Sources
Several vessels loading tens of thousands of tonnes of wheat
for the state buyer of Egypt, the world's largest wheat importer,
are stuck in Russia's Black Sea ports ahead of the launch of an
export tax in Moscow, trade sources said.
After the rouble's slump against the dollar spurred grain exports,
driving up domestic prices, the Russian government was forced
to curb exports with informal limits and announced an export tax
that will come into force on Feb. 1.
Due to the informal curbs, these supplies for Egypt's state grain
buyer, the General Authority for Supply Commodities (GASC),
have already missed deadlines of previously agreed contracts,
but traders cannot change the origin of supply.
"There have been negotiations to try to change the origin even
to Ukraine but GASC insisted that it remains Russian," one of
sources said.
U.S. soyoil open interest suggests further falls ahead
U.S. soyoil futures are likely to test recent six-year lows next
week after investors extended bearish bets in a surge of trading
after a policy decision that could boost Argentina's exports to
the United States.
Open interest in soyoil on Thursday expanded to 401,410 contracts, the most since mid-November, as prices tumbled to
29.32 cents per lb, the lowest levels since February 2009, CME
Group data showed on Friday.
Trading volume on Wednesday of 178,984 soyoil contracts was
the most in nearly a year, the CME Group said.
Open interest can be an indicator that investors are making
short bets, or buying with the expectation prices will fall.
Codelco aims to cut 2015 costs by $1 bln as copper price
plummets
Sugar traders have informal talks about Euro-based
contract
World No.1 copper miner Codelco will look to slash costs by $1
billion in 2015, Chief Executive Nelson Pizarro said Friday, as
the price of the base metal slumped to multi-year lows.
It is seeking to cut direct cash costs by some $0.193 per pound
of copper at its operations, Pizarro told journalists. In the January through September, Codelco's cash costs averaged $1.537
per pound.
Still, none of the Chilean state-run copper miner's large investment projects will be at risk and no personnel will be laid off,
Pizarro said.
Instead, the company will look to implement efficiencies by such
measures as the renegotiation of energy contracts, its task
eased by slumping oil prices and a Chilean peso that has weakened around 25 percent versus the U.S. dollar over the last two
years.
Sugar traders have held several meetings to discuss the possible launch of a European euro-denominated futures contract
following lobbying from both beet growers and industrial users.
Prices for sugar within the European Union, which has import
tariffs and production quotas, can differ significantly from global
benchmarks set by ICE raw sugar and white sugar contracts.
"The momentum (for the European contract) is frustration with
the current opacity," one trade source involved in the process
said.
"It's very much at the probing stage. There has been a considerable amount of scepticism," the source added.
3
INSIDE COMMODITIES
February 2, 2015
TOP NEWS
Speculators hike bearish copper bets as mood darkens CFTC
India's JSW steel calls for action against Chinese steel
"dumping"
Hedge funds and money managers increased their bearish positions in copper futures and options to a four-month high and
raised their bullish bets in gold to their highest in just over two
years in the week to Jan. 27, U.S. Commodity Futures Trading
Commission (CFTC) data showed on Friday.
In silver, they increased their net long by 6,539 lots to 40,164,
the highest since July last year.
Hedge fund and other speculative investors increased their net
long in bullion by 21,960 contracts to 167,693, the most since
late November 2012, while in copper, they increased their net
short by 4,970 to 12,976, the highest since early October last
year.
India's JSW Steel Ltd on Friday urged the government to address "dumping" of cheap steel by Chinese rivals and take steps
to improve iron ore availability after lower steel prices led to a 30
percent drop in the company's third-quarter profit.
Steel imports into India leapt by more than 60 percent in the
April to December period, with 1 million tonnes imported in December alone, group Chief Financial Officer Seshagiri Rao told
reporters in Mumbai.
"We have been representing to the government that they should
take steps, as is being done by various countries, in stopping
the dumping and to stop injury to the domestic industry," Rao
said.
BEYOND THE HEADLINES
Light and Heavy as naphtha and fuel oil cracks rebounded from
last month, boosting demand for these grades in Asia.
Arab Extra Light "should increase relative to Arab Light for
March as naphtha is so strong", an analyst said.
Saudi OSPs to Asia are set as premiums or discounts to the
average of Platts Oman and Dubai prices.
The extent of the price cuts depend on how Saudi Aramco will
factor in the spread in its calculations, traders said.
A sharp widening of the Oman/Dubai spread this week could
lead to bigger price cuts, they said, although the spread was
little changed if compared on an average monthly basis.
Saudi crude OSPs, usually released by the fifth of each month,
set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more
than 12 million barrels per day (bpd) of crude bound for Asia.
PREVIEW-Saudi Arabia expected to cut march crude prices
for Asia
By Florence Tan
Top oil exporter Saudi Arabia is expected to cut prices for most
of the crude it sells to Asia in March in line with a weak Dubai
market, trade sources said on Friday.
Ample supply continued to weigh on the Middle East crude market, widening Dubai's prompt inter-month spread into a deeper
contango. Prompt oil is cheaper than supply in future months in
a contango market.
Four of the six traders who took part in a Reuters survey expected Arab Light's OSP to fall by about $1 in March while the
other two forecast price cuts of just over $2 a barrel.
Traders are also expecting smaller price cuts for Arab Extra
4
INSIDE COMMODITIES
February 2, 2015
3 month TECHNICAL CHARTS (12 and 50 days Exponential Moving Average)
Click on the chart for full-size image
NYMEX Crude
ICE BRENT Crude
Spot Gold
Spot Silver
CBOT Corn
CBOT Wheat
(Inside Commodities is compiled by Atiqul Habib in Bangalore)
For more information:
Learn more about our products and services for commodities
professionals, click here
Contact your local Thomson Reuters office, click here
For questions and comments on Inside Commodities click here
Your subscription:
To find out more and register for our free commodities newsletters
click here
© 2015 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. Any copying,
distribution or redistribution of this content is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters
shall not be liable for any errors or delays in content, or for any actions
taken in reliance thereon. Thomson Reuters and its logo are registered
trademarks or trademarks of the Thomson Reuters group of companies
around the world.
Privacy statement:
To find out more about how we may collect, use and share
your personal information please read our privacy statement here
To unsubscribe to this newsletter click here
5