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Tuesday, March 31, 2009

Copper Preliminary Data - 2008 by ICSG

Dear Members,

 

Copper: Preliminary Data for 2008

 

The International Copper Study Group (ICSG) released preliminary data for 2008 for world copper supply and demand in its March 2009 Copper Bulletin.  The Bulletin is available for sale upon request.

According to the preliminary ICSG data, including revisions to data previously presented, the refined copper market balance for the full year 2008 indicated a market surplus of about 360,000 metric tonnes (t). The deficit of about 140,000 t in the 1st half of the year was more than offset by a surplus of around 500,000 t in the 2nd half of the year. The 2008 market surplus compares with a surplus of around 290,000 t for 2007.  In December, weaker holiday-period usage in the United States and the European Union and weaker usage in Japan resulted in a large apparent monthly surplus of around 170,000 t.

World refined copper usage is estimated to have increased by 2.2% (387,000 t) in 2008 compared with usage in 2007.  World usage growth was mainly driven by China, where apparent usage grew by 14%.  Without China, world usage actually decreased by 2% mainly impacted by depressed usage in the other three major consuming regions, the EU-15 countries, Japan, and the United States, where it decreased by 6%, 5.4%, and 8.7%, respectively. On a regional basis, usage increased in Africa, Asia (incl. China) and Oceania by 7.1%, 7.2% and 3.2% respectively, and decreased in the Americas (-3.7%) and in Europe (-3.3%).  Note that China’s apparent copper usage is based only on reported data (production + net trade +/- SHFE stock changes+/-industry stock changes, if reported ) and does not take into account changes in unreported stocks [State Reserve Bureau (SRB), producer, consumer and merchant/trader], which may be significant during periods of stocking or de-stocking.

World mine production in 2008 remained unchanged as compared to the 2007 level; concentrate production was down by 108,000 t
(-0.9%) while solvent extraction-electro winning (SX-EW) was up by around 107,000 t (+3.5%). Operational failures, labour unrest and lower ore grades
resulted in stagnant production levels that did not keep pace with capacity growth.  As a result, and based in ICSG production capacity data, the average global mine capacity utilization rate fell to about 82.3% in 2008, the lowest level since 1989. Although mine output increased in China, Congo, Peru and the United States, world mine production was mainly affected by lower output in major producing countries such as Chile (-4%), Indonesia (-17%) and Mexico (-27%).  On a regional basis, mine production was up in Africa (13%), down in America (-1%), and practically unchanged in Asia, Europe and Oceania.

Total world refined production increased by 2.6% (465,000 t) in 2008 compared with refined production in 2007: primary production was up by 3.2% and secondary production (from scrap) was down by 1%.  China was the biggest contributor to growth (9.4%) due to the expansion of its copper refinery capacity. Production was down in several countries including India, Japan, South Korea and the United States, where output was affected by operational failures, adverse weather conditions and maintenance shutdowns. However, those decreases were more than offset by increases in other countries such Australia, Chile, China, Congo, Peru and the Scandinavian countries. On a year-on-year basis, refined production was down in Africa (-3.5%) and North America (-1.1%) but up in all remaining regions: Latin America (4.7%), Asia (2.2%), Europe (3%) and Oceania (14%). The average global refined capacity utilization was about 82% in 2008 slightly below the average of recent years.

The average LME cash price for February 2009 was US$3,314.73 per tonne, up from the January 2009 average of US$3,220.69 per tonne. The 2009 high and low copper prices through the end of February were US$3,527.00 and US$3,050.00 per tonne, respectively, and the average was US$3,266.56 per tonne. As of the end February 2009, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 606,107 t, an increase of 216,424 t from stocks held at the end of December 2008.  Stocks were up at all three exchanges.

World Refined Copper Usage and Supply Trends, 2002-2008

Thousand metric tonnes, copper

Due to the nature of statistical reporting, the published data should be considered as preliminary as some figures are currently based on estimates and could change. p/ preliminary,      1/ Based on EU apparent usage.      2/ Surplus/deficit is calculated using refined production minus refined usage.      3/ Surplus/deficit is calculated using seasonally adjusted refined production minus seasonally adjusted refined usage.

 

 

Yours Sencierly,

Commodity Daily

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NEW INVESTORS SHOULD BE VERY CAREFUL.

 

 

Wednesday, March 18, 2009

Impact of US : FOMC meeting announcement , Wednesday 18 March 09 at 2.15 PM ET - Must Read

Fellow Members,

On basis of lots of inquire, i have try to explain the risk and impact of US Interest rate announcement on financial market below.

Definition           
The Federal Open Market Committee consists of the seven Governors of the Federal Reserve Board and five Federal Reserve Bank presidents. The FOMC meets eight times a year in order to determine the near-term direction of monetary policy. Changes in monetary policy are now announced immediately after FOMC meetings.

Description
The Fed determines interest rate policy at FOMC meetings. These meetings occur roughly every six weeks and are the single most influential event for the markets. For weeks in advance, market participants speculate about the possibility of an interest rate change -- or a change in the wording of the post-FOMC announcement that suggests a shift in policy -- at these meetings. If the outcome is different from expectations, the impact on the markets can be dramatic and far-reaching.
The interest rate set by the Fed, the federal funds rate, serves as a benchmark for all other rates. A change in the fed funds rate, the lending rate banks charge each other for the use of overnight funds, translates directly through to all other interest rates from Treasury bonds to mortgage loans. It also changes the dynamics of competition for investor dollars: when bonds yield 10 percent, they will attract more money away from stocks than when they only yield 5 percent.
The level of interest rates affects the economy. Higher interest rates tend to slow economic activity; lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, few homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the financial markets, while lower interest rates are bullish.


Risk with News Trading

As with all major economic releases, there could be significant price volatility with this announcement.  Currency spreads will typically widen just before the release and will remain wide for a few minutes after.  If the announcement is a shock to the consensus estimate, the price of the currency pair could gap significantly.  For example, the price on the EURUSD trading at 1.2820 - 1.2822 just before release could gap up 60 pips to 1.2880 - 1.2882, without any available prices available between the price of 1.2820 and 1.2882.  A Buy Stop placed before the announcement at 1.2830 would turn into a Market Order and would be filled at the prevailing price 1.2882.  The same would be true with a Sell Stop.

Approximately four years ago we saw a gap of approximately 200 pips on the GBPUSD on a Non-Farm Payroll announcement.  While this is an extreme example, it nevertheless is a possibility with trading during economic announcements.  Consequently, plan on the spreads widening and, if you are trading with a Buy or a Sell Stop entry order, do not anticipate being filled at your entry price. You will be filled at the prevailing market price after the release, which could be significantly different from your desired price of your entry order. 

Happy Trading
Commodity Daily

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OnlineChat : "commoditydaily@gmail.com" , "sgxdaily@gmail.com"
Note- Members express their own view  & may be or may not be having investment or speculative positions in the commodity, please do not take it as buy or sell call, pl use  own judgments for buying or selling, after having discussion with your certified investment brokers or the person to whom u  have good level of confidence. once sentiment is changed from good to bad no good news work but bad news do work, investors must keep this in mind.
NEW INVESTORS SHOULD BE VERY CAREFUL.

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