Demonetisation shock : Oil demand growth in India will slowdown

Oil demand growth in the world's rapidly-growing crude market may weaken as the government's cash crackdown slows the economy. 

Diesel and gasoline use, which account for more than half of India's oil demand, will slow or contract this month and perhaps early next year, as per reports. Expansion in the world's fastest-growing major economy is universally expected to ease temporarily after Prime Minister Modi last month withdrew high-value currency notes in a country where almost all consumer payments are in cash. 

Diesel consumption could drop as much as 12 % and gasoline demand as much as 7 % his month, according to reports.

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Base Metals & Energy Updates For 25 May 2015

Mcx commodity tips: Copper prices plunged in the domestic market on Friday as a stronger dollar took the sheen off the industrial metal by curbing demand for copper as an alternative asset. Stronger greenback makes copper more expensive for those holding other currencies, thus hitting demand. Further, a drop in German business confidence in the month of May 2015 signaled a faltering recovery in Europe’s biggest economy, darkening the demand outlook for industrial metals. The gauge measuring German business sentiment fell for the first time in seven months, dropping to 108.5 in May from 108.6 in April, the Ifo Institute reported. Copper may extend a drop today as investors fret over a 2015 US interest rate hike after Fed Chair Janet Yellen termed a 2015 rate hike as “appropriate”. At the MCX, Copper futures for June 2015 contract closed at Rs 396.50 per 10 gram, down by 1.58 per cent after opening at Rs 402.60, against the last closing price of Rs 402.85. It touched the intra-day low of Rs 394.65 till the ending.

Zinc futures plunged more than 1 per cent in the domestic market on Friday as investors and speculators exited positions in the industrial metal amid weak physical demand for zinc in the domestic spot market. Investors cast aside data which showed a pickup in growth in the world’s second biggest economy, boding well for the demand outlook for zinc. The China leading index climbed 1.1 % in April from March, when it rose 0.5% the Conference Board said. However, the report warned that “despite April’s gain in the Leading Economic Index for China, its 6-month increase rate continues to slow. At the MCX, Zinc futures for May 2015 contract closed at Rs 138 per 1 kg, down by 1.22 per cent after opening at Rs 140.10, against the last closing price of Rs 139.70. It touched the intra-day low-lying of Rs 137.30 till the ending.

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COMMODITY DAILY REPORT FOR 10 JUNE 2014

Precious Metals

D A I L Y B U Z Z 

GOLD 

Gold fell below Rs 26,000 per 10 gms on the futures market Monday to touch a low of Rs 25,811 for the August contract. The metal was trading at Rs 25,883 per 10 gms on the MCX midday after climbing down from an intraday high of Rs 25,930. 

On the spot market, gold was trading at Rs 26,700 per 10 gms. "Prices will fall further as we are expecting the government to reduce import duty shortly," said Kapil Parekh, executive director at the Indian Bullion & Jewellers Association. "The rupee too is expected to strengthen further, which will further bring down prices." 

In the international market, gold held above the lowest level in four months on speculation that recent declines may spur purchases. Gold for immediate delivery traded at $1,253.68 an ounce In Singapore compared with $1,253.23 on Friday, according to Bloomberg generic pricing. The metal on June 3 dropped to $1,240.73, the lowest since January 31, as signs of a US economic recovery drove the Standard & Poor's 500 Index to a record and fuelled gains in the dollar. In China, the world's largest bullion consumer, volumes for the benchmark spot contract in Shanghai fell to 8,568 kilograms on June 6, the least since April 4. The nation's exports rose more than analysts estimated in May while imports unexpectedly slumped, latest data showed. Gold for August delivery traded at $1,254.20 an ounce on the Comex in New York, from $1,252.50 on June 6. The bullion's 60-day historical volatility was at the lowest since April 2013. 

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