INDIAN ECONOMY â AN OVERVIEW - MCX

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DATABANK - NON-AGRI COMMODITIES DATABANK - AGRI COMMODITIES Silver Mine Production (2010) Silver Consumption (2010) Peru 18% Mexico 19% USA 20% India 14% China 15% Others 33% Japan 8% Others 46% Australia 9% United States 6% Italy 6% Thailand 6% Source: USGS Source: CPM Silver Yearbook 2011 180 160 140 120 100 80 60 40 20 Silver Vs. Oil prices, Gold Silver Ratio and Dollar Index Silver prices (RHS) WTI Prices (USD/bbl) Gold Silver Ratio Dollar Index USD/Oz 40 35 30 25 20 15 10 5 0 Mar-84 Jan-85 Nov-85 Sep-86 Jul-87 May-88 Mar-89 Jan-90 Nov-90 Sep-91 Jul-92 May-93 Mar-94 Jan-95 Nov-95 Sep-96 Jul-97 May-98 Mar-99 Jan-95 Nov-95 Sep-06 Jul-07 May- 08 Mar-09 Jan-10 Nov-10 0 Source: CME (COMEX & NYMEX) www.mcxindia.com / www.pwc.com/in/en A PwC & MCX Joint Endeavour 97
EDITORIALS PROLOGUE EXPERTS' VIEWS INDIAN ECONOMY Metals The base for development Currently, there are over 85 known metals in the world. People had been using only a few metals during BC, but increased realisation of their utility led to rapid discovery of new metals later (Material Science & Engineering, Carnegie Mellon University). Metals and metal alloys possess high structural strength per unit mass, making them useful materials for carrying large loads or resisting impact damage. Metal alloys can be engineered to have high resistance to shear, torque and deformation. Strength and resilience have led to metals’ frequent use in high-rise building, bridge construction, vehicles, tools, pipes, non-illuminated signs, railroad tracks and numerous other appliances. Thus, metals play a vital role in the developmental process. The two most commonly used structural metals – iron and aluminium – are also the most abundant metals in the earth’s crust. India produces 89 minerals, comprising four fuel minerals, 11 metallic, 52 non-metallic and 22 minor minerals. Besides being the world’s largest producer of mica blocks, it is one of the world’s top producers of iron ore, manganese, aluminium, crude steel, etc. Futures prices of base metals on MCX were a mixed bag in 2010. While copper futures jumped 28%, zinc futures fell 9%, y-o-y. As 2010 dawned, combination of factors – concerns over market regulation in the US, expectations of monetary tightening in China and increases in LME stocks – triggered a sharp fall in the prices of base metals, including copper and zinc. However, upbeat global economic data lent support for a short-term revival. Later, in June, metals’ prices, especially zinc’s, eased to a year low on growing doubts over Greece’s ability to manage its debt crisis. What also added to the downward pressure were data such Commodity in 2010 Exchange (contract) “Put a coward to his metal an’ he’ll fi ght the de’il” (An Irish Proverb) 450 416 382 348 314 280 1-Jan-10 Price Unit Open High Low Close as a rise in jobless claims in the US and China’s intent on curbing lending activity. Thereafter, the prices of base metals, particularly of copper, rose on upbeat US economic data: unemployment claims fell to a six-week low and orders of durables dropped more than expected in May 2010 and copper mining major BHP Billiton announced that its output could fall 5-10% in 2010 (www.erbakir.com.tr). Besides, news such as Escondida, the world’s largest copper mine, was expecting its output to dip 5-10% on lower ore grades aided a rally in copper www. erbakir.com.tr). A halt in production, due to labour disputes at Collahausi (Chile), the world’s third-largest mine, helped metals edge up. Zinc prices also recovered as China’s third-largest zinc producer closed down its smelter to comply with government pollution investigation in October 2010, the full recovery could not materialize in early 2010. Finally, a rally led copper futures prices on MCX to touch an all-time high of Rs. 439.80 in the final trading session of the year. MCX base metals futures prices (in Rs./kg) - 2010 Expectations of Chinese monetary tightening Source: Metastocks Copper - LHS Zinc - RHS Annualised Volatility Volume (in lots) Copper MCX (1 tonne) Rs/ kg 343.95 439.80 284.10 439.50 20.70% 31,341,022 LME (25 tonnes) US$/ Tonne 7,405.00 9,687.00 6,037.50 9,600.00 28.82% 29,665,041 Zinc MCX (5 tonne) Rs/ kg 118.70 123.20 74.35 109.00 29.25% 11,927,214^ LME (25 tonnes) US$/ Tonne 2,588.00 2,736.00 1,577.00 2,454.00 39.77% 17,911,059 Source: Respective exchanges’ website; ^ all contracts-all variants 29-Jan-10 26-Feb-10 26-Mar-10 23-Apr-10 21-May-10 Greek debt Crisis 18-Jun-10 16-Jul-10 labour union disputes at Collahausi, Copper mine 13-Aug-10 10-Sep-10 labour union disputes at Collahausi, Copper mine 8-Oct-10 5-Nov-10 3-Dec-10 31-Dec-10 125 115 105 95 85 75 98 Commodity Insights Yearbook 2011
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INDIAN ECONOMY â AN OVERVIEW - MCX

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INDIAN ECONOMY â AN OVERVIEW - MCX