OPEC’s crude output cut to balance market, domestic silver imports fall by 25% in 2018 & Commodity Index Futures may be a reality soon

12th Jan – 18th Jan

1. OPEC output cut balancing the market well

January 17, 2019

The Organization of the Petroleum Exporting Countries (OPEC) has reported in a monthly report that it has cut oil output by 751,000 barrels per day (bpd) in December to 31.58 million bpd in order to suitably balance crude oil supply. This is the biggest month-on-month drop in almost two years.

Source: Reuters

2. Indian silver demand drops to 40% in rural areas

January 17, 2019

Silver sales drop almost 40% in the rural areas of India as prices are looking expensive to farmers. Silver demand mainly comes from states such as Rajasthan, Gujarat and Maharashtra. As a result, silver imports also dropped by 25% in the year 2018 from the level of 5,200 tonnes a year ago. Poor rains during the peak monsoon season has affected the crop and resulted in less demand for precious metals jewelry .

Source: Economic Times

3. Aluminium price drop is affecting Indian manufacturers

January 17, 2019

The recent fall in Aluminium prices and rising input costs are denting Indian aluminium makers' profits. The cost of production of Alumina is below $2,000 per ton while LME Aluminium prices have dropped to $1,775 per ton and this has reduced the margins for producers such as National Aluminium Company (NALCO), Vedanta and Hindalco Industries. Their smelting cost is around $2,000 a tonne.

Source: Business Standard

4. Commodity Index futures a reality soon

January 17, 2019

Although still in the initial stages and a lot needs to be done towards introducing index based futures trading in India, this step is likely to be welcomed by market participants. Index futures in commodities will be traded by institutions and by physical commodity players who will be able to hedge their basket of commodities in the form of an index. SEBI has proposed allowing investors, small and medium-sized enterprises, mutual funds and institutional investors to trade in commodity index futures to begin with. Index constituents will be assigned weights by the exchange based on their production value and liquidity value. The size of the index futures contract is fixed at Rs. 5 lakh to begin with.

Source: Business Standard

5. Sovereign Gold Bond (SGB) scheme to end on 18th Jan 2019

January 16, 2019

The fifth series of the Sovereign Gold Bond (SGB) in the year 2018-19 is open for investment from 14th January and will remain open till 18th January, 2019. In the current issue, the price works out to be ₹ 3,214 per gram or per bond. The government has decided to offer a discount of ₹ 50 per gram to those investors applying online and the payment made through digital mode. For such investors, the issue price of each gold bond will be ₹ 3,164.

Source: Business Standard

6. Brent Oil prices up 20% as OPEC starts production cut in January

January 13, 2019

Oil prices are up more than 20 percent since hitting an almost two-year low in December. In spite of the US pumping a record 11.70 million barrels of oil per day, OPEC+ reduced production by 6,00,000 barrels per day in December and hopes to reduce 1.2 million barrels per day in January according to their latest OPEC meeting commitment to balance the oil market in Q1'19.

Source: Bloomberg

7. Brent Oil is forming a bottom around $60 a barrel according to top oil producers

January 12, 2019

As per reports, two big producers, Italy's top oil producer, and Oman's energy minister predict Brent to trade between $60-$70 a barrel this year. In the recent OPEC meeting, Russia along with Saudi agreed to reduce oil output by 1.2 million barrels per day, and this supported the oil market and Brent oil prices were back to $60 per barrel with a nearly 20% recovery from the recent lows of $49.90 per barrel.

Source: Business Standard

8. India's oil imports from Iran fell by 41 percent in December

January 11, 2019

Indian oil imports from Iran remain at 3,02,000 bpd, which is an almost 41% drop. Indian oil imports from Iran are dropping after US implemented its sanctions on Iran from November 4th last year. However, India has received some sanction waivers from the US for the next six months along with 7 other nations and has been allowed to make rupee payment in escrow account under Oriental Bank of Commerce for oil imported from Iran.

Source: Economic Times