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  • MODERATOR:

    Hello and welcome to the webchat with Gnanasekar Thiagarajan, Director, Commtrendz Research on 'Outlook on commodities'



  • V

    VIPUL

    Global crude oil prices have been hovering above $40/barrel. While reports suggests that oil producers are likely to meet again to curtail output what is your call on commodity in the near term? What is the target by the end of the calendar year when winter demand sets in?

    GNANASEKAR THIAGARAJAN

    Vipul hi, We have to look at crude in the bigger picture for direction going forward. On the supply side nothing much has changed except that Shale oil supply has been curtailed to a great extent. Demand though is picked up due to low prices from consuming countries, some of them even storing for future needs. global oil demand grows in a healthy pace, led by India, China and other emerging countries. At the turn of this year or by early 2017 at the latest, we expect oil markets to rebalance and the prices to also to get rebalanced. We see markets focusing more on demand rather than supply and output freeze and any hint of increase in demand could send prices skyrocketing, while any adverse news on the supply front could be conveniently ignores as it is might be priced into it already. So, we expect $51-52 being tested in the coming quarters or even higher to $60-61 towards the winter season.


  • J

    JATIN

    The ECB in its policy review on Thursday has kept key rates unchanged. What could be the possible impact on gold in the near-to-medium term? What is the possible range for the yellow metal in the second half of 2016?

    GNANASEKAR THIAGARAJAN

    Draghi struck a more guarded tone than in an earlier press conference, although reiterated his pledge to act if there were to be an upset to the economy. Actually, gold is still vulnerable for a fall, but its usefulness as a safe-haven asset has been proven time and again. My feeling is that if the Fed were to get more hawkish and start hiking rates, the biggest beneficiary of the monetary stimulus so far is the equity markets, which will tumble and investors will move to safer assets. So, the trend is largely on the bullish side for gold irrespective of what the central banks do. The range we are working is $1165-$1350.


  • J

    JATIN

    What is your call on silver which finds application in several industrial goods in wake of China's sluggish economic growth? What is your medium term outlook on the precious metal?

    GNANASEKAR THIAGARAJAN

    There is a clearly a turnaround in Chinese growth, which is one of the reasons for this sudden spurt in Silver prices. Gold has rallies almost 15 percent in 2016, while Silver under performed so far, making it more cheaper than gold in the precious metals complex. This sentiment could ideally push Silver towards $25 in the 2016. Presently, it is around $17.


  • K

    KABIR

    Reports suggest that global copper is heading for the fifth year of price decline? What is your call on the commodity and are the trends similar in the domestic market too?

    GNANASEKAR THIAGARAJAN

    The year began with copper prices looking more vulnerable for a fall. But recent activity in China and a weakening dollar has kept the funds busy chasing risky assets. And, since metals are an economic barometer of strength/weakness, any signals of economic recovery both in the emerging markets and the U.S is underpinning sentiment for Copper prices both in the domestic as well international markets. We expect LME Copper to test $5300-400 in the coming months.


  • P

    PRITAM

    What is the demand outlook for cotton in the domestic market and what price levels do you see post the monsoon?

    GNANASEKAR THIAGARAJAN

    We are working with domestic consumption of around 3 to 3.25 lakh bales out a possible supply of around 425-50 lakh. The trend looks quite positive for cotton going forward. I personally see prices testing 18,200 in futures, which is currently around 17,200.


  • N

    NARESH

    Recent trends indicate that edible oils are rallying. What is your outlook on palm oil and soya bean refined oils?

    GNANASEKAR THIAGARAJAN

    The edible oil complex is on fire due to weather reasons. It is difficult to go against the trend, in this case very bullish. My belief is both the oils are set to test yearly highs in the coming months. Any corrective dips is an opportunity. Specifically Sunflower has been lagging in this entire rally, and even that could start rising after a correction in prices.


  • N

    NARESH

    What is your outlook on steel prices in the global and domestic markets for rest of the calendar year 2016?

    GNANASEKAR THIAGARAJAN

    The latest price hike simply followed a significant jump in international iron ore prices after signs of rising demand for steel in the world market, which has been the main concern so far. The recovery should continue provided there are no economic hurdles. Since, China is recovering, and that was one of the main reasons for the Fed to pause it's rate hike. But, as this recovery progresses questions will be raised on the Fed's timing again, which could potentially dent the recovery in steel prices.


  • G

    GIRISH

    Zinc prices have been firming up since January. What is your take on the commodity for rest of the calendar year?

    GNANASEKAR THIAGARAJAN

    The steel prices have been on the rise in China and both Zinc and Nickel are expected to benefit from it. Also, recent steps by China to rekindle demand through rate cuts and monetary stimulus seems to be working as manufacturing and property prices are on the rise. So, I think we have seen a bottom in base metals, at least for now. The biggest risk is the Fed and its monetary tightening that could derail this recovery.


  • M

    MUKESH

    From a trading point of view which are the active commodities that one can trade for the short-to-medium term?

    GNANASEKAR THIAGARAJAN

    Mukesh Hi, As it is Commodity trends are short to medium-term in nature due to the cyclical nature of it. It is better to stick with the liquid ones mainly like the Non-Agri commodities. But, there are certain specific commodoties in there agri space with an international benchmark that is also quite liquid. Like, Edible oils and Cotton.


  • S

    SANDESH

    After a prolonged strike by jewellers and drought the demand season is coming to an end. With Indian demand weak, do you see that impacting returns of gold in immediate future? At what price level can one buy?

    GNANASEKAR THIAGARAJAN

    Indian demand will come around. Our love for precious metals is ever lasting. But, as you rightly said, due to weak monsoon and to some extent jeweller's strike demand has been impacted. But, this has not had a negative impact on prices so far due to a pick up in investment demand during the same period. I think anywhere near $1165-75 looks like a good level if prices drop.


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