Commodities Lecture Notes PDF

Overview of Commodities – Agricultural Commodities Session Outline Introduction Classification of Agricultural Commodities International trade in Agriculture – Commodities and Countries Major Agricultural Commodities in India Major Producing States in India Agricultural...

Overview of Commodities – Agricultural Commodities Session Outline Introduction Classification of Agricultural Commodities International trade in Agriculture – Commodities and Countries Major Agricultural Commodities in India Major Producing States in India Agricultural Marketing and Spot Markets in India Factors Affecting Spot Prices of Agricultural Commodities in India Seasons and Crops - Seasonality in Agricultural Commodity Prices Market Response and Expectations Factors Influencing Prices Potato, Rubber, Soybean, Soybean Meal, Refined Soyoil, Cotton  Hard Commodities vs Soft Commodities Hard Commodities Soft Commodities - include natural resources - include products that must (metal ores, oil reserves, be grown and cared for etc.) (agricultural produce and -They form the basis of the livestock) economic health of a VS - more volatile as their price- country (oil & coal setting mechanism relies on producing countries) multiple external factors. - Supply and demand for - production depends largely the products are largely on the environmental predictable due to its fixed conditions of a country. nature. - agrarian economies suffer more due to events such as climate change. Classification of Agri. Commodities Pulses Gram(Chana), Moong, Tur, Urad, Peas, Spices Masoor, and Red Chillies, Grains Other Lentils Black Pepper, Rice, Maize Turmeric, Jeera (Corn), Wheat, (Cumin), and other Coriander, Coarse grains Cardamom Agri. Commo Veg Oil Fiber dities Sunflower, Cotton, Jute Groundnut, Palm Oil, Soybean, Rapesee d (Mustard) Others Oil Seed & Meals Sugar, Jaggery Sunflower, (Gur), Castor Groundnut, Seed Soybean, Rapeseed (Mustard) Top 10 Agricultural Commodities  Agri. Products Production – Global Scenario The most prevalent group of crops across the world is cereals. Cereals cultivation exceeds 20% of global land area, or 61% of the total cultivated land. Wheat, maize, barley, rice, and millet are dominant over more than two thirds of the cropland of the world. Wheat is the most abundant crop, occupying 22% of the total cultivated area in the world. Oil-bearing crops are grown over 10% of the cropland. Pulses occupy 4% of the cultivated land and, as a group, they rank third in cultivation area, after cereals and oil-bearing crops. Soybeans occupy 5% of the world’s croplands. Potatoes and cassava, (tubers) together cover 4% of the world’s total harvested area. Cotton is cultivated over 3% of the croplands. Rice Producing Areas Wheat Producing Areas Pulses Producing Areas Soybean Producing Areas Sugarcane Producing Areas Potato Producing Areas Cotton Producing Areas Top Agricultural Producing Countries Top Agricultural Producing Countries Products First Second Third Coffee Brazil Vietnam Colombia Cotton China India U.S. Maize (Corn) U.S. China Brazil Potato China India Russia Pulses (Total) India China U.S. Rice China India Indonesia Rubber Thailand Indonesia Malaysia Soybean U.S. Brazil Argentina Sugarcane Brazil India China Tea China India Kenya Wheat China India Russia Major Exporters of Food & Agri. Products Major Importers of Food & Agri. Products  Overview of Agri. Sector in India (1/2) India since ages has been known to be an agrarian country. During the mid-1960s, India witnessed a shortage of agricultural products that later on led to the green revolution. Agriculture sector had a growth rate of around 2.7% in the last 50 years. Indian agriculture and allied activities consist of 54.6% of the population (census 2011) Contributes 14.4% to the country’s Gross Value Added for the year 2018- 19 (Current prices). Agricultural export from India reached US$ 38.54 billion in FY19 and US$ 28.93 billion in FY20 (till January 2020), and it is 10.5% of total exports of the country. India is among the 15 leading exporters of agricultural products in the world.  Overview of Agri. Sector in India (2/2) India since ages has been known to be an agrarian country. India is known as the “The Home of Spices”. India is the leading producer, consumer and exporter of spices in the world. India is the second largest producer consumer and exporter of cotton. India plays a crucial role in cotton and sugar. Surplus or deficit in India tilts the global prices of sugar. Currently, India is one of the largest producers of cereals and grains. India is the second largest rice producer after China with a share of 20% of world production. India is the world’s largest producer and consumer of pulses. Of the total pulses production, Chana contributes more than 40%.  India’s Trade in Agricultural Commodities Total Exports – USD 468 Billion Total Imports – USD 620 Billion Agri Exports - >Rs 1,14,057 Cr Agri Imports - >Rs. 1,25,526 Crores Imports - Crude Oil – USD 102 Billion Gold – USD 28 Billion Vegetable Oil – USD 10 Billion 2019-20 2019-20 Commodity Rs. Crore Commodity Rs. Crore Basmati Rice 31025.88 Vegetable Oils 68558 Buffalo Meat 22661.12 Fresh Fruits 14137 Non-Basmati Rice 14352.75 Pulses 10221 Fresh Fruits 5449.75 Spices 10188 Groundnut 5096.39 Cashew 9026 Misc Processed Items 4677.06 Natural Rubber 4927 Fresh Vegetables 4616.36 Misc Processed Items 2634 Processed Fruits & Juices 4590.61 Sugar 2473 Cereal Preparations 3871.59 Cocoa Products 1834 Guargum 3185.19 Other Oil Seeds 1528 Sectoral Share in GVA at Current Prices (2011-12 series) Sectoral Share in GVA at Current Prices (2011-12 series) Changes in the Share of Area Under Major Crops Changes in the Share of Area Under Major Crops Largest Producing States of Important Crops (2016-17) Largest Producing States of Important Crops (2016-17) Pulses – Production & Consumption Centres Soybean: Area, Production & Yield in Major Producing States (2016-17 & 2017-18) Soya Agri Zone Comprising of Key Producer States Cotton: Area, Production & Yield in Major Producing States (2016-17 & 2017-18) Potato: Area, Production & Yield in Major Producing States (2016-17 & 2017-18) Classification of Agricultural Products Kharif Rabi Zaid  Kharif Crop Sowing for the crops is done from April to July and harvesting is done from September to December. The crops that are sown in the rainy season are called kharif crops. (also known as the summer or monsoon crop) in India. Kharif crops are usually sown with the beginning of the first rains in July, during the south-west monsoon season. The main monsoon season in India runs from June to September and the southwest summer monsoon occur due to a low pressure area that's caused by the extreme heat of the Thar Desert and adjoining areas, during summer. Paddy Guar Cotton Chilly Jowar Urad Maize Arhar Bajra Groundnut  Rabi Crop The crops that are sown in the winter season are called Rabi crops (also known as the "winter crop") in India. Sowing is done from October to December and harvesting season is from March to May. Crops that are grown in the winter season, from November to April are called Rabi Crops. Some of the important rabi crops are wheat, barley, peas, gram and mustard. States of north and north eastern part of India are important production centers of wheat and other rabi crops. Availability of precipitation during winter months due to the western temperate cyclones helps in the success of these crops. Wheat Maize Gram Mustard Cumin Coriander Fenugreek Onion Tomato Potato Oat  Zaid These crops are grown mainly in the summer season during a period called the ' Zayad crop season ’. Crops grown on irrigated lands, which do not have to wait for monsoons, in the short duration between Rabi and Kharif crop season, mainly from March to June, are called Zaid crops (also written as Zayad crops). Sowing for the crops is done in March and harvesting is done in June. They require warm day weather for major growth period and longer day length for flowering. Its main products are seasonal fruits and vegetables. Muskmelon Watermelon Guards Cucumber  Crop Seasons Period Crops Crops Cropping Cultivated Cultivated Season (Northern (Southern Sowing Harvesting States) States) Rice, Cotton, Rice, Maize, Beginning of Kharif Apr - May Bajra, Maize Ragi, Jowar, Nov Jowar, Tur Groundnut Wheat, Gram, Rice, Maize, End of Oct Or Rapeseeds, Ragi, Rabi Beginning of March Mustard, Groundnut, Nov Barley Jowar Rice, Vegetables, Zaid April June Vegetables, Fruits, Fodder Fodder  Seasonality and Its Effects on Crop Markets Seasonality is the phenomenon that causes crop prices to behave in a relatively predictable manner, year in and year out. There are two major components to crop seasonality: – The harvest lows, followed by – The post-harvest rally Sometimes seasonality is a strong element of the pattern of crop consumption (domestic usage as well as exports). Forward price bids at harvest generally are higher than harvest prices. In most cases, seasonality is restricted to one production cycle. Many other factors besides seasonal fluctuations in supply and demand affect crop prices (E.g. Price trends). In commodity analysis, it is common to separate grain seasonals into two groups: – Short crop years – years in which yields fell significantly below the trend because of drought, freezes, floods, lack of growing degrees, etc. – Normal years – all years other than short crop years.  Soybean: Seasonality Seasonal Price Trend in Soybean (CBOT, U.S.) 470 460 450 440 430 420 Price - US$ per MT 410 400 390 380 370 360 350 340 330 Seasonal Period 2015-16 2016-17 2017-18 2018-19 2019-20 Source: Indexmundi  Soybean Soybean is economically the most important bean in the world, providing vegetable protein for millions of people. Uses range from human foods to animal foods, to industrial products, to ingredients, and to precursor materials. A key step to utilizing soybeans is to separate oil from protein and fiber. Soybean has emerged as an important commercial crop and soy oil has wide industrial applications. India ranks fifth in soybean production worldwide. Soybean is grown in Maharashtra, Rajasthan, Andhra Pradesh, Karnataka and Chhattisgarh. Soybean arrivals are highest in September and October with a corresponding decline in prices. Soybean - Price Influencing Factors Demand &Policies of Economic Importers U.S. /Brazil Variables Production High Chinese Crude Oil Price demand Prices Influencin g Factors MSP Index (Minimum Commodity Support Fund Price) Corn Climate Effect Price Correlation of CPO with Crude Oil  Cotton The use of cotton for fabric is known to date to prehistoric times. Between 2000 and 1000 BC cotton became widespread across much of India. Cotton is essentially grown for its fibre, which is used the world-over to make textile. Cotton fibre is one of the most important textile fibres, accounting for around 35% of the world's total textile fibre used. Cotton seed is crushed to make cottonseed cake, which is used in livestock feed; and cottonseed oil which is the 5th major edible oil consumed in the world. Cotton is classified according to the staple, grade, and character of each bale. Cotton - Price Influencing Factors Demand & Policies of Importers Price of Economic Competing Growth Crops Crude Chinese Oil Stock- Prices Building Price Influencing Prices of USDA Factors Synthetic Reports Fibres Seasonal US $ Factors MSP Weather  Natural Rubber Natural Rubber is a perennial crop, which requires about 6 to 7 years from the date of planting to harvest. The production of Natural Rubber peaks during October to March and from April to Sept the production will be comparatively low. India is the 4th largest natural rubber producing country of the world, producing about 9% of the global output. Rubber area in India is highly concentrated, ~80% in Kerala. Imports of natural rubber of all varieties/forms are limited to two sea ports of Chennai and Mumbai. In year 2017-18, total rubber production in India at ~694,000 tonne with average yield of 1449 kg/hec. Import and export of rubber has been pegged at 5072 tonne and 4,69,760 tonne respectively during 2017-18. Block rubber is marketed with BIS specifications (IS4588 - 1986) and this rubber is termed as Indian Standard Natural Rubber (ISNR). Natural Rubber - Price Influencing Factors Global Demand & Supply Situation International Automobile Market Prices Industry Int. Price China’s Natural Influencing Import Rubber Factors Policies Agreement China’s Synthetic Production & Rubber Consumption Production Climate Price Correlation of NR with Crude Oil  Potato Potato (Solanum tuberosum L.) popularly known as ‘The king of vegetables’, is 4th most important food crop in India after rice, wheat and maize. The Portuguese introduced potatoes, which they called 'Batata', to India in the early 17th century when they cultivated it along the western coast. British traders introduced potatoes to Bengal as a root crop, 'Alu'. By the end of the 18th century, it was cultivated across northern hill areas of India. Today, India ranks as the world's third largest potato producing nation. In India, the aloo is not primarily a rural staple but a cash crop that provides significant income for farmers. Potato varieties suited to the country's climate are grown on the Indo-Gangetic plain during the short winter days from October to March. Regional Distribution of Potato Cultivation in India Potato - Price Influencing Factors Production Area Production & Storage Yield Price Urban Labour Influencing Demand Availability Factors Transportion Input Cost Charges Climate Agmark grade standards of Table Potato Major Domestic Markets: Soybean, Cotton, Natural Rubber, Potato Soybean Indore, Bhopal, MP Natural Rubber Ankola, Latur, Kottayam, Kochi, Maharashtra Kozhikode, Kannur in Kerala Cotton Potato Warangal, Adilabad, Agra, U.P. Telangana Khatra, WB Rajkot, Kadi, Mundra, Gujarat Shadabad, Sirsagunj, Haldavani, Saranpur Yaatmal, Jalna, Maharashtra  Useful References a) https://commerce.gov.in/ b) http://mospi.nic.in/ c) https://www.caionline.in/ d) https://www.indexmundi.com/ e) USDA:https://www.ers.usda.gov/amber-waves/2016/may/major-factors- affecting-global-soybean-and-products-trade-projections/ f) https://www.potatopro.com/india/potato-statistics g) http://www.anrpc.org/ Overview of Commodities – Metals Session Outline Introduction to Base Metals Major Sources of Base Metals Industrial uses of various Base Metals Major Base Metal Markets in the World Supply Chain Factors Influencing Base Metal Prices Overview of Base Metals Markets in India Introduction to Precious Metals Major Producers and Consumers of Gold Price influencing factors of gold Role of London Bullion Markets Association (LBMA) on Prices, Standards and Refining Producers and Consumers of Silver LBMA and Silver Prices Silver and its various uses Overview of gold & Silver Markets in India Aluminum Factsheet Aluminum is an excellent reflector of heat, light and electromagnetic waves Aluminum's light weight and strength makes it particularly suitable for all means of transportation Aluminum's thermal conductivity is remarkable and promotes its use in diverse manufacturing sectors One of the most versatile of all the metal. All known foundry methods may cast aluminium Aluminium of corrosion resistant Can be alloyed with diverse metals to improve certain properties. Aluminium in its purest form and certain alloy are excellent electricity conductors Aluminium takes colour well and is suitable for all types of printing Various Forms of Aluminium Aluminium Forms Flat-rolled Aluminium Castings Extrusions Forgings Rod and Bar Utensils Wire Ingots Pigments and Powder Aluminium Production Process Global Aluminium Production – Major Producers  Key Global Players Rusal Rio Tinto Alcan Inc Nosk Hydro ASA Emirates Global Aluminium PJSC Vedanta Limited Nalco Balco Hindalco Aluminium Bahrain (Alba)  Domestic Aluminium Balance Sheet India Primary Vs Secondary Aluminium – 3.7 MMT ( 77%) Vs 1.1 MMT (23%) India: Basic Customs Duty on Aluminium Bars and Rods – 7.5 % IGST – 18 % Social Welfare Surcharge – 10% Indian Aluminium Production Vs Global – A Comparative Outlook Major Primary Aluminium Producers in India 1.29 Mill Tons 4,40,00 Tons (19%) (6%) 3.68 Mill Tons (53%) Aluminium Consumption – India Vs Global Aluminium Historical Price Trend and World GDP Global Aluminium Stocks and Prices  Aluminium Vs Energy To produce one tonne of primary aluminium metal, a smelter requires 14500 units of power, which is generated by burning 11.7 tonnes of coal. Trade Tensions and Aluminium Prices Rusal Ban and China Export Tax London Metals Exchange three-month futures for aluminum have jumped to $2,245 a metric ton as of Wednesday's settlement, up 13% from April 6, 2018, settlement at $1,988 Copper Factsheet Global Copper Reserves Copper Production Process Copper in Various Forms Global Refined Copper Production – By Major Countries World Refined Production Trends Global Trade in Copper and Copper Products Copper Stocks, Price & Usage Copper Uses – India Vs Global  India Copper – Balance Sheet 1b Significant Growth Potential in C I dia Pe Ca i a C e C m i c e l l D Expected to increase to 1.5 kg by 2025 R (kg/person) 5.82 5.64 0.60 C China USA India 1b Significant Growth Potential in Copper Consumption in India C s m Source: Ministry of Mines, Annual Report 2015-16 S Refined Copper Consumption G I dia Pe Ca i a C e C m i c e l l DomesticWorld Copper Consumption to IncreaseIndia C Telecom Expected to increase to 1.5 kg by 2025 Transport 7% Others 5% 2% Refined Copper Consumption Defense 3% Others Electrical (kg/person) Electrical Engineering 28% (Lakh tonnes) 34% 17% 8% 5.82 5.64 6.7 6.5 7.0Consumer 5.6 Building & Building & 6.3 Durables 5.0 Engineering Constrution 48% Construction 8% Transport 11% 8% 24% India’s copper consumption is concentrated in Electrical industry in contrast with the rest of the world which is concentrated in Building and S Construction 1 0.60 Source: Ministry of Mines, http://mines.nic.in/ 2 FY14 FY15 FY 16 FY17 FY18 FY 19 3 Copper consumption grown at a CAGR of 5.8% from FY13 to FY18. China USA India Copper demand in electrical segment is growing due to demand in infra sector as a result of affordable housing schemes, rural electrification and more urbanization. India Copper Imports  Growth Drivers Antimicrobial Copper is gaining popularity as an alternative to plastic in medical applications, such as sterile table tops an d medical cart handles Aquaculture Marine aquaculture nets and pens made with copperalloy mesh are emerging as an effective solution to impor tant problems facing the near‐shore fish farming industry Electrical Propulsion Powering EVs require changes to the electrical infrastructure that will benefit from copper Renewable Energy Copper plays important roles in clean energy systems from wind to solar thermal plants Seismic Energy Dissipation Earthquake damage can be controlled through the use of copper‐based devices that absorb energy to li mit building motions Ultra‐conductive Copper Components Progress is being made in the methods of incorporating nanocarbon materials into copper in a way that promises to deliver large efficiency improvements in electrical energy transmission and distrib ution networks Electrical Vehicles (EVs) To reduce carbon emissions. Rising number of EVs is expected to result in increased copper usage.  Copper and Electric Vehicles EVs contain typically four times copper than that of conventional vehicles - Batteries - Windings - Copper Rotors - Wiring - Charging Infra 2018 – 5 Mill EVs estimated Charger – 0.7 kg Fast Charger – 8 kg World GDP Vs Copper Prices Impact of Stocks on Copper Prices Nickel Factsheet  Nickel – Profile Nickel occurs in nature principally as oxides, sulphides and silicates. Nickel is the fifth most common element on earth with its highest concentrations found in the core and the lowest in the earth´s crust. Nickel ores are mined in about 33 countries on all continents, and are smelted or refined in about 30 countries. Primary nickel is produced and used in the form of ferro-nickel, nickel oxides, NPI, nickel sulphate and other chemicals, and as more or less pure nickel metal. Nickel is also readily recycled in many of its applications, and large tonnages of secondary or "scrap" nickel are used to supplement newly mined ores.  Nickel – Market Overview Nickel occurs in nature principally as oxides, sulphides and silicates. Market for nickel is expected to expand at a CAGR of more than 5% (2020-25). Major factor driving the market studied is rising demand for corrosion resistant alloys in the oil & gas industry. Volatility in the supply demand scenario is expected to hinder the growth of the market studied. Growing popularity of electric vehicles is likely to act as an opportunity in the future. Asia-Pacific dominated the market across the globe with the largest consumption. Nickel - Fundamentals Supply Mine production: Growth is set to slow this year. Refined production to grow at a stronger pace on higher ore availability from Indonesia and an attractive international price. Demand Robust demand outlook amid strong stainless steel production and production of car batteries in EVs. The biggest winner of EV revolution – battery chemistries will be increasingly nickel-intensive. Estimated World Nickel Ore Reserves World Nickel Mine Production Trends World Nickel Usage (1995-2017) Global Stainless Steel Production (in 1000 MT) Primary Nickel Producers  Nickel Usage Nickel is used in over 300,000 products for consumers in form of over 3000 alloys. Primary Nickel Metal Market Segmented in to: o Stainless Steel o Nickel Alloy o Plating o Battery Material It is also a high-end material used in construction, automobiles, petrochemicals, fabrication and welding, power and renewable energy, electronics, transportation and water sectors. Stainless steel industry is the biggest user of primary nickel and scrap nickel followed by alloys.  Nickel Usage Stainless steel industry accounted for approximately 75% of all primary nickel usage and also consumed nearly 900,000 tonnes of scrap nickel (2017). The battery industry accounted for 3.7% with the remainder used by the other above-mentioned industries. Nickel – Competitive Landscape India Nickel Imports (country-wise) India Nickel Imports (year-wise)  Price (US$/MT) 13,750 33,750 53,750 23,750 43,750 63,750 3,750 Jul/00 Feb/01 Sep/01 Apr/02 Nov/02 Jun/03 Jan/04 Aug/04 Mar/05 Oct/05 May/06 Dec/06 Jul/07 Feb/08 Sep/08 Apr/09 Nov/09 Jun/10 Jan/11 Aug/11 Nickel Price (LME) Mar/12 Oct/12 May/13 Dec/13 Jul/14 Feb/15 Sep/15 Apr/16 Nickel Price Movement (LME) Nov/16 Jun/17 Jan/18 Aug/18 Mar/19 Oct/19 May/20  Price (US$/MT) 13,500 17,500 11,500 15,500 19,500 9,500 7,500 Aug/15 Oct/15 Dec/15 Feb/16 Apr/16 Jun/16 Aug/16 Oct/16 Dec/16 Feb/17 Apr/17 Jun/17 Aug/17 Oct/17 Dec/17 Feb/18 Apr/18 Nickel Price (LME) Jun/18 Aug/18 Oct/18 Dec/18 Feb/19 Apr/19 Jun/19 Aug/19 Oct/19 Dec/19 Feb/20 Nickel Price Movement & Stock Levels(LME) Apr/20 Jun/20 Zinc Factsheet  Zinc - Profile Zinc is a slightly brittle metal at room temperature and has a blue-silvery appearance when oxidation is removed. Zinc is a bluish-white, lustrous, diamagnetic metal, though most common commercial grades of the metal have a dull finish. Metallic zinc is produced by roasting the sulfide ores and then either leaching the oxidized product in sulfuric acid or smelting it in a blast furnace. A little more abundant than copper, zinc makes up an average of 65 grams (2.3 ounces) of every ton of Earth’s crust. Leading early 21st-century producers of zinc are China, Australia and Peru. At present, zinc is the world’s fourth most widely consumed metal after iron, aluminum and copper. It has strong anti-corrosive properties and is well connected to other metals. Used in many commercial industries and major uses of zinc metal are in galvanizing iron and steel against corrosion and in making brasses and alloys for die-casting.  Zinc – Mining Process The zinc mining process is conducted primarily underground, with more than 80% of all zinc extracted beneath the Earth’s surface. 8% of zinc is mined in open pits, with the remaining 12% being mined through both methods. Once it’s removed from the earth, the concentrate is roasted at a temperature of 950 degrees Celsius, causing zinc, sulfur and iron oxidization. After the zinc and iron oxides are reduced to powder form and leached with diluted sulfuric acid, the solution is neutralized and contaminants are removed via filtration. In the foundry, the zinc goes on to take its final form. Zinc Smelting Zinc – Smelting Process World Zinc Production & Consumption (000 tonnes)  World Zinc Production & Usage (000 tonnes) Production China occupies the first place in case of mine production accounting for about 34% and 40% in terms of metal production. Australia takes the second place with about 12% of mine production followed by Peru with 10%. U.S. with 6% and India with 5.5% share in total mine production in the world.  Uses of Zinc Manufacturing , construction material Solar cells, nuclear Alloy (mixed reactors with copper to form Brass) Micronutrients Galvanizing for people, Uses of (Iron or steel plants and Zinc to avoid animals rusting) Oil based paints, Die casting additive to industry rubber Cosmetics and pharmace uticals  Domestic Zinc Market There is huge end-demand for zinc in India, particularly since the galvanizing sector continues to deliver strong growth. Country’s investment in infrastructure is also driving end-demand for zinc, and this momentum is likely to continue for many years. Vedanta Limited is India’s largest and world’s second largest zinc miner. Vedanta Ltd. zinc operations currently hold 72% market share in India’s Zinc industry. Vedanta Ltd owns 64.9% stake in Hindustan Zinc Limited (HZL), while the GoI retains a 29.54% stake. India’s zinc ore resources are estimated at 385 million tonnes. There are two primary producers of Zinc. – Hindustan Zinc Limited (HZL), – Binani Industries, with smelting capacity of 38000 tonnes per annum India Zinc Market Segmentation India Zinc Imports (US$ million)  Zinc – Price Influencing Factors Global supply of zinc is a major price determining factor. Substitutes can also greatly influence the demand for zinc. Metals such as aluminum and magnesium are alternatives as die-cast materials. Production and refining methods for zinc are also influencing prices as these processes are becoming ever increasingly cost-effective. This will increase the supply of available zinc and thus lower the price of this metal. Limited remaining deposits can cause difficulties on the supply of zinc in the future. Zinc has a lower return yield which is why very limited budget is spent on the exploration of new zinc deposits.  Price (US$/MT) 1,000.00 2,500.00 3,500.00 4,500.00 1,500.00 2,000.00 3,000.00 4,000.00 5,000.00 500.00 0.00 Jul/00 Feb/01 Sep/01 Apr/02 Nov/02 Jun/03 Jan/04 Aug/04 Mar/05 Oct/05 May/06 Dec/06 Jul/07 Feb/08 Sep/08 Apr/09 Nov/09 Jun/10 Jan/11 Aug/11 Mar/12 Zinc Price Movement (CME) Oct/12 May/13 Dec/13 Jul/14 Feb/15 Sep/15 Zinc Price Movement (CME) Apr/16 Nov/16 Jun/17 Jan/18 Aug/18 Mar/19 Oct/19 May/20 Zinc Price Movement & Stock Levels(LME) Zinc Stocks & Prices Lead Factsheet  Lead - Profile Lead is mentioned often in early biblical accounts. The Babylonians used the metal as plates on which to record inscriptions. The Romans used it for tablets, water pipes, coins, and even cooking utensils; lead poisoning was recognized in the time of Augustus Caesar. Lead metal can be classified as either primary or secondary. Primary lead is produced directly from mined lead ore; secondary lead is produced from scrap lead products (such as automobile batteries) which have been recycled. Annual production is approximately 8 million tonnes, half of which is primary lead. It is rare to find pure deposits of lead in nature though. The majority of the deposits are mixtures of minerals, hence lead ore is usually obtained as a byproduct of other metal mining such as zinc, silver or copper. In fact, lead ore is a main source of silver and contributes substantially towards the world's total output. Lead Smelting Process Lead Smelting Process World Lead Production & Consumption (000 tonnes) End Use of Lead  Domestic Lead Market Lead is exported as well as imported both in the form of concentrates as well as various forms such as: Lead waste Lead Refined lead Scrap Worked lead and scrap unrefined unwrought Lead and alloys Lead and alloys Antimonial Pig lead Alloys including scrap unwrought lead Major export destinations: China for ore & concentrates while South Korea, Saudi Arabia and Malaysia for metal alloys. Major import sources: Ireland, South Africa, Senegal and Morocco for ore & concentrates whereas UK, UAE, Australia, South Korea, and US for Lead and alloys. – Major industrial sectors using Lead in India are: – Batteries with 74% share – Pigments & other compounds with 9% – Rolls & extrusions with 8% – Alloys with 3% Domestic Lead Production (in 1,000 mt) Lead – Price Influencing Factors Largely governed by Int. markets & Price trends Global Govt. Economic policies on Conditions Price trade Influencing factors of Lead Geopolitical Growth and conditions of performance major of major producing utilizing countries industries  Price (US$/tonne) 1850 2850 1350 2350 3350 3850 850 350 Jul/00 Feb/01 Sep/01 Apr/02 Nov/02 Jun/03 Jan/04 Aug/04 Mar/05 Oct/05 May/06 Dec/06 Jul/07 Feb/08 Sep/08 Apr/09 Nov/09 Jun/10 Lead Price Movement (CME) Jan/11 Aug/11 Mar/12 Oct/12 May/13 Dec/13 Jul/14 Feb/15 Sep/15 Apr/16 Lead Price Movement (CME) Nov/16 Jun/17 Jan/18 Aug/18 Mar/19 Oct/19 May/20 Lead Price Movement & Stock Levels(LME) Lead Price Movement & Stock Levels Base Metal Market - Competitive Landscape  Steel - Overview At 51.3%, China is the world’s largest producer of steel. India was the world’s second-largest steel producer with production standing at 111.2 million tonnes (MT) in 2019. With a total contribution of 5.9%, India has overtaken Japan to become the second largest producer of steel. Production of steel has kept pace with its global usage. In 2018, the global usage of steel stood at 1712.1 MT, up from 1632.5 MT in 2017. Per capita consumption of steel increased to 224.5 kg in 2018 from 216.3 kg in 2017. Since 2008, domestic production has gone up by 75% while domestic steel demand has grown by around 80%. Domestic export and import of finished steel stood at 8.24 MT and 6.69 MT, respectively, in FY20P. World Crude Steel Production (Million Tonnes) Steel – GDP & Production Rate Comparison Domestic Steel Industry – Journey So Far Domestic Crude Steel Production (Million Tonnes) Sector-Wise Domestic Demand for Steel Export value of base metals from India (FY2019) in US$ million Gold Ore Reserves by Countries Major Gold Producers Gold Refining Simplified Various Gold Products Historical Gold Price Movements Central Bank Reserves Current Global Gold Demand Trends India Gold Imports and Consumption  Gold Prices Movers and Shakers Global Crisis – Financial Crisis, Geopolitical Turmoils, Currency Crisis, etc. Inflation – Currency values may change based on inflation but what an ounce can buy commodities will stay stable Interest Rates – Lower rates – Investors prefer Gold and higher the rates investors chase debt instruments Currency Rate – Gold provides a proxy hedge to currency exposures Economic Instability – Investors flock to gold as value of paper money is instable Production/Demand/Consumption Central Bank Reserves - Central banks have been adding to gold reserves as growth slows, trade, geopolitical tensions rise, and some nations seek to diversify away from the dollar Jewelry Demand Gold Prices and Currency Rates Gold Price Vs Real Interest Rates India’s Gold Policy Regime Distractors of India Gold Prices Vs Global Prices India Customs Duty Regime Drivers of Gold Prices in India Global Mine Production of Silver in metric tonnes Leading silver producing countries worldwide (2018) in million Ounces Top Silver Producing Countries/Companies Export World Silver Supply & Demand in million ounces Silver Physical Surplus/Deficit World Silver Supply/Demand Silver Prices & US$ Silver Price Movements Gold/Silver Ratio Correlations Of Changes In Daily Prices Silver Prices Against Other Benchmarks Domestic Silver Imports Domestic Industrial Fabrication  Useful References a) https://www.icsg.org/ b) https://www.aluminum.org/ c) http://www.world-aluminium.org/ d) http://www.ilzsg.org/ e) https://www.worldsteel.org/ f) http://indsteel.org/ g) https://www.gold.org/ h) http://www.lbma.org.uk/ i) https://www.silverinstitute.org/ j) https://www.ibja.co/ k) http://ibma.co.in/ Overview of Commodities – Energy Products  Session Outline Introduction to Energy Products – Production & Consumption Crude Oil Variants Major Producers of Crude Oil and Natural Gas Energy Value Chain Overview of Energy Trading (Physical) OPEC and Non-OPEC Countries Major Consumers of Crude Oil and Natural Gas Factors Influencing Crude Oil Prices Historical Development and Current Trend in Crude Oil Prices Overview of Energy Markets in India Regulation of Marketing of Energy Products and Storage Coal Market in India – Coal Imports and Pricing of Coal Natural Gas – International Spot and Derivatives Markets Natural Gas and India – Production, Imports and Usage Natural Gas Trading in India Overview of Trading Mechanism Primary Energy Mix for India Source-wise Consumption of Energy (2018-19) The Decline of Coal in Three Charts Trends in Domestic Consumption of Energy OPEC Market Share Crude Reserves – Opec Vs Non-Opec Market Share – OPEC Vs Non-OPEC World Crude Oil Demand/Supply  Crude Oil Stocks and Storages - OECD Estimated Total Non-OECD Stocks Commercial and SPR – 2154 mb - China +FSU – 789 /310 mb- 60/62 days India SPR - 36.9 mb – 10 days Major Crude Oil Types Geographical Spread of Oil  Benchmarks for Crude Oil Brent – Roughly about 65 percent of physical trades reference Brent - refers to oil from four different fields in the North Sea: Brent, Forties, Oseberg, and Ekofisk - Light and sweet, making them ideal for the refining of diesel fuel, gasoline, and other high-demand product. - Waterborne production units makes it easier to transport West Texas Intermediate - the main benchmark for oil consumed in the United States - Oil extracted from wells in the U.S. and sent via pipeline to Cushing, Oklahoma - It is very light and very sweet (Sulphur -