MCX COMMODITY MARKET NEWS REPORT - 20 SEP 2016

FED:

All eyes are focused on the U.S. Federal Reserve and Bank of Japan policy decisions scheduled for Wednesday. 

Those looking for a December rate hike are hoping the Fed delivers a “hawkish” tone in its statement. The general feeling is that if Fed Chair Janet Yellen wants to guide the market for a rate hike later this year, she’s going to have to be more specific in her assessment of the economy, rather than just saying the decision will be data dependent.

The consensus says the Fed will leave rates unchanged in September. This news will be bullish for gold.

BANK OF JAPAN:

The BOJ is expected to be more aggressive than the Fed. There is speculation the central bank may take interest rates deeper into negative territory. There is some controversy over this possible decision, however. Many traders feel that since lowering rates into negative territory in January hasn’t worked then why do it again?

Oil and metal producers nevertheless remain supported and markets are going optimistic into this week's key central bank decisions.

Gold could rally if the BOJ lowers negative interest rates further. Gold traders like negative rates because it makes the precious metal a more attractive investment. 

CRUDE OIL:

Members of the Organization of Petroleum Exporting Countries (OPEC) had about 1.1 million barrels a day of spare production capacity last month.

Angola pumped more that summer, while Saudi Arabia increased its own production by 1.35 million barrels a day.

ALUMINIUM:

China Aluminum International Trading Co. (Chalco Trading) further cut aluminum prices it offered in major markets today after big cut in previous day, it said on its WeChat.

LME aluminum will move between USD 1,570-1,590/mt today, with support at the 5-day and 10-day moving averages.

LEAD:

LME lead should range between USD 1,940-1,960/mt on Tuesday and SHFE 1611 lead will move at RMB 14,350-14,550/mt.

ZINC:

China Zinc Product Output Slid 2.8% in August but to Rise in September.

NICKEL:

Philippines is likely to suspend more Nickel mine operations as it does not meet environmental standards. The country may suspend at least 10 more mines, said minister in charge of mining to Reuters. 

The country had already suspended operations of 10 mines of which eight of them are nickel producers.

The suspension of mines are due to environmental lapses and 30 more mines are still operating in the country, Reuters report said.

Philippines is the world's top supplier of nickel ore and the suspensions would disrupt supply of nickel ore not only to China but to other markets as well. The mining suspensions are resulting in the surge of prices globally.

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