MCX Commodity Market News Updates - 28 JULY 2016

Zinc

Zinc investors have been drawn in by the narrative of mine closures and a resulting tightening of the supply chain. As zinc prices weakened over the past three years,

more than 1.5 million metric tons of mine capacity was either idled or closed permanently.

Nickel

In the case of nickel, the supply shortage comes as the new mining minister in the Philippines, Regina Lopez, said that there would be a ban on fresh mining exploration in the country for a month while all existing mines are being reviewed. At present, the Philippines is the top supplier of nickel ore to China and these new developments have sparked concerns about ore supply to China.

On top of the supply shortage, refined nickel imports in China have surged by 189% to a record 226,100 mt in the first half of the year.

OIL

Stimulus package from Japan did little to stop oils decline.

According to the last monthly report from the Organization of Petroleum Exporting Countries (OPEC), released in Vienna two weeks ago, European oil demand this year is expected to reach 13.4 million barrels per day, almost the same level of 13.71 million barrels per day of 2015.

SUPPLY SIDE: This year, OPEC projects an increase in its members’ production to 31.9 million barrels per day and 33 million barrels per day in 2017.

DEMAND SIDE: Also, it expects demand increases, from last year, by 5.6% in India and 2.5% in China, 1.7% in the Middle East, 1.1% in the Americas and almost 0.2% in Europe.

The World Bank issued its latest report on the sector yesterday, upping the estimate for the average oil price this year. But at $43 a barrel, the commodity is still expected to end 2016 lower than it is now.

Societe Generale, said he believes there is a "soft floor" for oil at around $40 a barrel,

Analysts at Morgan Stanley said a return of US shale production could prompt a supply excess from August, which would push oil lower. It believes a bottom could yet be found in the mid-$30s.

Few expect a return to the ultra-bearish conditions from earlier this year, however, which prompted oil to slump to a 13-year low of $27 a barrel in February.

An oil refinery or petroleum refinery is an industrial process plant where crude oil is processed and refined into more useful products such as 

1.   petroleum naphtha, 

2.gasoline,

3.   diesel fuel,

4.asphalt base,

5.   heating oil, 

6.kerosene,

7. liquefied petroleum gas.

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