CommodityConnect OCT 2015

Macroeconomic overview

MCX trade statistics

Awarenessinitiatives

Regulatory developments

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International market developments

Global economic calendar Oct. 2015

Price movementAugust 2015

Global economic overview

World Economic Outlook (WEO) October 2015 update released by IMF on 6 October 2015 projects global growth for 2015at 3.1%, 0.3% lower than in 2014 and 0.2% below the forecasts in the July 2015 update.

• US economy

– The US Federal Reserve held interest rates steady amid concerns about global economic growth, financial marketvolatility, and sluggish inflation at home.

– A survey of consumer confidence rose from a revised 101.1 in August to 103 in September, the second biggest risesince the end of the Great Recession, bettered only by a slightly higher reading in January.

– Financial data firm Markit said its preliminary US Manufacturing Purchasing Managers' Index for September was 53,the same as August, which was its lowest since October 2013.

– The U.S. added 173,000 jobs in August, marking the smallest increase since March and the second smallest gain of2015., while orders to US factories posted a modest gain of 0.4% in July compared with a 2.2% rise in June.

• European economy

– The European Central Bank (ECB) cut its growth and inflation forecasts, warning of possible further trouble fromChina and paving the way for an expansion of its already massive one-trillion-euro-plus asset-buying programme.

• Asian economy

– In China, the preliminary Caixin/Markit manufacturing index based on a survey of factory purchasing managers fellto 47 in September, the lowest in six-and-a-half years. Earlier, data release showed that the final Caixin/Markitmanufacturing purchasing managers' index (PMI) slipped to 47.3 in August, the lowest reading since March 2009

– China's official manufacturing purchasing managers index (PMI) slipped to 49.7 in August, the weakest since August2012, down from 50 in July. This is the first time in six months that the official PMI has fallen below 50.

– The producer-price index in China fell 5.9% in August, extending the slide to 42 straight months; consumer pricesincreased 2%, the fastest in a year.





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Global economic calendar Nov. 2015






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Indian economic overview

• Overall, the Indian rupee appreciated against the dollar inSeptember 2015.

– The USD–INR RBI reference rate closed September at65.7418, as against the August close of 66.3062 (that is, m-o-m change of -0.85%).

– Exporters and banks stepped up dollar sales amidaggressive policy measures coming from the RBI.

– Rise in the Indian rupee was also helped by the U.S. FederalReserve’s decision to hold its interest rates, thus allowingthe RBI to ease its monetary policy later in the month.





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• On September 29, the RBI announced a steeper-than-expected cut in the policy repo rate under the liquidityadjustment facility by 50 basis points, that is, from 7.25% to 6.75%.

• Late in the month, data release showed that eight core industries, comprising nearly 38% of the weight of itemsincluded in IIP, had an output growth of 2.6% in August 2015 over August 2014.

• India's external debt at end-June increased 1.8% over end-March, due to rise in NRI deposits and commercialborrowings. The external debt–GDP ratio stood at 24% at end-June, increasing from 23.7% at end-March.

• India's exports fell sharply and trade deficit widened to $12.47 billion in August 2015 from $10.66 billion in August2014. Merchandise exports fell 20.66% to $21.26 billion in August 2015 over August 2014.

• India's services exports rose 0.3% in July 2015 over July 2014, while services imports jumped 10%.

• The all-India general CPI inflation was nearly flat 3.66% in August 2015 (new base 2012=100), compared with the3.69% (revised) reading in July 2015.

65.5000

65.8000

66.1000

66.4000

66.7000

67.0000

01 Sep 08 Sep 15 Sep 22 Sep 29 Sep

RBI USDINR Refernce Rate

Source: RBI





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Bullion

• Gold

– The price of the MCX Gold October 2015 futures contractdropped by 3.10% in September to close the month at`25,856 per 10 grams (g).

– The U.S. Fed resisted a rate hike in its September meet,increasing expectations of a hike later in the year, given thehawkish comments of U.S. Federal Reserve ChairpersonJanet Yellen which pulled down gold prices.

– A firm U.S. dollar and a global rout in commodities alsoweighed on yellow metal prices.

• Silver

– MCX Silver December 2015 futures contract prices declinedby 2.22 percent in September, closing the month at `34,547per kg.

– In addition to factors affecting gold price movement, weakglobal industrial demand, especially due to increasingconcerns over Chinese economic growth, kept silver pricesunder pressure in September.

Source: MCX

Source: MCX





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Price movementSeptember 2015





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Base metals

Base metal prices moved down largely on concerns over China’seconomic slowdown.

• Copper

– MCX Copper November 2015 futures contract prices slippedby 1.73% in September to close the month at `342.70/kg.

– Despite copper production cuts, notably by Glencore,copper prices moved down in September on increasingChinese economy concerns.

– The International Copper Study Group’s estimates thatcopper market had a surplus of 15,000 tonnes in the first 6months of 2015 compared with a deficit of 576,000 tonnes ayear earlier, aided the decline in copper prices.

• Nickel

– MCX Nickel September 2015 futures contract pricescontracted by 0.76% in September to close the month at`663.0/kg.

– Weak demand on concerns over Chinese economicslowdown, and International Nickel Study Group’s releasethat global nickel market surplus was 10,300 tonne in July asagainst 7,800 tonne surplus (June), put pressure on prices.

– At month-end, with international prices at around six-yearlows, closing of positions at the quarter-end and ahead oflong Chinese holidays, aided some recovery in prices.

Source: MCX





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Base metals

• Aluminium

– MCX Aluminium September 2015 futures contract pricesclosed September at `102.45/kg., a monthly fall of 4.39%.

– A spate of downbeat economic data releases, especiallyfrom China, pushed aluminium prices down.

– Rising refining capacity in China amidst decreasing raw-material costs leading to surge in alumina inventories overthe past few months kept pressure on aluminium prices.

• Lead– MCX Lead September 2015 futures contract prices fell by

6.08% in September, with a month close at `108.90 per kg.– Along with other base metals, lead prices also moved down

on weak global demand, especially on concerns over aslowing Chinese economy.

• Zinc

– MCX Zinc September 2015 futures contract prices moveddown by 10.02% in September, with a month close of`109.15 per kg.

– Zinc prices fell on rising global stockpiles amid increasingconcerns over the Chinese economy, the world’s largestmetal consumer.

– Global zinc inventories in September were the highest sinceFebruary this year.

Source: MCX





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Energy

• Crude oil

– MCX Crude Oil futures prices declined by 7.77% inSeptember 2015 to close the month at `2,979 per barrel.

– Signs of slowing global economic growth, abetted byconcerns about China fed to the worries on energy demandoutlook, and pushed oil prices down.

– In addition, US Energy Information Administration andGoldman Sachs lowered their oil price forecasts amidstnews that Saudi Arabia did not support the holding of anemergency OPEC meet aimed at stopping the slide of crudeoil, added pressure on oil prices.

– The decision of the U.S. Federal Reserve to keep ratesunchanged also raised worries about the U.S. economy, andincreased concerns about energy demand.

• Natural gas

– MCX Natural Gas futures prices slumped by 6.72% inSeptember 2015, closing the month at `166.7 per mmBtu.

– Weather forecasts suggesting above-normal temperaturesfor large parts of the U.S. in the first two weeks of October,softened demand for natural gas, which is largely used ingas-fired heating of electricity plants.

– Moreover, rise in U.S. gas stocks added to the pressure onnatural gas prices. *Prices of crude oil and natural gas refer to the most active futures contracts on MCX

Source: MCX

Source: MCX





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Agriculture

• Crude palm oil

– MCX September CPO futures contract closed the month at`415.90/10 kg, up 8.7% after import duty on edible oil wasincreased. India raised import duty on crude edible oil from7.5% to 12.5% and on refined edible oil from 15% to 20%.

– El Nino strengthened concerns of palm oil output in SouthEast Asia. El Nino may exceed levels observed during 1997–98, Australia’s weather bureau predicts. Its effects may beexacerbated by haze in parts of Indonesia and Malaysia,which together supply 86% of the world’s palm oil.

– Festive demand was also seen lifting palm oil prices. Thefestive season from September to November generally leadsto higher demand for food commodities.

• Cotton

– MCX October Cotton futures contract closed the month at`15,780/ bale, down 3.4%.

– India will have one of the largest closing stocks of cotton (90lakh bales) in its history when the new season begins onOctober 1, according to Cotton Association of India (CAI). Itestimates cotton output for 2015–16 at 377 lakh bales.

– CAI projects cotton supplies for 2015–16 at 467.65 lakhbales (including the carry forward stock of 90 lakhbales);while it estimates the domestic consumption at 325lakh bales for 2015–16.

Source: MCX

Source: MCX





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Agriculture

• Cardamom

– MCX cardamom October 2015 futures contract fell by 3.7%in September to close the month at `808.80/kg amidsufficient stocks in the physical market.

– Cardamom prices were down owing to improvement inarrivals at auction centres and conducive weather whichaugurs well for harvesting the new crop.

– Export demand remains poor amid cheaper availability ofGuatemalan crop in the global markets.

• Mentha oil

– MCX mentha oil September futures contract fell by 8.7% toclose at `891.60/kg.

– Prices were down on high arrivals and low export demand,which continued to remain poor. Concerns of fall in Chinesedemand owing to sharp fall in their equity markets, weighedon prices. China is one of the biggest importers of Indianmentha oil.

– Sufficient stocks across mandis in the mentha-growing-beltalso weighed on prices.

Source: MCX

Source: MCX





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MCX top 10 commodities, September 2015

Commodity Average Daily Value (` crore)

Units for Volume and OI Average Daily Volume Average Daily Open Interest

CRUDE OIL 6,840.85 Thousand Barrels 22,537.83 2,373.31 GOLD 4,684.28 Tonnes 17.75 11.34 SILVER 3,093.82 Tonnes 873.62 445.09 COPPER 1,975.71 Tonnes 56,338.63 19,434.84ZINC 1,684.61 Tonnes 1,47,387.59 39,793.14LEAD 1,110.57 Tonnes 98,945.82 19,349.95 NICKEL 861.07 Tonnes 13,018.75 7,905.60 NATURALGAS 769.00 Thousand MMBTU 43,469.77 12,817.78 ALUMINIUM 523.92 Tonnes 49,391.95 28,331.59 MENTHA OIL 143.14 Tonnes 1,543.96 4,677.27

Source: MCXAggregate MCX monthly turnover ` 4,82,515 crore | Average daily turnover ̀ 21,933 crore

Source: Respective Exchanges' websiteSource: Respective Exchanges' website

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20.00%

40.00%

60.00%

80.00%

100.00%

Agri Bullion Energy Metal Grand TotalMCX83.92%

NCDEX15.66%

NMCE0.42%

Exchange-wise market share, September 2015

Note: Data refers to all variants of each commodity

MCX segment-wise market share, September 2015





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Commodities Location Quantity Unit Value (` crore)

GOLD MINI Ahmedabad 131.10 Kg 34.85 GOLD GUINEA Ahmedabad 0.496 Kg 0.13CARDAMOM Vandanmedu (Kerala) 17.70 MT 1.47 MENTHA OIL Barabanki & Chandausi (UP) 1,92,600.00 Kg 19.80 SILVER Ahmedabad 66,210.00 Kg 228.98GOLD PETAL (MUMBAI) Mumbai 5.984 Kg 1.56

Exchange deliverable warehouse stock position as on September 30, 2015Commodity Delivery Centres Quantity UnitCARDAMOM Vandanmedu (Kerala) 32.30 MTMENTHAOIL Barabanki & Chandausi (UP) 6,443.87 MTGOLD Ahmedabad 174.00 KgGOLD GUINEA Ahmedabad & Mumbai 23.66 KgGOLD MINI Ahmedabad & Mumbai 503.90 KgSILVER (30 KG) Ahmedabad 11,356.09 KgSILVER (1 KG) Delhi 287.00 Kg

Source: MCX

Source: MCX





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SEBI Circulars / Regulations

October 01, 2015• Comprehensive risk management framework for national commodity derivatives exchanges

The circular from the SEBI provides details of the core of the risk management system of national commodityderivatives exchanges. The core consists of liquid assets, different margins, liquid networth requirement, baseminimum capital, settlement guarantee fund, etc.. (CIR/CDMRD/DRMP/01/2015).

September 08, 2015

Ahead of the FMC–SEBI merger on September 28, the SEBI notified certain amendment to its regulations. These were:

(i) SECURITIES CONTRACTS (REGULATION) (STOCK EXCHANGES AND CLEARING CORPORATIONS) REGULATIONS, 2015.

A commodity derivatives exchange may continue with existing clearing and settlement up to three years

(ii) SECURITIES AND EXCHANGE BOARD OF INDIA (STOCK BROKERS AND SUB-BROKERS) REGULATIONS, 2015 .

With revised regulations, the net worth for a self-clearing member at national commodity derivatives exchanges should be `1 crore, and for a clearing member, `3 crore. This is besides the `50 lakh deposit for both.

(iii) SECURITIES AND EXCHANGE BOARD OF INDIA (REGULATORY FEE ON STOCK EXCHANGES) REGULATIONS, 2015.

Fees payable by members dealing in commodity derivatives: `20/- per crore of the turnover.

MCX circulars

September 29, 2015• Registration of members under SEBI

All existing members of the exchange who satisfy the eligibility requirements of membership, shall be eligible to applyfor registration to the SEBI, within three months from September 28, 2015. Further, existing members must meet theeligibility criteria as specified under Rule 8 of SCRR 1957 by September 28, 2016. (MCX/MEM/268/2015).





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Key developments in international markets, September 2015

• The London Metal Exchange (LME) is in talks with the gold industry for launching precious metals derivatives, LMEChief Executive Garry Jones said on September 10.

• LME has decided to introduce scrap and rebar cash-settled contracts in November. The two contracts, LME SteelRebar and LME Steel Scrap, designed to complement the existing LME Steel Billet contract, are to be launched onNovember 23.

• LME plans to introduce limits on large positions to avoid market squeezes, initially on its new aluminium premiumcontract, it said on September 15. The use of position limits may be expanded for other contracts if upcominglegislation requires them, the exchange added.

• CME Group announced the expansion of its base metals offering with the introduction of a new Aluminium EuropeanPremium Duty-Unpaid (Metal Bulletin) futures contract from 21 September, 2015.

• The CME Group and China Securities Index Co. Ltd announced that they have signed an index development andproduct licensing agreement. Under this agreement, CME Group will grant CSI a licence to use certain CME Groupmarket data for developing, calculating, and disseminating commodity indexes.

• The Shanghai Futures Exchange from September 22 has started charging a fee for closing nickel positions on thesame day they are opened—part of a series of measures by China to curb speculation in futures market. A fee has alsobeen introduced for same-day settlement of silver and bitumen futures, the exchange said.





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Key developments in international markets, September 2015

• Intercontinental Exchange (ICE) announced that ICE Futures U.S. would launch a World Cotton contract on November2, 2015. The World Cotton contract would price delivery of multiple origins and allow delivery in multiple locationsaround the world. The new contract would trade alongside ICE’s benchmark Cotton No. 2® contract.

• ICE has set November 17 as the new launch date for its Asian hub, that is, Singapore. It had originally aimed atcommencing trading from Singapore in March but pushed back the opening as new customers struggled to finishthe extensive regulatory paperwork.

• Singapore Exchange (SGX) is utilizing the Platts 62.5% Iron Ore (Fe) China Spot Lump Premium assessment as thesettlement basis for its new swap and futures contracts launched on August 31.

• European Energy Exchange (EEX) said on September 2 that it would launch a wind power futures contract in the firstquarter of 2016, allowing customers to hedge risks and speculate on an increasingly important part of the electricitymarket. The contract could help both wind and conventional power plants to cope with the unpredictability of windproduction over a given month, said Tobias Paulun, EEX board member in charge of strategy.





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Khurda (Odisha), September 03

Beawar (Rajasthan),September 07

Dehradun (Uttarakhand),September 10

Tinsukia (Assam),September 09

Durg (Chhattisgarh),September 18

Shillong (Meghalaya), September 24

Awareness programmes

In order to educate various stakeholders of the commodity markets, MCX conducted 26 awareness programmesacross the country in September 2015.





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Village Dhamangaon (Maharashtra), September 07

Village Guthwada (Gujarat), September 14

Village Purey Kharin (Uttar Pradesh), September 17

Village Runi (Gujarat), September 15

Branch Post Masters’ Training Village Tharad (Gujarat),

September 23

Village Jodhpar (Gujarat), September 29

Farmers’ training programmes

During September 2015, 13 farmers’ training programmes were conducted by MCX, covering 383 farmers .





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Global economic calendar, November 2015(All timings in IST)





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Monday Tuesday Wednesday Thursday Friday

207.15: CN HSBC Final Mfg PMI12.30: German Retail Sales15.00: UK Mfg PMI20.15: US Final Mfg PMI20.30: US ISM Mfg PMI / Construction Spending

and ISM Mf prices

306.30: CN Non-Mfg PMI20.30: US Factory Orders and IBD/TIPP

Economic OptimismAll Day US Total Vehicle Sales

407.15: CN HSBC Services PMI15.00: UK Services PMI18.45: US ADP Non-Farm Emp Change19.00: US Trade Balance20.30: US ISM Non-Mfg PMI 21.00: US Crude Oil Inventory Report EIA/API

512.30: German Factory Orders 15.30: EU Retail Sales17.30: UK Official Bank Rate / MPC rate

statement and Asset Purchase Facility19.00: US Unemp. Claims/Prelim Non-Farm

Productivity & Unit Labor costs 21.00: US Natural Gas Storage

612.30: German Industrial Prodn15.00: UK Construction PMI19.00: US Non-Farm Employment change/

Unemp rate and Avg Hourly Earnings m/m

915.00: UK Mfg Prodn m/m15.30: EU Economic Forecasts20.30: UK NIESR GDP Estimate20.30: US Labor Mkt conditions index

1005.20: JP Current ac & Bank lending07.00: CN CPI/PPI/ Trade Balance/ New Loans14.30: UK Inflation Report Hearings18.00: US NFIB Small Business Index19.00: US Import Prices20.30: US Whole sale Inventories23.31: US 10-y Bond Auction

1105.20: JP Prelim GDP/ Core Machinery Orders/ PPI11.00: CN Ind Prodn/ Fixed Asser Invt/ Retail Sales 16.00: UK BOE Gov Speaks and Inflation Report21.00: US Crude Oil Inventory Report EIA/APIAll Day US Holiday – Veteran’ s Day

1205.20: JP Tertiary Industry Activity15.00: UK CPI/PPI/RPI/ HPI15.30: EU Ind Prodn19.00: US Unemployment Claims 20.30: US JOLTS job Openings21.00: US Natural Gas Storage

1300.30: US Federal Budget Balance12.00: German Prelim GDP19.00: US Core Retail Sales and PPI20.25: US Prelim UoM consumer Sentiment20.30: US Business Inventories

1615.30: EU Final CPI y/y16.30: German Buba Monthly Report19.00: US Empire State Mfg Index

1715.00: UK Average Earnings Index/ Claimant

Count Change and Unemp.rate15.30: German ZEW Economic Sentiment 19.00: US CPI m/m19.45: US Capacity Utilization rate and Ind Prodn20.30: US NAHB Housing Market Index

1815.00: UK MPC Official Bank Rate votes/

Public Sector Borrowing and MPC Asset Purchase Facility votes

19.00: US Building Permits and Housing starts21.00: US Crude Oil Inventory Report EIA/API

1900.30: US FOMC Meeting Minutes05.20: JP Monetary Policy Statement and

BOJ Press Conference15.00: UK Retail Sales19.00: US Unemployment Claims 20.30: US Philly Fed Mfg Index and

Mortgage Delinquencies21.00: US Natural Gas Storage

2007.15: CN HSBC Mfg PMI14.30: EU Flash Mfg and Services PMI20.15: US Flash Mfg PMI20.30: U S CB Leading Index

2315.45: US Targeted LTRO20.15: US Flash Services PMI20.30: US Existing Home Sales

2414.30: German Ifo Business Climate19.00: US Prelim GDP q/q19.30: US S&P/CS composite-20 HPI20.30: US CB Consumer Confidence and Richm

ond Mfg Index

2512.30: GfK Ger. Consumer Climate15.00: UK 2nd Estimate GDP/BBA Mortgage

approvals and Prelim Buss Investments16.30: UK CBI Realized Sales19.00: US Core Durable Goods Orders m/m/ Core

PCE Price Index/ Personal Spending 20.30: US New Home Sales 21.00: US Crude Oil Inventory Report EIA/API

2605.20: JP Monetary Policy Meeting Minutes/

Prelim Ind Prodn and Retail SalesAll Day German Prelim CPI15.00: UK Net Lending to Indvls16.00: UK BOE Financial Stability Report19.00: US Unemp.ClaimsUS Bank Holiday Thanks Giving Day

2705.20: JP Household Spending and Tokyo Core

CPI/ Retail Sales/ Ind Prodn12.30: German Import Prices20.25: US Revised UoM Consumer Sentiment

3020.15: US Chicago PMI20.30: US Pending Home Sales m/m


**Timings in IST Disclaimer: Every effort has been made in compiling the data/ information to ensure the high quality and accuracy of the content of the MCX Global Economic Calendar. Under anycircumstances, MCX shall not be liable to any user for intended/accidental errors. Users may carry out due diligence before using any data/information herein, MCX will not be responsible for anydiscrepancies/disputes arising out of such use. The calendar may also be subject to change without any previous notice.

Commodity Connect is not intended as professional counsel or investment advice, and is not to be used as such. While the exchange has made every effort to assure theaccuracy, correctness and reliability of the information contained herein, any affirmation of fact in the Commodity Connect shall not create an express or implied warranty thatit is correct. Commodity Connect is made available on the condition that errors or omissions shall not be made the basis for any claims, demands or cause of action. MCX shallalso not be liable for any damage or loss of any kind, howsoever caused as a result (direct or indirect) of the use of the information or data in this Commodity Connect.©MCX 2015. All rights reserved.

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CommodityConnect OCT 2015