Spike trading in Commodity Markets

Spike 

Spike is the large upward or downward movement of a price or value level in a short period.Spikes be possible in all Commodities of MCX Trading.Spikes in MCX Usually happen in Evening Trading Session Due to US Fundamentals.Generally Fundamentals/News are the driving factors for these Spikes.

Past Identification of Spike s 

In 2012-2013 Indian Budget Time Gold gave a Spike for 700 points jump in a second on March 16'2012.During the time Inventory data of Crude Oil & Natural Gas May likely to Spike s in Price level in MCX Market trading.Stop loss orders not triggered due to price jump When Market giving Spike in price level.During the time of U S Federal Reserve & European Central bank Rate announcement are the crucial time for Price Spike.

Traders should a bit while cautious while Fundamentals like economic calendar data release time,Inventory data ,Budget Time & Monetary policy meeting Times.

DPR -Daily Price Range in MCX Trading

Every commodity is giving different kind of movement in an every trading day.Every day MCX market is giving Normal range of trading levels in their trading.MCX Exchange fixed Trading Range for every commodity in an every trading day.That Range is Daily Price Range shortly called as DPR.This DPR varies by commodity to commodity due to their volatility of that commodity s nature.

If an abnormal circumstances/unforeseen fundamentals hit the MCX trading,MCX commodities turn upper//bullish/Buying side or down/Bearish/Selling side.When MCX Market in an abnormal fluctuation this Price Range may possible to ride off.When any MCX  Commodity reaches the upper limit of daily range is called Upper circuit/upper freeze.If a commodity in an Upper freeze mean there is no seller available in the MCX market to sell that Particular commodity.If a commodity reaches the lower limit of daily range is called Lower Circuit/Lower Freeze.In Lower Freeze mean there will be no buyer in MCX market to buy that commodity that time.

In any commodity in MCX trading breaching Upper/lower circuit/freeze ,there will be cooling Period for 15 minutes.In that cooling period there will be no trading except if buyer /seller willing to buy/sell that particular freezing Commodity.Oncce Cooling Period over,the Daliy Trading Range will be extended little more.

Is it advisable to trade in Upper/lower freeze/Spike Timings in MCX

During these kind of abnormal trading movement timings,avoiding the trade is the best solution for all except well expertised person.

MCX Brent Crude Oil

Crude oil is a mixture of hydrocarbons that exists in a liquid form in natural underground reservoirs.

All industries are directly or indirectly dependent on derivatives from crude oil. Its price movements largely and directly affect prices of lubricants, petrochemicals, fertilizers, paints, transportation costs, etc


The prices of crude are highly volatile. High oil prices lead to inflation which in turn increases input costs,reducing non-oil demand and reduces investment in net oil importing countries.

PRICE MOVING FACTORS

• OPEC output, supply and spare capacities
• Currency fluctuations
• US crude and products inventories data
• Increased demand from developing countries, geopolitics
• Weather conditions
• Speculative buying and selling

MCX Brent Crude Oil

Contract Basis                         : Monthly(All Month Contracts Available)

No of Contracts of a year        :12

Contract Duration                    :3 Months

Price Quotation(Quoted Price)  : 1 BBL

Lot size                                    : 100

Margin Percentage                    :5% of lot value

Margin/Investment Required to
Trade Brent Crude Oil               : Approx.Rs.25,000-40,000(Subject to change as per MCX Exchange)

Tick Size                                  : Rs.1

Tick Value                                : Rs.100 Per Tick

Value for One Point/Price
Variation(Up/Down)                  : Rs.100


Trading period                         : Monday through Saturday

Trading session/Timings             : Monday to Friday: 10.00 a.m. to 11.30 p.m.
                                                    Saturday: 10.00 a.m. to 2.00 p.m.

Brent Crude Oil

General Characteristics

Brent crude oil is a light sweet crude oil from North Sea. It has API (American Petroleum Institute) gravity between 38-39 and has higher sulphur content than the other well-known benchmark, WTI crude oil. Brent crude oil is a global benchmark for other grades and is widely used to determine crude oil prices in Europe and in other parts of the world. Brent is typically refined in Northwest Europe, but a major portion is been exported to the US Gulf and East Coasts, and also to parts of Mediterranean. It is more expensive than the Organization of Petroleum Exporting Countries (OPEC) basket, but lesser than West Texas Intermediate (WTI) because of higher sulphur content than the WTI crude. Global Scenario Oil accounts for 40 per cent of the world's total energy demand. The world consumes about 76 million bbl/day of oil. United States (20 million bbl/d), followed by China (5.6 million bbl/d) and Japan (5.4 million bbl/d) are the top oil consuming countries. Balance recoverable reserve was estimated at about 142.7 billion tones (in 2002), of which OPEC was 112 billion tones. OPEC fact sheet OPEC stands for 'Organization of Petroleum Exporting Countries'. It is an organization of eleven developing countries that are heavily dependent on oil revenues as their main source of income. The current Members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. OPEC controls almost 40 percent of the world's crude oil. It accounts for about 75 per cent of the world's proven oil reserves. Its exports represent 55 per cent of the oil traded internationally. Market Influencing Factors OPEC output and supply .  Terrorism, Weather/storms, War and any other unforeseen geopolitical factors that causes supply disruptions.  Global demand particularly from emerging nations. Dollar fluctuations. DOE / API imports and stocks. Refinery fires & funds buying. Exchanges dealing in Crude Futures The New York Mercantile Exchange (NYMEX) .  The International Petroleum Exchange of London (IPE).  The Tokyo Commodity Exchange (TOCOM). Related Links: MCX live Rate Crude Oil Natural Gas OPEC MCX Trading with Pivot Levels For MCX Intraday Calculator MCX Live Charts  MCX Trading Holidays 2013

MCX SilverMicro

Factors influencing/Impacting MCX Silver Micro

• Economic events such as national industrial growth, global financial crisis, recession, and inflation affect metal prices.
• Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.
• Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect  supply by regulating (restricting or encouraging) material flow.
• Geopolitical events involving governments or economic paradigms and armed conflict can cause major changes
• A faster growth in demand against supply often leads to a drop in stocks with the government and investors.
• Silver demand is underpinned by the demand from jewellery and silverware, industrial applications 
• In India, the real industrial demand occupies a small share in the total industrial demand of silver. This is in sharp contrast to most developed economies
• In India, silver demand is also determined to a large extent by its price level and volatility.
  
  

MCX SilverMini

Factors influencing/Impacting MCX Silver



Economic events such as national industrial growth,global financial crisis,
recession, and inflation affect metal prices.

Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.

Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect  supply by regulating (restricting or encouraging) material flow.

Geopolitical events involving governments or economic paradigms and armed conflict can cause major change.

A faster growth in demand against supply often leads to a drop in stocks with the government and investors.

Silver demand is underpinned by the demand from jewellery and silverware, industrial applications.

In India, the real industrial demand occupies a small share in the total industrial demand of silver. This is in sharp contrast to most developed economies.

In India, silver demand is also determined to a large extent by its price level and volatility.

MCX Silver

Silver (Chemical symbol-Ag) is a brilliant grey-white metal that is soft and malleable.Silver is unique amongst metals due to the fact that it can be classified as both a precious metal and an industrial metal.Today, silver is sought as a valuable and practical industrial commodity and as an investment.Silver is an important element of the global monetary reserves.Silver is an effective portfolio diversifier.

Silver In India 

India's silver demand averages 2500 Metric Tonnes(MT) per year, whereas the country’s production was around 342.13 MT in 2011.Nearly 60% of India's silver demand comes from farmers and rural India, who store their savings in silver bangles and coins.

Factors influencing/Impacting MCX 

Silver

• Economic events such as national industrial growth, global financial crisis, recession, and inflation affect 
  metal prices.
  
  
• Commodity-specific events such as the construction of new production facilities or processes, unexpected 
  mine or plant closures, or industry restructuring, all affect metal prices.
  
  
• Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect 
  supply by regulating (restricting or encouraging) material flow.
  
  
• Geopolitical events involving governments or economic paradigms and armed conflict can cause major 
  changes.
  
  
• A faster growth in demand against supply often leads to a drop in stocks with the government and 
  investors.
  
  
• Silver demand is underpinned by the demand from jewellery and silverware, industrial applications, 
  and overall industrial growth.
  
  
• In India, the real industrial demand occupies a small share in the total industrial demand of silver. This is in 
  sharp contrast to most developed economies. 
  
  
• In India, silver demand is also determined to a large extent by its price level and volatility

MCX Gold Petal

Factors Influencing/Impacting the MCX Gold Petal

• Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans.
• Hedging interest of producers/miners.
• World macroeconomic factors such as the US Dollar and interest rate, and economic events.
• Commodity-specific events such as the construction of new production facilities or processes, unexpected 
  mine or plant closures, or industry restructuring, all affect metal prices.
•  In India, gold demand is also determined to a large extent by its price level and volatility.

MCX Gold

• Gold (Chemical Symbol-Au) is primarily a monetary asset and partly a commodity.
• Gold is the world's oldest international currency.
• Gold is an important element of global monetary reserves.
• With regards to investment value, more than two-thirds of gold's total accumulated holdings is with central banks' reserves, private players, and held in the form of high-karat jewellery.
• Less than one-third of gold's total accumulated holdings are used as “commodity” for jewellery in the western markets and industry.

The gold market is highly liquid. Gold held by central banks and other major institutions and in the 

form of retail jewellery is reinvested in the market.

Effective diversification during “stress” periods: Traditional methods of portfolio diversification often fail when they are most needed, that is during financial “stress” (instability). On these occasions, the correlations and volatilities of return for most asset classes (including traditional diversifies  such as bonds and alternative assets) increase, thus reducing the intended “cushioning” effect of a diversified portfolio.

Gold In India

India is the largest market for gold jewellery in the world and a key driver of the global gold demand. The 

domestic drivers of gold demand are largely independent of outside forces. Indian households hold the 

largest stock of gold in the world. Two thirds of the Indian demand for gold comes from the rural parts of the 

country. In 2011, gold's role as an inflation hedge bolstered its appeal in India. The nation witnessed jewellery

and investment demand of 933.4 MT. The nation was by far the largest single investment market in 2011

MCX Gold Guinea

Factors Influencing/Impacting the MCX Gold Guinea

• Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans.
• Hedging interest of producers/miners.
• World macroeconomic factors such as the US Dollar and interest rate, and economic events.
• Commodity-specific events such as the construction of new production facilities or processes, unexpected 
  mine or plant closures, or industry restructuring, all affect metal prices.
•  In India, gold demand is also determined to a large extent by its price level and volatility.

MCX Gold Mini

Factors Influencing/Impacting the MCX Gold Mini

• Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans.
• Hedging interest of producers/miners.
• World macroeconomic factors such as the US Dollar and interest rate, and economic events.
• Commodity-specific events such as the construction of new production facilities or processes, unexpected 
  mine or plant closures, or industry restructuring, all affect metal prices.
•  In India, gold demand is also determined to a large extent by its price level and volatility.

OPEC

OPEC stands for 'Organization of Petroleum Exporting Countries'. 

It is an organization of eleven developing countries that are heavily dependent on oil revenues as their main source of income.

The current Members 

Algeria

Indonesia

Iran

Iraq

Kuwait

Libya

Nigeria

Qatar

Saudi Arabia

United Arab Emirates 

Venezuela.

• OPEC controls almost 40 percent of the world's crude oil.
• It accounts for about 75 per cent of the world's proven oil reserves.
• Its exports represent 55 per cent of the oil traded internationally.

Related Links:

• MCX live Rate
• MCX Trading with Pivot Levels
• For MCX Intraday Calculator
• MCX Live Charts 

• MCX Trading Holidays 2013

Natural Gas

Major Characteristics:

• Natural gas is a colourless, odourless, environment friendly energy source. It is a gas consisting primarily of methane. It is found associated with fossil fuels, in coal beds, as methane clathrates, and is created by methanogenic organisms in marshes, bogs, and landfills. Natural gas is commercially produced mostly from oil fields and natural gas fields.
• Before natural gas can be used as a fuel, it must undergo extensive processing to remove almost all materials other than methane. The by-products of that processing include ethane, propane, butanes, pentanes and higher molecular weight hydrocarbons, elemental sulfur, carbon dioxide, and sometimes helium and nitrogen.
• The major difficulty in the use of natural gas is transportation and storage. While, pipelines are used for inland transport, it cannot be used under oceans, which is essential for global trade. Liquified Natural Gas (LNG) is a proven commercial technology for transporting natural gas across oceans. However, as special ships and separate LNG receiving terminals are required, LNG projects are highly capital intensive in nature.

Global Scenario:

• The world's proven natural gas reserves as on January 1, 2009 are estimated at 185.2 trillion cubic metre, of which almost three-quarters are located in the Middle East and Eurasia. Russia, Iran, and Qatar together account for about 57% of the total reserves.
• Natural gas consumption has increased strongly over the past decade. However, despite this rising consumption, reserves-to-production ratios for most regions are substantial. Worldwide, the reserves-to-production ratio is estimated at 63 years.
• The total global production of natural gas in 2008 is estimated to be 3065.6 billion cubic metre with the main producing countries being Russia Federation (602 billion cubic metre), US (582 bcm), Canada (175 bcm) and Iran (116 bcm).
• The total global consumption of natural gas in 2008 is estimated to be 3018.7 billion cubic metre with the main consuming countries being US (657 bcm), Russia Federation (420 billion cubic metre), Iran (117 bcm), Canada (100 bcm) are the major consumers.
• Globally, industries consume the largest portion of natural gas, followed by the power sector. Industrial consumption is expected to be around 40% of total global consumption by 2030 as projected by Energy Information Administration.

Crude Oil

General Characteristics:

• Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground reservoirs. Oil and gas account for about 60 per cent of the total world's primary energy consumption.
• Almost all industries including agriculture are dependent on oil in one way or other. Oil & lubricants, transportation, petrochemicals, pesticides and insecticides, paints, perfumes, etc. are largely and directly affected by the oil prices.
• The prices of crude are highly volatile. High oil prices lead to inflation that in turn increases input costs; reduces non-oil demand and lower investment in net oil importing countries.

Global Scenario:

• Oil accounts for 40 per cent of the world's total energy demand.
• The world consumes about 76 million bbl/day of oil.
• United States (20 million bbl/d), followed by China (5.6 million bbl/d) and Japan (5.4 million bbl/d) are the top oil consuming countries.
• Balance recoverable reserve was estimated at about 142.7 billion tones (in 2002), of which OPEC was 112 billion tones.

Lead

Major Characteristics:

Lead is usually found in association with zinc, silver, as well as copper ores. It is one of our planet's most sustainable and recyclable commodities. It can be re-melted any number of times without ever losing any of its properties. The lead production process consumes less energy as compared to the production of any other metal.

Demand and Supply Scenario:

• In 2010, world lead mine production was 6.3% higher than in 2009. This was mainly due to rises in China, Mexico and the Russian Federation that more than offset decreases in Ireland, Peru and the United States.
• Global refined lead production over 2010 was 9.311 million MT, up from 8.802 million MT in 2009.
• Global refined lead consumption had risen to 9.329 million MT in 2010, up from 8.761 million MT in 2009

Global Scenario:

• The world's reserve base of lead is estimated at 170 MT. Australia leads with 35% of the world reserve base of lead, followed by China (21%), USA (11%) and Kazakhstan (4%).
• Major refined lead producing countries are China, USA and Europe, while major refined lead consuming countries are China, USA and India.
• Major refined lead exporting countries are Australia, Germany and Canada, while major refined lead importing countries are USA, United Kingdom and India.

Zinc

Major Characteristics: Zinc is the fourth most common metal in use, behind iron, aluminium and copper in terms of annual production. Zinc can be recycled indefinitely, without loss of its physical or chemical properties. It is present in a wide variety of foods, particularly in association with protein foods.

Demand and Supply Scenario:

• The rise in world zinc mine production in 2010 (8.8% compared with 2009) was primarily influenced by higher output in Australia, China, India, Mexico and the Russian Federation.
• Global output of refined zinc metal exceeded usage by 264,000 MT; the fourth successive year that the market has been in surplus.
• After a sharp decline in 2009 caused by the economic crisis, world usage of refined zinc metal rebounded by 15.6% in 2010, surpassing 12 million MT for the first time.

Global Scenario:

• The rise in refined zinc in 2010 was driven mainly by further growth in Chinese apparent demand of 13.3% and a recovery in European usage of 29.3%. Other contributing factors included increases in Brazil, India, Japan, the Republic of Korea, Taiwan and Thailand.
• Major refined zinc exporting countries are Canada, Australia and Rep. of Korea, while major refined zinc importing countries are China, USA and Germany.

Nickel

Characteristics of Nickel: Nickel finds its usage in various industries such as engineering, electrical and electronics, infrastructure, automobile and automobile components, packaging, Batteries etc.  Among base metals Nickel is the most volatile owing to its strong demand and tight supply. Nickel demand is derived demand based on the growth of different industrial sector thus exhibits high volatility. About 65 per cent of nickel is used in manufacture of stainless steels, and 20 per cent in other steel and non-ferrous including "super" alloys, often for highly specialized industrial, aerospace and military applications.

Characteristics of World Nickel Market:

• Nickel world market is characterized by rising demand and constrained supply. 
• More than 54% if world total supply comes from only five companies.
• Global nickel consumption is growing by an average 3.1 per cent a year.

Aluminium

Major Characteristics:

• Aluminium (chemical symbol - AI) is the third most abundant element in the earth's crust. It exists in very stable combination with other materials particularly silicates and oxides.
• It is resistant to common atmospheric gases and a wide range of liquids. Hence, aluminium is known for its durability and high resale value.
• Aluminium is a unique metal; light weight, strong, durable, flexible, and impermeable, it does not rust and is 100% recyclable

Demand and Supply Scenario:

• The global aluminium market was in surplus by 577,000 MT in 2010, though down from 1.901 million MT in 2009.
• In 2010, global primary aluminium production was 40.795 million MT, up from 36.974 million MT in 2009. Global primary aluminium consumption rose to 40.218 million MT in 2010, compared with 35.073 million MT in 2009.

Global Scenario:

• World primary aluminum production increased in 2010 compared to the production in 2009, mainly as a result of starting new smelters and restarting smelters that had been shut down in 2008 and early 2009.
• Major aluminium exporting countries are Germany I Russia and Canada, while major aluminium importing countries are USA, Germany and China.

Copper

Copper (chemical symbol - Cu) is a malleable and ductile metallic element that is an excellent conductor of heat and electricity. It is also corrosion resistant and antimicrobial.It stands at the third place in context of the world consumption after steel and aluminium.Copper is an important contributor to the national economies of mature, newly developed and developing countries.

Global Scenario:

• While Chile accounts for 34% of the total world copper mine production, Peru, USA, China, Australia and Indonesia, together are responsible for around 32%.
• Growth in refined copper usage has been especially strong in Asia, where demand has expanded more than five-fold in less than 30 years
• Major refined copper exporting countries are Chile, Zambia, Japan, Russia and Peru, while major refined copper importing countries are China, USA, Germany, Italy and Taiwan.

Silver

Silver (Chemical symbol-Ag) is a brilliant grey-white metal that is soft and malleable.Silver is unique amongst metals due to the fact that it can be classified as both a precious metal and an industrial metal.Today, silver is sought as a valuable and practical industrial commodity and as an investment.Silver is an important element of the global monetary reserves.Silver is an effective portfolio diversifier.

Major Characteristics:

• Silver has unique properties such as its strength, malleability, ductility, electrical and thermal conductivity, sensitivity, high reflectance of light, and reactivity
• The main source of silver is in lead ore, although it can also be found associated with copper, zinc and gold and produced as a by-product of base metal mining activities
• Silver is unique amongst metals due to the fact that it can be classified as both a precious metal and an industrial metal.
• Silver is an important element of global monetary reserves.
• It is an effective portfolio diversifier.

Demand and Supply Scenario:

• Silverware achieved an increase of 4.6%, owing to stock-related gains in India.
• Demand for coins and medals surged yet higher from 2008, rising by 20.7% to reach a new record high of 78.7 Moz (2,447 t) in 2009 on the back of strong investment demand.
• In 2009, implied net investment soared to 136.9 Moz (4,258 t), buoyed by safe haven concerns, which led to strong inflows into both ETFs and physical investment.
• Net government sales fell by just over one half to 13.7 Moz (426t) in 2009, primarily driven by lowest stock sales from Russia, coupled with the continued absence of any disposal from China and India.

Gold

Gold is the oldest precious metal known to man and for thousands of years it has been valued as a global currency, a commodity, an investment and simply an object of beauty.

Major Characteristics:

• Gold is the world's oldest international currency.
• Gold is an important element of global monetary reserves.
• With regards to investment value, more than two-thirds of gold's total accumulated holdings is with central banks' reserves, private players, and held in the form of high-karat jewellery.
• Less than one-third of gold's total accumulated holdings are used as “commodity” for jewellery in the western markets and industry.

Demand and Supply Scenario:

• China was the world's largest gold producer with 340.88 tonnes in 2010, followed by the United States and South Africa.
• Gold demand in 2010 reached a 10-year high of 3,812.2 tonnes
• In 2010, India was the world's largest gold consumer with an annual demand of 963 tonnes
• The total supply of gold coming onto the market in 2010 reached 4,108 tonnes, a rise of 2% from 2009 levels

Global Scenario:

• London is the world’s biggest clearing house
• Mumbai is under India's liberalised gold regime
• New York is the home of gold futures trading