Ashu Dutt’s 'THE COMMODITY BOOM & BUST' - July 2009 Edition from www.ashudutt.com

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Ashu Dutt’s THE COMMODITY BOOM & BUST

Edition: XXVIII

Published this 15th day of July, 2009

Price: US$100 for 12 Editions

CRUDE

- Short Term Trend (30-90 days) – Bullish. The Odds are

o +10% gain: 50%

o +5 gain: 40%

o -2% loss: 10%

- Intermediate Trend (90-365 days) – Bullish

o +20% gain: 60%

o +15 % gain: 30%

o +10% gain: 10%

- Long Term Trend (365 days +) – Bullish

o +30% gain: 50%

o +25%gain: 40%

o +20% gain: 10%

STRATEGY

- Crude futures on the MCX may be your trading option (unless you have access to global trading in which case, NYMEX is perhaps a better option

KEY DRIVERS

- Crude prices should head to US$ 65-67 levels in the immediate term

- In a 12 month scenario, there is every likelihood for crude oil to head to US$80

- Most pointers indicate that we will see a big spike in oil prices. Increasing interest rates, speculative interest in oil etc

ALUMINIUM

- Short Term Trend (30-90 days) – Neutral. The Odds are

o +5% gain: 30%

o +2%gain: 40%

o – 5% loss: 30%

- Intermediate Trend (90-365 days) – Bullish

o +10% gain: 40%

o +5% gain: 50%

o +2% gain: 10%

- Long Term Trend (365 days +) – Bullish

o +20% gain: 50%

o +15% gain: 30%

o +10% gain: 20%

STRATEGY

- While the fundamentals in the immediate term don’t back this up, the technicals for aluminium remain strong

- A speculative buildup is very likely if economic demand looks like it is picking up

- A good indicator of where aluminium may go may be where the equity markets head. I know it sounds irrational but lately commodity prices have had more to do with the market’s gyrations as opposed to their own underlying fundamentals

KEY DRIVERS

- Aluminium stocks are currently at record levels above 4.5 million tonnes

- There has been a significant increase in supply over demand

- China represents over 40 percent of global demand for aluminium and stockpiling has kept prices from sliding further.

- The shutdown in aluminium production has also helped to stabilize prices. However China is the wild card.

- LME inventories of aluminium are rising and are around 10 weeks' consumption.

- Aluminium consumption over the first quarter was down 16.9% year on year at 7.924m tonnes

- European demand for aluminium is down by over 30%. German demand (the largest consumer of aluminium), demand is down by 45%