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Commodities Briefing - Category | Market Moves more

China faces deepening impact from world economy, commodity prices

Posted on 22 January 2016 by VRS  |  Email |Print

The impact on China from the global economy and lower commodity prices is deepening, but the country’s economic fundamentals are good and Beijing will make sure the economy runs within a reasonable range, the cabinet said on Thursday.
The State Council reiterated that the government would tackle over-capacity in the steel and coal sectors first in its campaign to reduce supply gluts, according to a statement on its website. It also said that China should price in risks and challenges from the world economy and commodity values………………………………………..Full Article: Source

Nigeria Seeks Emergency OPEC Meeting

Posted on 22 January 2016 by VRS  |  Email |Print

For some of the world’s biggest oil-producing nations, the pain of more than a year and a half of falling prices is forcing increasingly desperate measures. Nigeria’s top oil official used a panel at the World Economic Forum in Davos, Switzerland, to bluntly plead for an emergency meeting of the Organization of the Petroleum Exporting Countries.
Other member states of OPEC, a cartel of some of the world’s biggest producers, have quietly lobbied for such a meeting for months. But on Thursday, Nigerian Oil Minister Emmanuel Ibe Kachikwu made one of the strongest, public calls yet by an OPEC member………………………………………..Full Article: Source

Plunging commodities prices take toll on Goldman Sachs, others

Posted on 21 January 2016 by VRS  |  Email |Print

Goldman Sachs Group Inc on Wednesday became the latest company to report a quarterly revenue decline as oil prices extended their slump and unseasonably warm weather reduced the demand for natural gas and power.
Goldman’s revenue from fixed income, currency and commodities client execution was $1.12 billion for the fourth quarter, down 8 percent from the prior-year period primarily on “significantly lower” earnings in commodities, the bank said in a statement. That was more than 20 percent down from $1.46 billion during the third quarter………………………………………..Full Article: Source

Iran’s Return to the Global Oil Market Is No Cause for Panic

Posted on 21 January 2016 by VRS  |  Email |Print

As Iran ramps up production, it will be countered by a decrease in activity in places where oil is more expensive to produce. The lifting of economic sanctions against Iran this past week is no reason for the oil markets to panic.
While the addition of somewhere between 500,000 and 1 million barrels of Iranian crude per day to an already oversupplied market may seem like the end of the world to those bullish on oil prices, the reality is far less dramatic………………………………………..Full Article: Source

Gold Gains As ‘Nervous’ Investors Seek Haven Assets Amid Turmoil

Posted on 21 January 2016 by VRS  |  Email |Print

Gold rose as renewed losses in Asian equities spurred demand for less risky assets, with Citigroup Inc. saying bullion’s rationale as a haven was now back in vogue and prices may be supported over the first quarter. Bullion for immediate delivery advanced as much as 0.6 percent to $1,093.56 an ounce and was just shy of that level at 12:10 p.m. in Singapore, according to Bloomberg generic pricing. Spot silver also climbed.
The tumultuous start to the year has led investors to seek bullion, boosting prices 3 percent. Asian stocks fell to a three-year low on Wednesday after crude fell below $28 a barrel and the International Monetary Fund cut its world growth outlook amid the slump in most commodities………………………………………..Full Article: Source

Metals and Miners Resume Slide as Growth Concerns Roil Markets

Posted on 21 January 2016 by VRS  |  Email |Print

Mining stocks plumbed a 12-year low and metals resumed their slump as sinking oil and equity markets fueled concerns about world economic growth and prospects for demand.
Oil plunged and stocks from Asia to Europe slid, fueling a rush to haven assets such as gold. The Bloomberg World Mining Index dropped as much as 3.3 percent to its lowest since September 2003, with the world’s biggest miner, BHP Billiton Ltd., losing 7.4 percent in London. Citigroup Inc. cut copper and other base-metals forecasts………………………………………..Full Article: Source

IMF cuts global growth forecast as China slows

Posted on 20 January 2016 by VRS  |  Email |Print

The International Monetary Fund cut its global growth forecasts for the third time in less than a year on Tuesday, as new figures from Beijing showed that the Chinese economy grew at its slowest rate in a quarter of a century in 2015.
To back its forecasts, the IMF cited a sharp slowdown in China trade and weak commodity prices that are hammering Brazil and other emerging markets. The Fund forecast that the world economy would grow at 3.4 percent in 2016 and 3.6 percent in 2017, both years down 0.2 percentage point from the previous estimates made last October. It said policymakers should consider ways to bolster short-term demand………………………………………..Full Article: Source

Commodities demand and China: An explainer

Posted on 20 January 2016 by VRS  |  Email |Print

Falling commodity prices have been treated as one of the clearest indications available that China’s resource-hungry economy is slowing. Yet the latest data on metals consumption paint a more nuanced picture, with demand still rising even as the pace of growth has slowed.
While copper may have halved in price since its peak in 2011, China’s consumption is estimated to have still grown 1.8 per cent last year, according to a report from HSBC………………………………………..Full Article: Source

Iran Follows Saudi Oil-Price Cut in Europe

Posted on 20 January 2016 by VRS  |  Email |Print

Iran said it will cut crude prices to Europe next month in line with similar reductions by Saudi Arabia, signaling that it wants to compete with its largest rival but without making deep discounts after international sanctions were lifted on its oil.
In a price list published on its website in recent days, the National Iranian Oil Company said it will reduce its official prices in North West Europe by $0.55 a barrel for its light crude and by $0.15 a barrel in the Mediterranean for delivery next month………………………………………..Full Article: Source

Oil Market Could Recover Within One Year Of Global Economic Growth

Posted on 20 January 2016 by VRS  |  Email |Print

Bahrain’s Energy Minister Abdulhussain Ali Mirza said that at the moment, oil supply exceeds demand by about 2 million barrels due to stagnation in the Chinese and other economies. The global oil market could recover within a year of the world economy returning to growth, Bahrain’s Energy Minister Abdulhussain Ali Mirza said.
“In a year, for example, the economy can return to growth and thus the situation in the oil market will be balanced,” he said………………………………………..Full Article: Source

Non-OPEC crude production projected to drop in 2016

Posted on 20 January 2016 by VRS  |  Email |Print

Crude oil production in 2016 outside the Organization of Petroleum Exporting Countries (OPEC) will plunge by 660,000 barrels a day (BPD), the group said Monday in its monthly market report, a 270,000 BPD drop from its December estimate. The bulk of the production drop outside OPEC this year will come from the U.S., 380,000 BPD, OPEC projected in its January report, averaging 13.5 million barrels per day (MMBPD), Kallanish Energy finds.
The drop was revised down by 210,000 BPD compared to December’s projection due to the steep drop in global oil prices which could endanger output of marginal barrels from unconventional sources (tight crude and unconventional natural gas liquids)………………………………………..Full Article: Source

Gold is set for a better year on the market

Posted on 19 January 2016 by VRS  |  Email |Print

After a steep decline in gold prices, newly restricted supply should restore the bull market to bullion. After years of high gold prices – which peaked in 2011 before seeing a price slide – encouraging a flurry investment to increase production, output for gold is now said to have peaked. According to Thomson Reuters’ GFMS metals research team, production this year could fall by three percent, offering a potential new rise in the market cost.
Encouraged by rising prices, the gold industry saw increased investment into new productive assets. However, after the price of gold began to decline, these new assets caused increasing strain in the gold mining industry, as they struggled to turn a profit and cover extraction costs………………………………………..Full Article: Source

Gold Output has Peaked for Current Commodities Cycle

Posted on 19 January 2016 by VRS  |  Email |Print

Gold output has peaked in this commodities cycle, according to mining industry leaders and analysts who say few big projects will reach the point of production amid falling prices.
The lack of new assets and declining output at existing mines is expected to curb gold supply, a glimmer of hope for surviving producers of the precious metal in an industry coming to terms with a rush of investment when prices were far higher………………………………………..Full Article: Source

Nickel leads gains in most industrial metals amid China rebound

Posted on 19 January 2016 by VRS  |  Email |Print

Nickel led base metals higher in London, rebounding after two weeks of losses prompted by concerns over financial turmoil in China, the biggest consumer of commodities. Metals benefited from gains in equity markets and the currency in the Asian country on Monday.
“The higher Chinese stock market and the sharp appreciation of the Chinese currency against the US dollar brought a little bit of good mood into the bearish metals market,” Richard Fu, head of Asia & Pacific at Amalgamated Metal Trading in London, said by email………………………………………..Full Article: Source

Funds betting commodity collapse has more to go

Posted on 18 January 2016 by VRS  |  Email |Print

The commodity meltdown that pushed oil to a 12-year low and copper to the cheapest since 2009 isn’t over yet. At least, that’s how hedge funds see it. Money managers increased their combined net-bearish position across 18 raw materials to the biggest ever, doubling the negative bets in just two weeks.
A measure of returns on commodities last week slid to the lowest in at least 25 years. Metals, crops and energy futures all slumped amid supply gluts and an anemic outlook for the global economy………………………………………..Full Article: Source

There’ll be a commodities bull market in 2016: Goldman

Posted on 18 January 2016 by VRS  |  Email |Print

As crude oil prices collapse below $30 per barrel and metals trade near record lows, Goldman Sachs forecasts that 2016 will nonetheless bring a “new bull market” for commodities.
The investment bank predicted that commodity producers this year would finally make the cuts needed to bring supply and demand back into balance. This would be helped by the globalization and increasing liquidity of commodity markets, which will mean surplus production will be absorbed more easily than at present………………………………………..Full Article: Source

Iranian oil likely to push prices lower

Posted on 18 January 2016 by VRS  |  Email |Print

When it comes to oil, the question becomes how low can prices go. And with Iran back as a full player in world oil markets, the previously unthinkable — sub-$20-a-barrel crude — is looking more possible.
Iran’s oil ministers say they intend to boost their oil production and ship 500,000 barrels a day initially, now that sanctions have been lifted in light of nuclear inspections deal, the Islamic Republic News Agency reported. Iran’s goal is 2 million barrels a day. Those levels alone are big enough to further depress the price of oil, especially since Saudi Arabia has refused to cut its production levels………………………………………..Full Article: Source

Saudi minister optimistic oil market will stabilize

Posted on 18 January 2016 by VRS  |  Email |Print

Saudi Oil Minister Ali Al-Naimi said on Sunday that it would take “some time” to restore stability to the global oil market but he remained optimistic about the future. Al-Naimi’s comments came even as Iran said it was ready to increase its crude oil exports by 500,000 barrels a day, hours after international sanctions on Tehran were lifted, removing an obstacle to exports.
“As you know, the oil market has witnessed over its long history, periods of instability, severe price fluctuations, and petro-economic cycles,” Al-Naimi said in a speech at an energy event in Riyadh attended by the Mexican president and energy minister………………………………………..Full Article: Source

Cooperation Among Oil Producers Will Take Time

Posted on 18 January 2016 by VRS  |  Email |Print

Oil-market stability will be achieved through cooperation among major producers but this will likely take time, Saudi oil minister Ali al-Naimi said Sunday, signaling the world’s top petroleum exporter is still not prepared to take sole responsibility for propping up the oil price.
“As you know, the oil market has witnessed over its long history periods of instability, severe price fluctuations and petro-economic cycles. This is one of them,” Mr. Naimi told an energy gathering in Riyadh. “Market forces, as well as the cooperation among the producing nations, always lead to the restoration of stability. This, however, takes some time.”……………………………………….Full Article: Source

Gold buyers, sellers wait for luster to return

Posted on 18 January 2016 by VRS  |  Email |Print

Today, as the price of gold has dropped from peaks that followed, the parties have evaporated, most gold-buying stores and kiosks have closed, and the ubiquitous TV commercials by the tan, smiling Gold Guys are history. How did gold lose its luster?
In late August 2011, gold hit an all-time high of more than $1,900 per ounce in after-hours trading, before falling to $1,600 in 2012, $1,200 in 2013, and drifting along at around $1,100 since 2014. As gold prices declined each year, so did consumer interest in selling gold for scrap………………………………………..Full Article: Source

Buy palladium and dump gold, says precious metals forecasters

Posted on 18 January 2016 by VRS  |  Email |Print

Investors may not want to get too used to this month’s surprise rally in gold. Some of the most accurate precious metals forecasters say the gains won’t last and instead expect palladium to advance, even though it’s off to worst start in decades. After dropping for three straight years, gold has advanced more than any other metal in January.
Bullion’s appeal as a haven got a boost from political tension in the Middle East and Asia and global market turmoil. At the same time, industrial commodities have tumbled. Palladium, a metal used mostly for catalytic converters in cars, fell 12%in January. “The gold market is benefiting from geopolitical news and Chinese stock-market uncertainty, and these factors are unlikely to last,” said Bernard Dahdahat Natixis SA……………………………………….Full Article: Source

Commodity ‘Crash’ Could Be ‘Catastrophic’ to Global Economy

Posted on 15 January 2016 by VRS  |  Email |Print

The world’s economy is in “quite a mess right now,” and while the American economy is doing well, its growth remains “mediocre by historical standards,” argued Carl Weinberg, chief economist of High Frequency Economics. It’s hard to overstate the deleterious effect of falling commodity prices, Weinberg said.
“There’s a crash in commodity prices right now that’s potentially catastrophic to the global economy,” he said. The steep price declines in everything from iron ore to gold to agricultural products — not to mention oil—“10 or 20 years ago” would have had only a modest effect on global GDP, but that’s not now the case, he said………………………………………..Full Article: Source

Oil price plunge: Risks and rewards

Posted on 15 January 2016 by VRS  |  Email |Print

Just over four years ago, the United States and Europe sanctioned the sale of Iranian oil in an effort to curb Tehran’s nuclear program. Oil was trading at $110 per barrel, and Obama administration officials fretted about how to curb Iran’s exports without causing a price spike.
How quickly things change. This week, crude dropped below $30 per barrel for the first time in 12 years, thanks largely to a boom in U.S. production. Sanctions against Iran will likely be lifted soon, unleashing more oil that will further depress an already glutted market………………………………………..Full Article: Source

Gold investment highest in a year following market uncertainty

Posted on 15 January 2016 by VRS  |  Email |Print

It’s been a scary start to 2016 for global markets and investors are responding by buying more gold than at any time in the past year. In the past five days, investors bought 26.8 metric tons of bullion through exchange-traded products backed by the metal, the most since January 2015, according to data compiled by Bloomberg.
Gold is one of the few commodities doing well, with prices up 2.8 per cent so far this year. Interest in the precious metal is being driven by demand for a safe haven after losses spread across Chinese and US equity markets and oil collapsed to $30 a barrel………………………………………..Full Article: Source

Anxious times for Africa’s oil giants as commodities boom starts to bust

Posted on 14 January 2016 by VRS  |  Email |Print

By relying on ready cash from oil and metals extraction, sub-Saharan African countries risk squandering their chance to invest in the continent’s future. As leaders of some African countries brace themselves for a rocky financial year, they might reflect ruefully on the words of Polish author Ryszard Kapuściński: “Oil is a resource that anaesthetises thought, blurs vision, corrupts.”
As the wheels come off a decade-long commodities supercycle, Africa’s oil-producing and metal-rich giants find themselves facing a dangerous mix of lower export revenues, depreciating currencies, declining financial flows from China, falling domestic demand and higher debt costs following last month’s US interest rate rise………………………………………..Full Article: Source

Iran: No request for OPEC meeting

Posted on 14 January 2016 by VRS  |  Email |Print

Iran has received no formal request for an extraordinary meeting for members of the Organization of Petroleum Exporting Countries, its oil minister said. Nigerian Oil Minister and current OPEC President Emmanuel Kachikwu said in a Tuesday interview with CNN that “the time has come” to hold an extraordinary meeting with representatives from the 12 other member states.
Crude oil prices are down more than 70 percent from mid-2014 levels above $100 per barrel. The price for Brent crude oil, the global benchmark, is down 23 percent from the last regular meeting for OPEC on Dec. 4………………………………………..Full Article: Source

Are You Ready for the Meltdown in Commodities?

Posted on 13 January 2016 by VRS  |  Email |Print

The Chinese stock market had an absolutely disastrous start to the year. On the first trading day of 2016, stocks fell by nearly 7%. The selling pressure triggered a circuit-breaker, which halted trading of Chinese shares for the day.
Not surprisingly, the artificial measure did little to contain the market slide. So, the Chinese government intervened drastically on the second trading day. In the early trading hours, they pumped stock prices nearly 5% higher. Unfortunately for them, global equities barely held up by the end of the trading session. The nightmare for regulators and punters didn’t stop there………………………………………..Full Article: Source

Commodity Rout Spreading Pain Beyond Energy, Citigroup Says

Posted on 13 January 2016 by VRS  |  Email |Print

Low commodities prices are hurting the very companies that you’d think would benefit from them. The rise in volatility that has accompanied lower prices of materials from oil to copper to corn is making it harder for management of companies across Standard & Poor’s 500 Index sectors to forecast future cash flows, according to Citigroup Inc.
That uncertainty can lead even companies that aren’t commodity producers to decrease investing and expansion, which subsequently crimps sales growth, Citigroup’s Financial Strategy and Solutions Group wrote in a note distributed to clients Tuesday………………………………………..Full Article: Source

Some OPEC Members Want Urgent Meeting, Says Nigeria

Posted on 13 January 2016 by VRS  |  Email |Print

Some OPEC nations are pushing for an emergency meeting as the oil-producing group grapples with crude prices that are drawing closer to $30 a barrel, though it is unclear whether all 13 members will agree to a gathering.
The Organization of the Petroleum Exporting Countries “may hold an emergency meeting in the first quarter if prices remain at current levels,” Nigerian oil minister Emmanuel Ibe Kachikwu said Tuesday at an Abu Dhabi energy conference, according to a recording of his comments………………………………………..Full Article: Source

OPEC High Output Strategy Working, Reducing Non-OPEC Oil Production

Posted on 13 January 2016 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries’ (OPEC) strategy on maintaining high oil output is working, as non-OPEC countries have lowered their production, UAE Energy Minister Suhail Mazrouei said Tuesday. Earlier in the day, Brent crude reached a 12-year low, majorly due to prolonged global oversupply and the OPEC unwillingness to cut production out of fear of losing market share.
“My assessment of that strategy is that it is working,” Mazrouei said at an energy forum in Abu Dhabi, as quoted by UAE-based newspaper The National. “We have seen a major reduction in the yearly production of non-Opec – it is a fundamental change.”……………………………………….Full Article: Source

Gold spread to platinum extends over $250/oz, largest on record

Posted on 13 January 2016 by VRS  |  Email |Print

The premium of gold to platinum has moved to its largest level on record, at over $250/oz, as the metal fails to keep up with large gains made by gold this year. Whereas gold has added over $50/oz in 2016 to date on safe haven buying at over $1,100/oz this week, soft China data, persistent yuan depreciation and weak stock markets have all helped platinum lose around the same amount this year, to $845/oz as of 1100 GMT Tuesday.
2016 has been even worse for palladium, down around 15% year to date, trading around $450/oz Tuesday morning, its lowest level in over five years, as concerns over China continue to dominate prices for industrial and precious group metals. Palladium’s discount to gold is the largest since 2013, at $650/oz………………………………………..Full Article: Source

Global commodities glut and the slump in China

Posted on 12 January 2016 by VRS  |  Email |Print

Chile is expanding its largest open-pit copper mine below the northern desert to dig up 1.7 billion additional tons of minerals, even as metal prices plummet around the globe. India is building railroad lines that crisscross the country to connect underused coal mines with growing urban populations, threatening to dump more resources into an already glutted market.
Australia is increasing natural gas production by roughly 150 percent over the next four years, as energy companies build half a dozen export terminals to serve dwindling demand. Across the commodities landscape, this worrisome mismatch mainly traces back to the same source: China………………………………………..Full Article: Source

OPEC waiting for US oil companies’ bankruptcy

Posted on 12 January 2016 by VRS  |  Email |Print

OPEC will cut crude production and export in order to raise oil prices, after the US companies extracting hydrocarbons go bankrupt due to the current low energy prices, said Alexander Razuvayev, economist and director of the analytical department at Russian company Alpari.
Alpari is one of the leading companies offering forex trading in Russia. “The price war will end sooner or later,” he told Trend Jan. 11. “We can expect positive changes this year. As a result of falling oil prices, budgets are running out, shale companies go bankrupt. Those, who survive the crisis, will take the new position on the market at comfortable prices.”……………………………………….Full Article: Source

The Gold Market in 2015

Posted on 12 January 2016 by VRS  |  Email |Print

How can we summarize the last year in the gold market? First, it was not a good year for the gold bulls (however, gold performed much better than many other commodities, confirming its role as a currency). The London spot price of the shiny metal declined 9.56 percent from $1172 to $1060. Gold marked its fourth full year in a bear market.
Some analysts are calling this the bottom in gold, and they could be right. However, investors should remember that picking the bottom is often like catching a falling knife. If you have not mastered advanced contrarian strategies, do not fight the trend, which is your friend until it bends………………………………………..Full Article: Source

China’s Buying Binge Replaced by a Global Commodities Glut

Posted on 11 January 2016 by VRS  |  Email |Print

Chile is expanding its largest open-pit copper mine below the northern desert to dig up 1.7 billion additional tons of minerals, even as metal prices plummet around the globe. India is building railroad lines that crisscross the country to connect underused coal mines with growing urban populations, threatening to dump more resources into an already glutted market.
Australia is increasing natural gas production by roughly 150 percent over the next four years, as energy companies build half a dozen export terminals to serve dwindling demand. Across the commodities landscape, this worrisome mismatch mainly traces back to the same source: China………………………………………..Full Article: Source

What does 2016 hold for the oil-hit GCC market?

Posted on 11 January 2016 by VRS  |  Email |Print

Last week, renowned Saudi Arabian contractor Abdullah A M Al-Khodari Sons claimed that the Kingdom’s rising energy and electricity prices would significantly increase its operational costs for outstanding projects over the next five years. Al-Khodari predicted that these changes would increase its expenses by $11.81m (SAR44.3m) between 2016 and 2020.
In a bourse statement to Tadawul, the contractor added that its operational costs would increase by $5.8m (SAR22.1m) in 2016, “which may possibly be of a significant impact on the net profit of the said financial year”………………………………………..Full Article: Source

How Big Is The Bust In Commodities Really?

Posted on 11 January 2016 by VRS  |  Email |Print

There isn’t a single listed commodity that currently trades at a lower price than at any time since January 1974. So how can an entire commodity index, which presumably includes a whole range of commodities, have fallen to a 42-year low?
Had one invested in commodities via GSCI excess return index, the nominal value of the investment would now be at a 42-year low. However, the same is not true of the commodities the index is composed of (although buying them directly wouldn’t have helped much). Many popular commodity indexes, in fact, do not reflect actual underlying commodity prices. This is due to the so-called “rollover effect”………………………………………..Full Article: Source

All about commodities

Posted on 08 January 2016 by VRS  |  Email |Print

Launching its flagship “Global Economic Prospects” report, the World Bank has warned that 2016 could be the year of a “perfect storm” for the world economy. In particular, it held out concerns that a simultaneous slowdown in the five big emerging-markets economies - Brazil, Russia, India, China and South Africa, or the Brics countries - was likely, and could be intensified by a new round of stress in the financial markets.
The World Bank predicts that China will see relatively modest growth, and that recessions in Russia and Brazil will continue. Only India will continue to expand at a robust pace. “If, in 2016, Brics growth slows further, by as much as the average growth disappointment over 2010-14, then growth in other emerging markets could fall short of expectations by about one percentage point, and global growth by 0.7 percentage point,” warned the Bank………………………………………..Full Article: Source

El Nino is likely to push farm commodities higher in 2016

Posted on 08 January 2016 by VRS  |  Email |Print

It might have been a treat for New Yorkers to stroll around in shorts as they basked in unseasonably balmy temperatures over the Christmas season, but the winter warmth felt across large parts of the U.S. and Europe spelled further gloom for commodities.
Along with the downturn in China, El Nino was a key theme in commodities in 2015, and its effects can only be accurately calculated in 2016. While little reprieve can be seen for oil and gas prices, crop shortages in 2015 could lend some support to the value of agricultural commodities. Warm weather in the Northern Hemisphere in December sapped demand for heating, sending crude oil prices to fresh six-year lows………………………………………..Full Article: Source

Gold Rises Again Amid Global Market Tremors

Posted on 08 January 2016 by VRS  |  Email |Print

Gold is regaining its luster as the ultimate safe haven for investors. As global stock markets have come unglued in the first days of 2016 because of worries about weakening economic growth in China and geopolitical unrest over both the Middle East and North Korea, investors have been returning to the market to play defense.
Though gold is traditionally viewed as a risk-off asset, in recent months the $30 billion market has been driven more by anticipation of the Federal Reserve’s interest rate increase and the strength of the U.S. dollar………………………………………..Full Article: Source

China Boosted Bullion Holdings in December as Prices Retreated

Posted on 08 January 2016 by VRS  |  Email |Print

China increased its gold hoard for the sixth straight month in December as prices extended their decline through the end of last year. The central bank boosted reserves to 56.66 million ounces or about 1,762 metric tons from 56.05 million ounces in November, according to the People’s Bank of China.
The country has expanded its stash by 6.3 percent since announcing in July a 57 percent jump since 2009. China is buying gold to diversify its foreign exchange reserves and holds the fifth-biggest tonnage by country. Russia and Kazakhstan are among other nations increasing assets………………………………………..Full Article: Source

Base metals plunge on China worry

Posted on 08 January 2016 by VRS  |  Email |Print

Copper fell over 3 per cent on the London Metal Exchange (LME) after China’s composite index slumped 7 per cent on Thursday. Base metals have not recovered after China announced its currency devaluation in August 2015 as the world’s largest consumer of industrial commodities began to slow down. Nickel has plunged 22 per cent on the LME and zinc, copper and aluminium have declined 19 per cent, 11 per cent and 6 per cent, respectively.
On Thursday base metals prices declined by up to 1 per cent on fresh turmoil in the Chinese market. “The ongoing fall in base metals’ prices can be attributed to the fall in the Chinese currency and deflation in the commodities market. Prices of raw materials have not declined as much as finished products, resulting in a stagnating cost of production,” said an analyst with a leading foreign brokerage house………………………………………..Full Article: Source

Restructuring Activity to Be Boosted By Flagging Commodities in 2016

Posted on 07 January 2016 by VRS  |  Email |Print

China’s economic slowdown led the U.S. markets to drop already in the new year, but it could mean a boon to the number of restructurings and corporate bankruptcies. Restructuring professionals believe the majority of their work will be led by commodities-related companies as demand falls and prices across sectors continue to dip, namely in the oil patch, according to turnaround-advisory firm AlixPartners’ annual restructuring survey.
Nearly 90% of the 185 lawyers, bankers, investors and others surveyed expect the energy and resources industry to be the most distressed. About 40% expect energy companies to restructure through chapter 11, while 31% expect them to try to work out their problems out of bankruptcy court………………………………………..Full Article: Source

Reversion to commodity mean: The force awakens

Posted on 07 January 2016 by VRS  |  Email |Print

There’s a funny fact (touted by gold enthusiasts) about the purchasing power of gold. For most of history — with few exceptions — an ounce of gold has been able to buy you pretty much the same sort of thing: a good quality pair of shoes, a belt and a suit.
Somewhere in our psyche, the suggestion is, that’s how much we’d ever really forgo to obtain a little lump of gold: the combined value of what it costs to clothe ourselves properly (since clothes wear and tear over time and always need replacing). What it also suggests is that any time the gold price trades at more than the collective value of a good pair of shoes, a belt and a suit, chances are it’s massively overvalued………………………………………..Full Article: Source

The long view is the only view on commodity income

Posted on 06 January 2016 by VRS  |  Email |Print

We hear a lot of criticism these days of people focussing too much on the short term. Whether it be business people not looking beyond next quarter’s financial results, or politicians supposedly hostage to a 24 hour news cycle. Both claims, in my view and experience, are greatly overstated.
Where I do find worrying short-termism, however, is in Australia’s approach to commodity prices. The media will show a 2-3 year graph of, say, oil or iron ore prices dropping from over $100 a barrel or tonne to now be around $40………………………………………..Full Article: Source

OPEC December oil output slips, still near record

Posted on 06 January 2016 by VRS  |  Email |Print

OPEC oil output fell in December, a Reuters survey found on Tuesday, led by lower supply from Iraq following a record-breaking month in November and smaller declines elsewhere in the producer group.
The Organization of the Petroleum Exporting Countries is still pumping close to record amounts as Saudi Arabia and other big producers focus on market share, weighing on any recovery in oil prices from near 11-year lows………………………………………..Full Article: Source

Gold and silver in 2016: a prediction

Posted on 06 January 2016 by VRS  |  Email |Print

The surging dollar, prospect of higher interest rates in the US and the slump in commodity prices bore down on precious metals in 2015. While gold prices dropped 10 per cent, silver slid 12 per cent and platinum slumped by a sharp 26 per cent on worries of drop in demand for diesel cars in Europe (after the Volkswagen emission scandal).
Investment demand for all the three precious metals was poor as investors took shelter in bonds. SPDR Gold fund, the largest gold ETF in the world, saw its holdings drop to the lowest in many years. Hard-bitten bullion investors are now thinking twice about betting on precious metals………………………………………..Full Article: Source

Tension Between Iran and Saudi Arabia Presents New Test for OPEC

Posted on 05 January 2016 by VRS  |  Email |Print

The diplomatic crisis between Saudi Arabia and Iran presents a new test for the Organization of the Petroleum Exporting Countries at a particularly challenging time for the oil-producing cartel.
The 13-nation group that controls more than a third of the world’s oil supplies has been able to function in the past even when its members were at war. Iraq and Iran sent representatives to OPEC meetings during their war in the 1980s, and Saddam Hussein’s oil officials sat at the table with representatives of Kuwait’s exiled government after Iraq invaded in 1990………………………………………..Full Article: Source

Ending of China’s super-boom spells pain with no end seen yet

Posted on 04 January 2016 by VRS  |  Email |Print

A decade-old commodity boom came crashing to an end in 2015, hurting energy and mining companies as China’s industrial rise and appetite for raw materials slowed. The outlook for 2016 is not much better. The Thomson Reuters Core Commodity Index fell by a quarter over the year, to hit its lowest level since 2002 in December, as commodities ranging from iron ore to oil took a battering. And there are few bright spots in sight.
“The chances of an optimistic 2016 are bleak,” Mark To, head of research at Hong Kong’s Wing Fung Financial Group, said. “Slowing economic growth and structural reforms in China might contribute to decreased demand for commodities.”……………………………………….Full Article: Source

Why Commodities Are The Smart Play For 2016

Posted on 04 January 2016 by VRS  |  Email |Print

Commodities have been hit with a rare ‘perfect storm’ of economic factors over the past 15 months. Weak global demand combined with one of the strongest dollar rallies in the past 30 years has brought prices to recession-level lows.
There are many reasons to believe this cannot persist, making commodities one of the smart plays for 2016. We break down the underlying economic story, its place in history, and how to play this situation in your own portfolio………………………………………..Full Article: Source

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