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Commodities Briefing - Category | Trading more

Currency trading algorithms

Posted on 18 December 2015 by VRS  |  Email |Print

Algorithm has been a dirty word this year. In September, Volkswagen admitted to installing a “sophisticated software algorithm” on certain vehicles to cheat emissions tests, and in November Barclays was fined $150m for alleged misuse of its foreign exchange algorithm. New regulation will soon be in place to manage the potential for “market distortion” as a result of the increased use of algorithms in financial markets.
But algorithms in themselves are not malicious, and their use is widespread and multi-faceted in trading across asset classes. At its core, an algorithm is simply a set of instructions given to a computer to carry out a specific task: “buy when the price drops below x”, “offer price y if the market moves in our favour”……………………………………….Full Article: Source

OPEC more threatened by Iran than U.S. oil exports

Posted on 17 December 2015 by VRS  |  Email |Print

An end to the U.S.’s 40-year ban on oil exports is probably not what OPEC needs right now. Yet a resurgent Iran may present a greater threat as it prepares to dump a million bbl on the market next year.
While OPEC “could have done without” the return of U.S. crude, “probably much more impactful will be whatever comes out of Iran, starting sometime in the second quarter,” said David Fyfe, head of market research and analysis at trading house Gunvor Group Ltd. Researcher IHS Inc. also said the immediate effect of the ban’s repeal would be “relatively minor.”……………………………………….Full Article: Source

Commodities on track for recovery: Van Eck

Posted on 16 December 2015 by VRS  |  Email |Print

Van Eck Global’s commodity strategist, Roland Morris, said financial markets remain focused on weak demand for commodities, not taking into account relevant supply adjustments that could lead to a sector-wide recovery. Morris gave the example of US oil production, which peaked at 9.6 million barrels in 2011. He said production today is down to nine million barrels and is likely to fall below this in 2016.
“Not only has production on existing rigs been scaled back, but new deep water and oil sands projects that could have delivered between six and seven million barrels have been cancelled or pushed out beyond 2020,” he said………………………………………..Full Article: Source

Commodities stocks help European equities to bounce back

Posted on 16 December 2015 by VRS  |  Email |Print

European equities bounced back on Tuesday from sharp declines in the previous two sessions as energy stocks tracked higher crude oil prices and steel makers gained following a European Commission move on Chinese and Russian steel imports.
The market was also supported by a rally in some French firms, but German chipmaker Dialog Semiconductor slumped 6 percent, dragging down peers such as ARM, after Dialog slashed its revenue guidance. The STOXX Europe 600 Oil and Gas index rose 3.4 percent, the top sectoral gainer in Europe, after oil rose following its lowest in nearly 11 years. BP, BG Group and Royal Dutch Shell rose 2 to 3.5 percent………………………………………..Full Article: Source

Industrial metals drop as commodities seen extending declines

Posted on 16 December 2015 by VRS  |  Email |Print

Industrial metals dropped with zinc and copper leading losses on concerns commodities risk extended declines on slowing demand from China, the world’s biggest user.
Zinc in London fell as much as 1.6% and traded at $1 532 a metric ton at 4:25pm in Shanghai, while copper fell as much as 1.2%. Raw materials have sunk to the lowest level since 1999 as China’s slowest expansion in a quarter of a century cuts demand. Chinese metals companies have announced reductions in supply or plans to rein in capacity growth to stem the price rout………………………………………..Full Article: Source

Plunging oil, ore set to underline new market era

Posted on 15 December 2015 by VRS  |  Email |Print

US Federal Reserve chairperson Janet Yellen is not the only one making history this month. The Organization of Petroleum Exporting Countries ( OPEC) had its own epoch-making event last week when it decided not to curb oil output to staunch bleeding finances in the face of calamitious collapse in crude oil prices. In the meeting, Saudi Arabia insisted that there be no cuts as long as non-OPEC members like Russia enjoy the freedom to ramp oil production.
Iraq and Iran want to increase production but in the face of Saudi intransigence and reluctance to cut, there can only be one outcome. Higher ouptut and lower prices. With markets and investors focused on Yellen’s dilemma, crude oil’s crumbling fortunes is not getting the attention it deserves. ……………………………………….Full Article: Source

Are you brave enough for this commodity trade?

Posted on 15 December 2015 by VRS  |  Email |Print

With crude oil prices below $40 a barrel and still falling, it’s a courageous trader who wants to boost his commodity exposure. But for those that do, ICBC Standard Bank has a novel suggestion. Demetrios Efstathiou, head of trading strategy at the bank, recommends investors look at bonds from major commodity exporting nations — particularly in Central Asia.
“As commodity importers appear safe but expensive, we think that for value, investors have to look at cheap commodity exporters. It is indeed a brave proposition to invest in them when commodity prices are still falling but a gradual accumulation of positions makes sense, especially among selected oil producers as oil prices are expected to bottom out next year,” ……………………………………….Full Article: Source

China November commodities output weak as refinery runs hit record

Posted on 14 December 2015 by VRS  |  Email |Print

China’s output of key industrial commodities including coal and steel remained weak in November amid chronic oversupply as slowing construction demand took its toll. The world’s second-biggest economy has been hit by weak demand at home and abroad, factory overcapacity and challenges posed by its transition to a consumption-led growth model from one reliant on investments.
Analysts see further slowing of the economy in 2016, from the government’s targeted 7 percent growth for this year, which would be the slowest in a quarter of a century. “Chinese demand is likely to disappoint. Our house view is for slowing growth in 2016, and importantly the mix is moving further towards less commodity-intensive services sectors,” analysts with ANZ Research said in a commodities note on Friday………………………………………..Full Article: Source

Crude oil price below $40 is not sustainable – Pure Speculation

Posted on 14 December 2015 by VRS  |  Email |Print

It is not possible nor practical for oil prices to fall below $40 a barrel. Everybody is predicting that oil prices will decline to as low as $30 or even $25, but this is pure speculation just to gain more publicity or to be known as the one who forecasted low level of crude oil prices.
The hard fact is that no oil producer outside the OPEC can survive such a low level, and within a short period, it will be forced to close down. The only countries that can manage such low oil prices are the Arabian Gulf producers, as the rest have higher cost – almost double, above $20 a barrel – including North African countries, Nigeria, Angola and Venezuela………………………………………..Full Article: Source

Commodity Prices Plunge for Third Successive Year

Posted on 11 December 2015 by VRS  |  Email |Print

Commodities have underperformed all other asset classes for a third successive year and produced their lowest annual returns since the 2008 financial crisis. It is difficult to conceive of a much more challenging time for the commodity markets; most of the main commodities have collapsed in excess of 50% from their peaks, iron ore has crashed by 73%, crude oil has plunged by nearly two thirds, corn by 57%, copper by 53%, gold 45% and the main index, the UBS Bloomberg CMCI, 46%.
Indeed, many commodity prices are close to the lows of 2008/9 resulting in huge swathes of the gains from the commodity super-cycle now having been wiped out. In most instances, and particularly for industrial metals and bulks, the key factor generating another year of commodity price declines was excess supply, driven by slowing China and emerging market demand and rising production………………………………………..Full Article: Source

Morgan Stanley closing base metals trading: source

Posted on 10 December 2015 by VRS  |  Email |Print

U.S. investment bank Morgan Stanley will close its base metals trading desks globally as part of a plan to cut up to 25 percent of jobs in its fixed income and commodities division, a source at the company told Reuters on Tuesday.
Some jobs in precious metals and energy markets may also go, but the bank is planning to keep a market making presence in these areas because they are more likely to deliver the required profitability and returns. A spokesman at Morgan Stanley declined to comment………………………………………..Full Article: Source

China lifts imports of some key commodities

Posted on 09 December 2015 by VRS  |  Email |Print

Chinese imports of some key commodities including copper, iron-ore and coal rose month-over-month in November, but that failed to alleviate the negative price sentiment surrounding metals because of concerns about a broader slowdown in the world’s second-largest economy.
China’s steel exports slowed during the month, underscoring the global lack of buyers for a glut of supplies that has been weighing on prices of the metal as well as the main steel-making resource, iron ore. The country’s imports of copper rose month-over-month by 9.5 per cent to 460,000 tons, while iron-ore imports rose 8.75 per cent to 82.13 million tons during the same month………………………………………..Full Article: Source

Oil to stay low for a long, long time, according to traders

Posted on 07 December 2015 by VRS  |  Email |Print

Crude oil slid nearly 3 percent on Friday, as Organization of Petroleum Exporting Countries (OPEC) refused to cut production levels despite an ongoing supply glut that has pressed down mightily on prices. And at this point, traders don’t appear to see crude oil rising back above $50 per barrel any time soon.
With the most widely traded Brent crude contract trading just above $40, the first futures contract that shows oil above $50 expires in the second half of 2017. Crude oil for December 2017 delivery (which is more liquid than other far-in-the-future contracts) is trading at just $51 per barrel………………………………………..Full Article: Source

Commodities set to tumble if yuan gains benchmark SDR status

Posted on 30 November 2015 by VRS  |  Email |Print

Markets are betting that China’s currency is headed for another fall with commodity markets likely to suffer collateral damage. The International Monetary Fund board meets today to consider whether to include the yuan in the basket of currencies that makes up the fund’s benchmark currency called Special Drawing Rights.
It is expected to award it the status that the People’s Bank of China has been seeking, symbolising China’s emer­gence as a global financial power. The PBOC vice-governor Yi Gang commented last week that the currency would remain stable after its inclusion in the IMF basket, implying that the central bank is prepared to intervene to make sure that is the case………………………………………..Full Article: Source

Commodities strike 2002 bottom

Posted on 25 November 2015 by VRS  |  Email |Print

Commodities hit 13-year lows on Monday as metals markets crashed but a steady close in oil and higher grains markets helped a key sector benchmark settle off the day’s trough. Copper and nickel prices fell to multi-year lows, forcing the Thomson Reuters/Core Commodity CRB Index to its lowest levels since November 2002.
The 19-commodity index, however, managed to settle just slightly lower after tracking oil’s steady finish, which came on the back of a pledge by Saudi Arabia to work toward crude price stability. Grains from soybeans to wheat and corn also rose on better physical demand and technical buying, limiting the downside in commodities………………………………………..Full Article: Source

Why The Worst Is Not Over Yet For Commodities

Posted on 25 November 2015 by VRS  |  Email |Print

Commodities have more room to fall. There are competitive reasons productions levels remain high. Interest rate hike by the Fed will put more pressure on the sector. Many commodity investors have been waiting for a bottom in the market in order to take a position on the low-end of the correction. I believe we have more weakness ahead, and it is premature at this time to get into the sector.
My thought is we’re at the end of the commodity super cycle, and in most segments there aren’t much in the way of positive catalysts to provide a decent risk/reward scenario………………………………………..Full Article: Source

Industrial metals and oil most battered in commodities slump

Posted on 24 November 2015 by VRS  |  Email |Print

A slump in commodities deepened, with industrial metals and oil leading losses as the dollar extended gains. Crude extended its drop below US$42 a barrel and copper fell to levels unseen since 2009 as comments from Federal Reserve officials about the prospect of a rate increase next month bolstered the greenback.
Nickel plunged 4.1 per cent and gold declined, helping to send the Bloomberg Commodity Index to a 16-year low. “This is not a really welcoming environment for risk taking,” said Tim Condon, head of Asia research at ING Groep NV in Singapore………………………………………..Full Article: Source

A Chinese conundrum for commodity markets

Posted on 19 November 2015 by VRS  |  Email |Print

There’s an interesting conundrum developing in commodity markets. Oversupply of almost all commodities has been factored into commodity prices throughout this year, as has some weakening of China’s economy and therefore demand for the raw materials that have fuelled its growth. Yet despite China’s official GDP growth numbers tracking in line with expectations — China’s president Xi Jinping reaffirmed his expectation of growth of around 7 per cent this year at the weekend’s G20 summit — commodity prices have cracked once again.
Over the past month or so there has been another sharp fall in prices across the suite of hard commodities, with iron ore prices now down about 13.5 per cent, copper prices by a similar amount, aluminium trading at its lowest levels for six years and zinc prices, which spiked after Glencore announced it would cut a third from its production, falling back to levels about 4 per cent lower than their levels before that announcement………………………………………Full Article: Source

The Collapse of Commodities in One Simple Chart

Posted on 19 November 2015 by VRS  |  Email |Print

This chart from Macquarie puts the year in perspective for commodity investors. It covers various asset classes including equities, FX markets, bonds, and commodity prices, and charts them YTD in terms of US dollars and expressed as a percentage. For a simple chart, there is a lot of information here to consider.
For starters, on the far right is the prime culprit in stymying commodity markets: the Dollar Index. The US dollar, which commodities are priced in, has had a big year with close to a 10% return YTD. While the US economy is still suspect at best, it has served as a safe haven for investors this year over markets such as Europe, China, and Japan. As a result, the USD has had the best performance of all of these asset classes listed on the chart………………………………………Full Article: Source

Currencies, Commodities and Slow Global Growth (Video)

Posted on 18 November 2015 by VRS  |  Email |Print

Geoffrey Yu, senior FX strategist at UBS, and Charles Lichfield, research associate at Eurasia Group, examine global economic growth and the impact of geopolitical risks on currencies and commodities. They speak on “Bloomberg Surveillance.”.………………………………………Full Article: Source

Forget China, the US offers commodities upside

Posted on 11 November 2015 by VRS  |  Email |Print

Commodity price swings aren’t all about China’s weaker demand; the U.S. could move the market upwards as its taste for commodities returns, one expert predicts. Upbeat data from the US suggest the possibility of an Federal Reserve interest rate hike soon, which would be a boon for commodities, Invast Australia’s director of research, Peter Fay, said.
“There are other countries that can come out and add to demand, it’s not just China,” Fay told CNBC’s Squawk Box on Tuesday. The U.S. Bureau of Labor Statistics reported Friday that nonfarm payrolls grew 271,000 for October, a sharp jump from weak August and September numbers…………………………………………Full Article: Source

IEA: Cheap oil era could boost reliance on Middle Eastern crude

Posted on 11 November 2015 by VRS  |  Email |Print

If crude prices don’t bounce back by the end of the decade, an era of cheap oil could consolidate more oil-market power into the hands of a few low-cost producers in the Middle East – raising concerns about energy security for oil-importing nations, the International Energy Agency says.
The IEA’s closely watched World Energy Outlook, an annual report being released Tuesday, said the world’s reliance on Middle Eastern oil exports could “eventually escalate to a level last seen in the 1970s,” most profoundly in developing Asian countries like India and China, if oil prices stay low well beyond 2020 and force higher-cost producers out of the market over the next 25 years. The Paris-based group, which consults 29 oil-importing nations, is a well-respected oil-market forecaster………………………………………..Full Article: Source

Dhanteras fail to boost gold sales

Posted on 11 November 2015 by VRS  |  Email |Print

Gold sales have remained sluggish despite the Tihar festival and Dhanteras which is considered to be an auspicious day for buying precious metals as people are more concerned about daily essentials. Jewellers said that low vehicular movement due to the fuel shortage caused by the Indian blockade had also dampened the festive buying sentiment.
Although huge crowds were seen at some gold shops, bullion traders said that footfall was 20-30 percent less compared to previous years. Many gold shops have launched discount offers on jewellery making charges to entice consumers. The offers will run till Laxmi Puja which occurs on November 11. Dhanteras, which was celebrated on Monday, marks the beginning of Tihar when buying gold is a popular custom………………………………………..Full Article: Source

Gold stabilises but more pain ahead

Posted on 11 November 2015 by VRS  |  Email |Print

Gold has stabilised after the weekend’s plunge, and Australian gold equities have stabilised with it, but there’s more pain to come, say analysts. Bullion was trading at $US1092 on Tuesday afternoon, up from the weekend’s low around $US1087.
Just to put that in perspective, on October 28 – less than two weeks ago – bullion was trading at $US1180. That’s a decline of nearly 8 per cent. Deutsche Bank analyst Brett McKay said it was “pretty obvious” the likelihood of a US Federal Reserve interest rate rise had prompted the fall. As US interest rates rise, and offer a better return to investors, alternative investments like gold lose their appeal………………………………………..Full Article: Source

Commodity demand: Past, present, future

Posted on 09 November 2015 by VRS  |  Email |Print

Over the past 15 years, China’s impact on global raw material demand has been nothing short of phenomenal. The spectacular growth in commodity demand between 2005 and 2010 led to the term “commodity supercycle”. But this was no ordinary commodity cycle, as the nation with a population of more than 1 billion people rapidly urbanised.
Today, despite the slowdown in commodity demand since 2011, there are still many analysts who have the firm conviction that the world remains in a commodity supercycle and that the globe is currently experiencing a pause before the acceleration in the demand for commodities resumes………………………………………..Full Article: Source

OPEC October oil output falls led by Saudi, Iraq

Posted on 09 November 2015 by VRS  |  Email |Print

Bunker buyers watching the key oil market drivers Friday received mixed signals as October all but drew to a close, with analysts undecided on whether Saudi Arabia, and the Organization of the Petroleum Exporting Countries (OPEC) as a whole, had increased or decreased their oil output. Even so, prices of Oman crude on the Dubai Mercantile Exchange closed the month marginally higher.
That’s an increase of 1.3 percent from a year earlier and 0.3 percent more than the previous month. “Stockpiles of distillate and gasoline are expected to have fallen last week, suggesting demand was sufficient to soak up the extra supplies assuming refinery activity picked up”, said the agency, predicting a decline of 1.88 million barrels in distillate stocks and a drawdown of 660,000 barrels in gasoline stocks in the same week………………………………………..Full Article: Source

Tokyo Commodity Exchange Trading Volumes down in October

Posted on 09 November 2015 by VRS  |  Email |Print

The Tokyo Commodity Exchange (TOCOM) reported a 12.8 percent monthly decline in average daily trading volumes, from 109,962 to 95,896 contracts. The total amount of trades carried out on the exchange over the month of October stood at 2.013 million, versus 2.089 million contracts for September.
In a statement, the exchange attributed the decline to the market uncertainty shrouding the economies of China and the European Union, which, it said, kept volatility subdued………………………………………..Full Article: Source

Medium-term outlook brightens for China’s commodities demand

Posted on 05 November 2015 by VRS  |  Email |Print

Lost amid the headlines about China’s decision to end its one-child policy was news that points to a brighter medium-term outlook for commodity demand in the world’s biggest consumer of natural resources. While the details of the ruling Communist Party’s fifth plenary have yet to be published, the world of commodities should note the commitment to double gross domestic product and per capita income by 2020 from 2010 levels.
This should go some way towards alleviating fears that China’s economy is in structural decline, as achieving those goals will require urbanisation to boost earnings to a level where China could be considered a middle income country. While it is no secret that Chinese leaders want to see an economy led by more sustainable consumer spending, to get there the country needs consumers with higher disposable incomes, and this means city-based jobs, whether these be in services such as finance or in manufacturing………………………………………..Full Article: Source

UBS: iron ore hanging tough, other commodities headed south

Posted on 05 November 2015 by VRS  |  Email |Print

There’s more grim news ahead for Australia’s commodities, with all minerals bar iron ore expected to head south. UBS has updated its commodity forecasts offering a mixed outlook, with iron ore expected to do a little better, coal to do worse, and base metals, including copper, expected to plunge.
For iron ore prices at the end of this year, UBS has upgraded forecasts slightly from $US56 to $US57. For the end of 2016 UBS has updated their iron ore price forecast to $US52 per tonne from $US50. The commodity dropped below $US50 last week for the first time since July as the fourth quarter tends to be a weak quarter for Chinese steel production. Steel production in China peaked last year at about 830 million tonnes, according to UBS……………………………………….Full Article: Source

Aluminium traders closing out bearish bets

Posted on 03 November 2015 by VRS  |  Email |Print

Orders to remove aluminium from warehouses tracked by the biggest metals exchange rose for a third day, the longest stretch in more than a year, prompting traders to close out bearish bets on prices that are near a six-year low.
Cancelled warrants, as the bookings are known, surged 21 per cent in the past three days to 1.1 million metric tons, the highest in five weeks, London Metal Exchange data show. While the market is in surplus, the bookings are probably a sign that supplies are tightening and have spurred traders to cover positions on further price declines, according to ICBC Standard Bank………………………………………..Full Article: Source

Focus on Africa for next commodities ‘supercycle’

Posted on 02 November 2015 by VRS  |  Email |Print

There was a frenetic air to trading in London’s listed miners this week — things were faster, wilder and even more uncontrolled to the downside than battered sector players have come to expect. No one mentions the concept of a commodities “supercycle” these days, not after four years of a downturn with no end in sight.
The themes of oversupply and faltering Chinese demand are well-worn, but the focus recently has moved to corporate debt levels and dividends. Or rather debt and the non-deliverable nature of those dividends. There is also the slightly unintuitive issue of rapidly falling production costs in the mining industry, noted by Investec’s sector specialist Marc Elliott this week as he and his research team again chopped their commodity price forecasts across the board………………………………………..Full Article: Source

Emerging markets and commodities: These are 2015’s seven worst-performing funds

Posted on 30 October 2015 by VRS  |  Email |Print

To say investors have been having a rocky 2015 is putting it mildly, with concerns over China’s worsening slowdown, a continuing commodities rout, and emerging markets getting pummeled. And all that before Black Monday came along and pulled the rug from under our feet as Chinese stocks fell to the floor on 24 August.
But some funds have been performing worse than others. FE Research has put together the seven active funds giving investors the worst headaches. It’s not hard to see the common ground here: Emerging markets and commodities funds are struggling the most, as Patrick Enright, analyst at FE Research said:……………………………………….Full Article: Source

Why Is Aluminum Trading at Its Lowest Levels Since 2009?

Posted on 28 October 2015 by VRS  |  Email |Print

Base metals and major base metal mining companies fell in the week ending on October 23, 2015. Within the base metals complex, Aluminum was the worst performer, falling ~5% last week. Anglo American (AAUKY), one of the major producers of base metals, led the descent by falling 11% last week. Also, LME (London Metal Exchange) 3M Copper fell by 2% last week and closed at 5176$ per MT, or metric ton.
Copper has been consolidating for the past two weeks. The surprise rate cut from China initially had a positive effect on metals prices, but as the dollar found major strength, these metals, including copper, fell to the lows established on October 21. The Chinese government’s meeting to draft its 5-year development plan, as well as the FOMC meeting, will help define the direction of copper prices in the short term………………………………………..Full Article: Source

The Commodities Boom Is Dead. Long Live the Commodities Boom.

Posted on 26 October 2015 by VRS  |  Email |Print

What’s going on with BHP Billiton? The world’s biggest miner bid for a share in a Chilean copper mine this year and is exploring for offshore petroleum in Australia and the Gulf of Mexico. Isn’t the commodities super-cycle meant to be over?
One way of thinking about it is to take a trip to your local supermarket. Its owners probably purchased a lot of steel, concrete and bricks while it was being built. Now the doors are open, they’re buying stuff that shoppers use every day: Food to fill their bellies, gasoline to fuel their cars, aluminum foil to wrap their lunch, electronic goods wired with copper, and stainless steel cutlery alloyed with nickel………………………………………..Full Article: Source

Oil traders threaten London market exit over EU ‘position limits’

Posted on 26 October 2015 by VRS  |  Email |Print

Some of the world’s largest oil traders are threatening to pull their business from London’s derivative exchanges because of tough new European rules that would place limits on their ability to manage price swings. Oil majors including BP and Royal Dutch Shell, and large independent traders such as Trafigura, may be unable to hedge their financial exposures to the contents of more than a handful of oil tankers under current proposals from the European Commission.
The rules, which are making their way through Brussels, seek to clamp down on speculation by imposing “position limits” that cap the number of futures contracts each company can hold………………………………………..Full Article: Source

India: Investors could soon get to trade in commodity, weather-based indices

Posted on 26 October 2015 by VRS  |  Email |Print

Traders, rich investors and hedgers could get to trade in commodity and weather-based indices, akin to Nifty and Bank Nifty in the equity segment, in a matter of months. In a move to deepen the decade-old commodity futures market, its new regulator Sebi is studying how this could change the trading landscape.
“We are studying the commodity market. Our initial sense is that it is a shallow market. We would like it to be deepened like the equity market, where introduction of demat accounts and online trading were the game changers. We are identifying what these (game changers) could be for the commodity markets,” a senior Sebi official said……………………………………….Full Article: Source

‘Urgency’ for oil exporters to adjust spending: IMF

Posted on 23 October 2015 by VRS  |  Email |Print

Political turmoil in the Middle East and a sharp decline in oil prices highlights the “urgency” oil exporting countries should have in adjusting their government spending plans, according to the latest regional outlook from the International Monetary Fund (IMF).
The IMF forecast growth in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region would be 2.5 percent in 2015, down from growth of 2.7 percent last year and down 0.5 percentage points from the fund’s last predictions in May………………………………………..Full Article: Source

Goldman Said to Hire Commodity Traders From Glencore, Moore

Posted on 23 October 2015 by VRS  |  Email |Print

Goldman Sachs Group Inc. hired traders from Glencore Plc and hedge fund Moore Capital Management LLC as the bank seeks to rebuild its bulk commodities team following a string of departures, according to people familiar with the situation.
The investment bank has recruited Espen Aaboe from Moore Capital and Brian Koizim from Glencore to trade coal and iron ore, according to the people, who asked to not be identified because the information hasn’t been made public. Both will start in London at a later date………………………………………..Full Article: Source

US and European stocks ease as commodities slip

Posted on 21 October 2015 by VRS  |  Email |Print

Stocks were slightly softer as the euro and Bund yields rose after improving bank lending in the eurozone reduced expectations for more stimulus from the European Central Bank. The FTSE Eurofirst 300, a pan-European equity gauge, fell 0.5 per cent, also dragged lower by resources groups as the prices of base metals and oil relapse. The FTSE Asia Pacific index shed just 0.1 per cent.
Both regions have received little impetus from the US, where the S&P 500 was flat overnight and briefly flirted with two-month highs before slipping 2.89 points to 2,030.77 by the close. That leaves the Wall Street benchmark, which tends to determine the global mood, only about 5 per cent below its record hit in May, having bounced 8.7 per cent from its August lows………………………………………..Full Article: Source

Diamond industry dragged into commodities slump

Posted on 21 October 2015 by VRS  |  Email |Print

The China-fueled commodity slump that has torn through the world’s biggest raw-materials markets from iron ore to copper is now hitting the diamond industry. That’s bad news for Anglo American. Cooling demand for diamond jewellery in China, the biggest market after the US, is the latest sign that the country’s slowdown isn’t only a problem for industrial commodities.
At the same time, customers of Anglo American’s De Beers unit, who trade, cut and polish the stones, say the producer is demanding more for the gems than many in the industry say they can afford to pay. “It is a catastrophe,” said Guy Harari, co-founder of rough-diamond trading platform Bluedax. “De Beers is saying it’s business as usual; it’s not business as usual. The market is much weaker than what De Beers tries to show the world.”……………………………………….Full Article: Source

Moody’s downgrade 2016 oil prices estimates

Posted on 20 October 2015 by VRS  |  Email |Print

Ratings agency Moody’s has cut its price outlook for the both Brent crude and WTI, believing the rise in prices will take place at a much slower pace than originally forecast as oversupply and demand issues show no signs of waning. The agency downgrade it price assumption in 2016 for Brent crude to $53 per barrel, down from $57. WTI was cut to $48 from $52 per barrel.
Moody’s expects both prices to rise by $7 per barrel in 2017, which is down $5 per barrel from its prior forecast. “We believe that oil prices will remain lower for a longer period, as large built-up inventories and oversupply cause oil prices to increase at a slower rate,” said managing director of corporate finance at the group, Steve Wood………………………………………..Full Article: Source

LBMA Looks to Modernise Gold Trading

Posted on 20 October 2015 by VRS  |  Email |Print

Change is brewing in London as the the LBMA – the association that oversees the world’s largest gold market – is looking at how best to modernise and improve over-the-counter gold trading. As members of the world’s gold industry meet this week at the LBMA’s annual conference in Vienna, their proposals are being sought on how to bring the gold trading in London up to date.
According to Eddie Van Der Valt reporting today for Bloomberg, London’s bullion market is more than three centuries old and has cleared about $21 billion of gold on average each day through the city this year. Key considerations for reform include “boosting transparency and… considering a new electronic platform that may lower trading costs and improve efficiency”………………………………………..Full Article: Source

Commodities slump casts a pall over UK dividend growth

Posted on 19 October 2015 by VRS  |  Email |Print

Dividend growth from London-listed companies is set to slow sharply in 2016 as the commodities sell-off hits payouts. Total dividends paid by companies listed on the main market are set to grow by 3 per cent in 2016, down from a 6.8 per cent projected increase in 2015, says a report by Capita Asset Services.
The gloomier prospects follow a peak in the second quarter, when total dividends reached their highest levels since before the 2008 financial crisis. But that picture has since been marred by dividend cuts at Glencore, the heavily indebted FTSE 100 metals and mining group, and Standard Chartered, the emerging markets focused bank………………………………………..Full Article: Source

China could be what determines whether the bottom is in for commodities

Posted on 19 October 2015 by VRS  |  Email |Print

The painful sell-off in some commodities may be over for now, but a blast of major Chinese economic reports early next week could put any recent rallies to the test. While many Wall Street strategists see signs of a broader bottoming process, there is no consensus that the commodities crash is actually over, particularly for copper.
Nonetheless, a bundle of Chinese data Monday, including GDP, retail sales and industrial output, could set the course for these markets next week. Analysts believe China’s economy must show improvement, or at least stop declining, before some base metals and other commodities see a real rebound. The concern is that any unexpected weakness in the data could mean a hard landing is ahead………………………………………..Full Article: Source

China, LatAm need to expand cooperation far beyond trading commodities

Posted on 15 October 2015 by VRS  |  Email |Print

Cooperation between China and Latin America, which traditionally relied on trading commodities, has to explore new areas amid the fall in the price of commodities. In its latest World Economic Outlook report, the International Monetary Fund (IMF) identified the end of the commodities supercycle as one of the major economic threats currently facing the world.
Many emerging economies, which rely heavily on exports of raw materials, are clearly suffering. For example, raw and intermediate products make up 62 percent of Brazil’s total exports; countries such as Chile and Peru have similar trade breakdowns. It is no wonder that the fall in the price of oil, iron, copper and other minerals has left them uncertain about how to rebalance their foreign trade………………………………………..Full Article: Source

Wait for commodities opportunities

Posted on 14 October 2015 by VRS  |  Email |Print

China’s continued deceleration has significantly impacted countries such as Canada, Australia and Brazil, which all have resource-dependent economies. That slowdown has also weighed on global demand for many commodities, including iron ore, coal, coke and copper, says Scott Vali, vice-president, Equity, for CIBC Asset Management. He manages the Renaissance Global Resources Fund.
In particular, China’s transition from an industrialized to consumer economy has hurt steel demand, he adds. “We’re seeing auto sales [and] steel sales peaking. That has a direct correlation on the demand for coke and coal, and [for] iron ore.”……………………………………….Full Article: Source

China imports plummet on weak commodities prices

Posted on 14 October 2015 by VRS  |  Email |Print

Chinese imports plunged by more than a fifth last month, official figures showed Tuesday, as slowing growth in the world’s second-largest economy wreaks havoc on global commodities prices and the country’s own customers.
The Asian giant is the world’s leading trader in goods but flagging expansion has seen the resources it uses — such as iron ore and crude oil — fall sharply in value, hitting producer countries, for example Australia. September imports sank 20.4 percent to $145.2 billion in dollar terms, the customs department said — worse than forecast in a survey of economists by Bloomberg News………………………………………..Full Article: Source

How Much Gold Is China Importing

Posted on 14 October 2015 by VRS  |  Email |Print

We have some catching up to do in terms of discussing Chinese gold import in H1 2015 and how this relates to withdrawals from Shanghai Gold Exchange (SGE) vaults. For this post, it’s advised you’ve read The Mechanics Of The Chinese Domestic Gold Market to have a basic understanding of the physical gold supply and demand flows through the SGE within the Chinese domestic gold market.
SGE withdrawals in 2015 are stronger than ever. Although, SGE withdrawals are (seemingly) less correlated to Chinese gold imports this year, nonetheless Chinese gold imports in the first six months of 2015 were higher relative to the same periods in the years before………………………………………..Full Article: Source

Goldman Sachs: What to expect from commodities as China slows

Posted on 13 October 2015 by VRS  |  Email |Print

After a bounce in both oil and metal prices last week, some analysts predicted that the worst was over for the commodity rout sparked by fears of an economic slowdown in China. Nonetheless, Goldman Sachs is maintaining its bearish take on the sector generally, as it argues fundamentals have not changed following the recent rally, but analysts at the bank are also suggesting that China’s rebalancing also throws up some opportunities.
The biggest shift the group sees is a rising demand for “opex” commodities, or energy and consumption-based metals such as aluminium in China, while expecting a decline in demand for “capex” commodities such as steel, cement and iron ore………………………………………..Full Article: Source

The Falling Commodities Markets Are Not About To Cause A Second Crash

Posted on 13 October 2015 by VRS  |  Email |Print

Seriously, there is no chance of a systematic crash from the troubles that certain commodities companies are going through. Whatever does happen to Glencore (and it has to be said that what does happen might not be good for that firm) we’re simply not at a Bear Sterns or Lehman Brothers moment.
The firms that are having those interesting times simply aren’t large enough with respect to the global economy to have that effect. Nor are they harbingers of a more general financial markets crash. They’re, if anything at all, simply commodity traders who got a little over leveraged in the boom and now the commodities bust is upon them………………………………………..Full Article: Source

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