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Don’t let the rally fool you: Commodity companies are headed for a massive debt cliff

Posted on 10 March 2016 by VRS  |  Email |Print

If you think commodity producers are out of the woods as markets rally, here’s a reality check: many are still grappling to contain debt. Another year of belt-tightening hasn’t kept pace with an earnings slump after prices collapsed. One gauge of leverage among mining, energy and agriculture companies continued to rise in the fourth quarter and is more than double year-earlier levels.
While raw materials have rebounded in the past month, they are still well below levels of even two years ago — 28 per cent in the case of copper and 64 per cent for crude………………………………………..Full Article: Source

China Is Now In Control Of Global Silver Prices

Posted on 10 March 2016 by VRS  |  Email |Print

China has been an unofficial price-setter for most metals over the past decade. And this week, the country became an official participant in setting prices for one of the world’s most important precious metals markets.
That’s the London Bullion Market silver price. Where one of China’s largest banks just became a member of an elite group of players that controls fluctuations in this key metal. CME Group, which runs the process for price setting of silver in London, said Sunday that China Construction Bank will officially join as a member of the silver price process………………………………………..Full Article: Source

Rout in global steel prices puts brakes on platinum recycling

Posted on 10 March 2016 by VRS  |  Email |Print

Recycling rates for autocatalyst metals platinum and palladium, have been driven lower in the past year not only by a price slide in the metals themselves, but also by a crash in the value of another raw material - steel.
With steel prices forecast to remain under heavy pressure this year in the face of over-supply and tepid demand, that could limit an expected rebound in the rate at which platinum group metals are recovered from catalysts. Recycling slowed last year as more scrapped cars were stockpiled by recyclers awaiting better prices, and as fewer cars, which use platinum in their autocatalysts, were scrapped………………………………………..Full Article: Source

Reasons to be cautious over commodity optimism

Posted on 09 March 2016 by VRS  |  Email |Print

The stunning rally in iron ore and mining stocks has turned commodity pessimism into a bout of optimism overnight. But there are still reasons for caution before relegating low commodity prices to history.
The increase in Chinese steel prices has driven a record 19 per cent rise in iron ore prices this week. But analysts see few signs that steel demand will pick up soon in the world’s largest consumer of the metal………………………………………..Full Article: Source

Here’s why commodity prices are rallying

Posted on 09 March 2016 by VRS  |  Email |Print

Iron ore saw its biggest one-day jump in value ever yesterday, reports Bloomberg. The price soared by a stunning 19% at one point. It’s partly down to hopes that China might be up for more “stimulus”.
But there’s also an increasingly convincing case to be made that we’ve seen the worst of the commodities bear market. And that’s going to create some interesting dilemmas for the world’s central bankers………………………………………….Full Article: Source

How far can the commodities rally go?

Posted on 09 March 2016 by VRS  |  Email |Print

As is the trend these days, where the miners go, the FTSE 100 is sure to follow. So, unsurprisingly, profit-taking in the commodities sector is the main reason why London’s blue-chip index is nursing losses Tuesday. With many miners having surged by 50% or more since mid-January, investors are rightly wondering how far the rally has to run.
The timing and breadth of the upturn certainly caught many investors off guard. Anglo American was the proverbial falling knife until January, since when its share price is up more than 160%. Glencore, once everyone’s favourite dog to kick, is up 126% in the past seven weeks………………………………………..Full Article: Source

Two signs that oil prices may have bottomed

Posted on 09 March 2016 by VRS  |  Email |Print

Oil prices may have finally hit a bottom, Jodie Gunzberg, global head of commodities and real assets at S&P Dow Jones Indices, said Tuesday. “There’s two things … that show us that it could have bottomed,” Gunzberg said.
“The energy stocks are outperforming the energy bonds by the most since October, and that shows a lot of optimism in the market. The other one is we saw a historically big runup in oil of 15 percent in three days last month. That has an additional 20 percent return.” Crude prices have been under pressure all year amid an oversupplied oil market and global growth concerns………………………………………..Full Article: Source

Why gold could rally by 50 per cent over the next two years

Posted on 09 March 2016 by VRS  |  Email |Print

Global investment advisory firm CrossBorderCapital explains why gold bullion is its high conviction trade this year and why it expects the commodity’s price to soar over the course of this year and 2017. The price of gold bullion is likely to soar over the course of this year and next year, according to the latest liquidity report from CrossBorderCapital, who expect the precious metal to reach $2,000 in 2017.
The investment advisory firm believes that the changing mix in global liquidity fuelled by monetary policy will continue to weaken paper money and therefore lead to strong gold prices………………………………………..Full Article: Source

Commodities Rebound Hinges on China’s Real Estate Market

Posted on 08 March 2016 by VRS  |  Email |Print

Iron ore prices soared the most ever Monday after China voiced willingness to stimulate the economy. The commodities rebound is being driven by speculation that investments in China’s housing market is recovering, Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong said in a report.
That means Chinese real-estate investments should also register a bounce when figures for January and February are released this month. Hong is not so sure: While housing inventories in bigger cities have fallen, it will “take years to clear” backlogs in smaller towns that account for 60 percent of China’s property investments, he said………………………………………..Full Article: Source

Why 2016’s gold rush is already running out of steam

Posted on 08 March 2016 by VRS  |  Email |Print

Gold has been hailed as the “new black” in 2016. But after the precious metal’s best start to a year since 1980, signs are emerging that a newfound love for base metals could overrun the gold rush, says Citigroup.
Gold is up almost 20% this year so far, easily outperforming copper and aluminum as well as other asset classes, including equities. That’s largely because concerns over a serious economic slowdown in China and plummeting oil prices triggered a flight to safety away from riskier choices………………………………………..Full Article: Source

The Commodities Rally Isn’t Built to Last

Posted on 07 March 2016 by VRS  |  Email |Print

It’s clear now that U.S. markets, in their swift early-2016 downdraft, were too worried about the risks of a recession. Friday’s jobs number helped put most lingering doubts to rest. Now, the opposite question is on the table. Are the markets, especially recently buoyant commodities and emerging markets, correctly predicting a ​global economic rebound that would undo the damage from last year?
Friday’s U.S. trade data say these markets are wrong and that the global economy is weak at best. The U.S. trade deficit grew 2.2% on the back of lower imports and exports, with shipments declining for nearly everything except for cars………………………………………..Full Article: Source

A rally in commodities may be a sign that Wall Street hit a bottom

Posted on 07 March 2016 by VRS  |  Email |Print

Have we hit a bottom yet? Wall Street appears to think that a march higher in the commodities sector may be signaling that the worst is over for the market — at least in the near term.
For many investors, plunging commodity prices have been a sign that all isn’t well in the world. Falling commodity prices, specifically crude-oil prices can serve as a sign that global growth is in a state of retrenchment. In the case of oil, many believe it is simply a matter of an unrelenting glut………………………………………..Full Article: Source

Will Russia End Up Controlling 73% of Global Oil Supply?

Posted on 07 March 2016 by VRS  |  Email |Print

Russia has played a master stroke in the current oil crisis by taking the lead in forming a new cartel, but it’s a move that could spell geopolitical disaster. The meeting between Russia, Qatar, Saudi Arabia and Venezuela on 16 February 2016 was the first step. During the next meeting in mid-March, which is with a larger group of participants, if Russia manages to build a consensus—however small—it will further strengthen its leadership position.
Until the current oil crisis, Saudi Arabia called the crude oil price shots; however, its clout has been weakening in the aftermath of the massive price drop with the emergence of US shale. The smaller OPEC nations have been calling for a production cut to support prices, but the last OPEC meeting in December 2015 ended without any agreement………………………………………..Full Article: Source

Saudi’s OPEC Love-In Has Limits

Posted on 07 March 2016 by VRS  |  Email |Print

Why is Saudi Arabia even prepared to discuss supply restraint?A second meeting has been pencilled in by the kingdom, Russia, Venezuela, Qatar and an unspecified group of oil producers (OPEC and non-OPEC) to talk again about the proposed output freeze, according to Nigerian petroleum minister Emmanuel Kachikwu.
But no-one should read this as a sudden outbreak of altruism in Riyadh.Non-OPEC producers Mexico and Oman might hope to get an invitation to the meeting, and they’ve both joined in with supporting prices in the past. When the group does get together, though, one big market participant certainly won’t be there: the U.S. shale industry………………………………………..Full Article: Source

China’s Commodities Trade Thrives as Uncertainty Spurs Wagers

Posted on 03 March 2016 by VRS  |  Email |Print

Economic uncertainty is a boon for China’s commodities trade, lifting volumes and expanding the nation’s sway over global markets for raw materials even as its own demand slows, according to two veteran metals brokers who share more than 50 years experience in the industry.
“Volatility is going to remain in the market this year and that is going to increase turnover,” said John Browning, managing partner at BANDS Financial Ltd., the brokerage he founded with Chinese business partner Tiger Shi last year………………………………………..Full Article: Source

US recovery involves short-term pain and long-term gain for commodities

Posted on 01 March 2016 by VRS  |  Email |Print

The US economic recovery placed pressure on metals prices as investors continued to unwind commodities-based positions taken during the resource supercycle, according to Export Development Canada VP and chief economist Peter Hall.
It had not been an orderly event, particularly for commodities-focussed nations that experienced pain on the lower prices caused, he told an audience at a recent meeting of the Canadian Institute of Mining’s Management and Economic Society in Toronto………………………………………..Full Article: Source

The Gold Price: How Much Higher Can it Rise?

Posted on 01 March 2016 by VRS  |  Email |Print

Gold has had a barnstorming start to the year, rising 17% since January 1st to its peak of around $1,260. The dynamic behind the rise in prices has been a heightened risk aversion and panic over… well, just about everything really.
Without fear to drive demand, gold suffers from the cost disadvantage of storage and finance costs but without the corresponding income stream of dividends. With Japan becoming the latest country to offer negative interest rates, investors sitting on cash are figuring out the sums on gold carry costs………………………………………..Full Article: Source

USDA: 2016 to be another bad year for farm commodities

Posted on 26 February 2016 by VRS  |  Email |Print

Commodity prices will not recover this year, the federal government said Thursday in a forecast that will be a blow to producers hoping for a rebound in the slumping farm economy.
The U.S. Department of Agriculture said producers should expect slumping farm income, modest declines in land values and cash rents and a less-than-favorable trade environment. Even so, the USDA declared that the financial health of the agriculture sector is strong because producers took advantage of record harvests and high prices in past seasons to strengthen their bottom line………………………………………..Full Article: Source

Big price drops for commodities over last 12 months

Posted on 26 February 2016 by VRS  |  Email |Print

The European market has proven more resilient to price declines for commodities than the global market. The latest report from the European Commission makes for grim reading, with prices for all major commodities, including grains, meat and dairy, suffering big drops in price over the last 12 months.
However, while the data shows significant declines for most commodities on the global market, European prices are still down, but have been more insulated. Grains: For 2015, the world market price of all cereal grains in December was down significantly year-on-year. Soft wheat prices were back almost 27%, while maize and barley prices took a hit of 8% and 17% respectively………………………………………..Full Article: Source

Amid Commodities Gloom, a Few Bright Spots Emerge

Posted on 24 February 2016 by VRS  |  Email |Print

Commodities have been an unloved asset class for a while, but some have had a pretty good year so far. Not that you’d know it from listening to those who produce or trade the world’s metals. On Tuesday, mining giant BHP Billiton announced a $5.67 billion first-half loss and said it would slash its dividend, arguing that the current period “of weaker prices and higher volatility will be prolonged.”
Singapore-listed trader Noble Group Ltd. meanwhile cut its long-term forecast for coal prices, blaming weaker growth in China and the broad trend away from using coal as an energy source. The company also issued a profit warning, saying it expects to report a net loss for the fourth quarter………………………………………..Full Article: Source

Why the Recent Rally in Commodities Will Come to an End

Posted on 24 February 2016 by VRS  |  Email |Print

Despite the upbeat view of some analysts and industry insiders who have predicted a strong rebound in commodities over the course of 2016, the outlook remains gloomy. This is because industry fundamentals and recent economic data indicates that demand will remain soft and that sharply weak commodity prices are here for some time to come.
Now what? Over the last two decades the primary driver of growing commodity prices was China’s insatiable demand for raw materials as it rapidly modernized and developed. This triggered a massive construction boom as the promise of a better life and higher wages sparked one of the greatest waves of rural-to-urban migrations ever witnessed………………………………………..Full Article: Source

The Collapse in Commodities Continues (Video)

Posted on 23 February 2016 by VRS  |  Email |Print

On “Single Best Chart,” Bloomberg’s Tom Keene looks at the collapse in commodities. Economic Cycle Research Institute’s Lakshman Achuthan and New York University’s Brad Hintz also weigh in on “Bloomberg Surveillance.”.………………………………………Full Article: Source

Opec has failed to stop US shale revolution admits energy watchdog

Posted on 23 February 2016 by VRS  |  Email |Print

‘This cycle is very nasty. It sets the seed for a very high price in the future,’ said Opec’s secretary-general. The current crash in oil prices is sowing the seeds of a powerful rebound and a potential supply crunch by the end of the decade, but the prize may go to the US shale industry rather Opec, the world’s energy watchdog has predicted.
America’s shale oil producers and Canada’s oil sands will come roaring back from late 2017 onwards once the current brutal purge is over, a cycle it described as the “rise, fall and rise again” of the fracking industry. “Anybody who believes the US revolution has stalled should think again. We have been very surprised at how resilient it is,” said Neil Atkinson, head of oil markets at the International Energy Agency………………………………………..Full Article: Source

Gold Lining On The Commodity-Price Collapse

Posted on 23 February 2016 by VRS  |  Email |Print

There is a perfect storm blowing through the Australian gold-mining industry, but it’s not doing any damage, because it’s a storm which has triggered soaring share prices and a modern-day gold rush.
A recovery in the U.S. dollar gold price is one factor driving interest in the metal, but it’s not the major force in the Australian gold sector. Two other events have helped some miners more than double their share prices over the past year………………………………………..Full Article: Source

4 Reasons Why Copper Is Due For A Rally

Posted on 23 February 2016 by VRS  |  Email |Print

The copper bear. Reason one - Other commodity action. Reason two - Technicals. Reason three - Seasonal trends. Reason four - Interest rates and China. So far, in 2016, COMEX active month March copper futures have traded in a range between $1.9355 and $2.1380 per pound.
Copper, the red metal that is often a barometer for the global economic condition, has been quiet when compared to other commodities. While copper did trade down to the lowest level since April 2009 on January 19, it has spent most of the time above the $2 level recently………………………………………..Full Article: Source

Commodity Slump Puts Dry-Bulk Shipping on Hold

Posted on 22 February 2016 by VRS  |  Email |Print

Idled ships are dotting coastlines world-wide as increasingly desperate companies that ship iron ore, coal and other bulk commodities try to weather the industry’s worst downturn in decades.
The parked vessels are a stark sign of how crumbling Chinese demand for commodities is pummeling the global shipping industry. The freight rates shipping lines can charge to transport raw materials are at record lows, and several operators have filed for bankruptcy protection or folded outright, brokers say………………………………………..Full Article: Source

Commodities’ well-travelled road to nowhere. Cutting output: Russell

Posted on 19 February 2016 by VRS  |  Email |Print

Live and don’t learn. That should be the motto of commodity producers whoattempt to push prices higher by trying a variety of methods torestrict supply. While the call by major producers including Saudi Arabia andRussia to freeze crude oil output at current levels is theheadline of the week, it’s merely the latest in a long line ofattempts to arrest sliding commodity prices.
In recent years various governments, producer bodies andeven companies have tried to influence commodity markets intheir favour, mostly with only very limited success. Thailand tried to push Asian rice prices higher in 2011 byrestricting supply in the mistaken belief that this would allowthe government to pay for a generous subsidy scheme for farmers………………………………………..Full Article: Source

Global growth not to pick up on Commodity price slump, China:Moody’s

Posted on 19 February 2016 by VRS  |  Email |Print

Global growth will fail to pick up steam over the next two years as the slowdown in China, lower commodity prices and tighter financing conditions in some countries weigh on the economy, Moody’s Investors Service said in a quarterly report.
The downside risks to Moody’s forecasts for G20 GDP growth of 2.6% in 2016 and 2.9% in 2017 have increased since the rating agency’s last Global Macro Outlook in November. Furthermore, G20 policymakers in some countries have limited fiscal and monetary policy space to boost growth or mitigate these risks………………………………………..Full Article: Source

Commodity Price Crunch Puts Pressure on Credit Lines

Posted on 19 February 2016 by VRS  |  Email |Print

Energy, mining and related manufacturing companies are renegotiating revolving credit lines to avoid defaulting on their loans. That’s leading to tighter terms and shrinking borrowing capacity. Bankers and analysts expect to see the trend accelerate amid tumbling prices for oil and gas and other commodities.
Joy Global Inc., a Milwaukee, Wisc.-based mining equipment maker, late last year approached its syndicate of banks, led by Bank of America Merrill Lynch, to avoid breaking terms on its $1 billion revolving credit line. Company executives were worried they could breach a debt covenant that restricted Joy’s ratio of net debt to ebitda to under three times………………………………………..Full Article: Source

As Commodities Plummet, Banks Edge Towards Undercapitalization

Posted on 19 February 2016 by VRS  |  Email |Print

Analysts from Bernstein Research state that European investment banks and US brokers are in general still undercapitalized, despite 6 years of spending aimed at remedying the situation. According to the analysts, Deutsche Bank’s tangible equity is just 2.7% of its tangible assets.
This is when we exclude the deferred tax assets. The only bank that has it worse is Credit Agricole with 2.3%. A little better is Credit Suisse with 3.0%. Standard Chartered looks good for now (7.3%) but it’s being heavily pushed by the markets that bank with commodity exposure………………………………………..Full Article: Source

Commodities update: Gold ready to roar, crude looks up

Posted on 19 February 2016 by VRS  |  Email |Print

Gold is in the news again, with prices rising as much as 14 per cent this year, which is ahead of the performance of most other asset classes. The latest bounce in the prices is raising hope that the precious metal may be getting ready to roar again. Or is it?
While the Singapore-based DBS has turned overweight on the yellow metal, Goldman analysts had recommended investors to short it. Meanwhile, there is hope on the crude counter, after Tehran agreed to support an effort by four major oil producing nations to check the global oil glut. All those and what else is buzzing on the commodity counter in this quick digest. ……………………………………….Full Article: Source

Russia Sees Oil Output Slump in Worst Case Amid OPEC Talks

Posted on 19 February 2016 by VRS  |  Email |Print

Russian oil production may slump 14 percent in the next five to 10 years under a worst-case scenario prepared by the Energy Ministry. Crude output may drop to 460 million metric tons (9.2 million barrels a day) by 2020-2025 from 534 million tons last year, before starting to show slight growth, the Energy Ministry’s press service said.
The worst case, prepared for the nation’s long-term energy strategy, envisages oil prices remaining at about $31 to $33 a barrel in 2016-2017 with a rebound to $42 in 2020, it said………………………………………..Full Article: Source

Commodity slump weighing on Canadian and global economies

Posted on 18 February 2016 by VRS  |  Email |Print

The ongoing decline in commodity prices has hit Canada’s economy hard, depressing incomes, and triggering layoffs and capital spending cuts. The U.S.-dollar prices of most internationally traded commodity products have slipped, hammering hundreds of resource companies (and their suppliers), and hurting business and consumer confidence across swaths of the country.
And it’s important to realize that the commodity carnage isn’t restricted to oil. It’s also affecting natural gas, coal, base metals, potash, various industrial raw materials, and some segments of the agri-food sector. Lumber prices have also beaten a hasty retreat in recent months………………………………………..Full Article: Source

Investment Keeps Eluding Australia as Commodities Rout Endures

Posted on 18 February 2016 by VRS  |  Email |Print

Australian policy makers have been scouring economic data every three months for signs of a pick up in investment outside the mining industry. Three years on, and with a 30 percent depreciation in the currency and record-low interest rates, it remains as elusive as ever.
“It has felt a lot like waiting for Godot,” said Gareth Aird, a senior economist at Commonwealth Bank of Australia, the nation’s largest lender by market value. “A lift in non-mining investment remains the missing ingredient in the Australian economic growth transition story.”……………………………………….Full Article: Source

Oil prices get boost as Iran praises Saudi plan to freeze output

Posted on 18 February 2016 by VRS  |  Email |Print

Iran has given a significant boost to oil prices by unexpectedly praising a plan put forward by Saudi Arabia and Russia to freeze production. The cost of Brent crude soared by 6.7% to $34.35 as Iran gave its verbal support for a production ceiling, even though it avoided making any immediate commitment to rein in its own growing output.
“Iran backs any measures which help stabilise the market and improve the price of crude oil,” said Bijan Zanganeh, the Iranian oil minister, after meeting his counterparts from Iraq, Qatar and Venezuela………………………………………..Full Article: Source

Commodities rout fails to slow urban explosion in Africa

Posted on 17 February 2016 by VRS  |  Email |Print

Africa’s biggest economies have been hammered by the collapse in commodity prices over the past 18 months but there are still investment bright spots to be found. In cities such as Lagos, Nairobi, Accra, Kinshasa and Johannesburg, growth remains robust and investors are prospering in the retail, financial services, technology and construction sectors.
This means investors can now readjust their strategy for Africa. Instead of taking a view on the continent as a whole, or choosing one country over another, they can seize opportunities city by city. Sub-Saharan Africa is urbanising faster than anywhere else in the world and city dwellers have more money to spend………………………………………..Full Article: Source

How Australia Is Weathering the Commodities Rout

Posted on 15 February 2016 by VRS  |  Email |Print

As Australia’s economy has slowed alongside the commodities rout, one surprising consensus is emerging: It isn’t nearly as bad as it should be. Other big resource exporters like Brazil and Canada have been slammed far worse by the falling commodities trade over the past year and a half that was sparked by China’s deceleration.
Australia, in contrast, seems already to have passed its nadir and is set to recover over the next two years, the government and many economists say. “The economy is continuing to grow at a modest pace, in the face of considerable adjustment challenges,” Glenn Stevens, governor of the Reserve Bank of Australia, told parliament on Friday………………………………………..Full Article: Source

OPEC members increasingly keen to end oil glut

Posted on 15 February 2016 by VRS  |  Email |Print

The mood inside the Organization of the Petroleum Exporting Countries (OPEC) is shifting from mistrust to a growing consensus that a decision must be reached on how to end the global oil price rout, Nigeria’s oil minister told Reuters.
Oil prices have slumped by more than 70 percent to near $30 a barrel over the past 18 months as OPEC, led by top producer Saudi Arabia, sought to drive higher-cost producers out of the market by refusing to cut production despite a supply glut………………………………………..Full Article: Source

The Commodities Bubble: History Repeats Itself

Posted on 12 February 2016 by VRS  |  Email |Print

All bubbles share similar characteristics. It all starts with strong demand for some object, whether it’s stocks, homes, commodities or tulips. In commodities, a bubble formed on hopes that China’s rapid growth would feed an ever-expanding appetite for raw materials.
Moreover, in 2008, China launched a huge $586 billion economic stimulus plan, leading to higher demand for commodities and, therefore, rising prices. But prices weren’t reflecting real growth, either. They were inflated as fake demand was created on the construction of excessively extravagant government buildings and uninhabited “ghost cities” in China………………………………………..Full Article: Source

Was Resource Boom A Boom For Commodities Exporters?

Posted on 12 February 2016 by VRS  |  Email |Print

While everyone is running around with the collapsed oil prices, economists with an eye for cycles and history are starting to digest the aftermath of the passed commodities price boom that started around the beginning of the century and lasted until 2011-2012.
The issues relating to that boom are non-trivial. Commodities prices are cyclical and just as the boom turns to bust, so will the bust turn to boom. Therefore, one should really try to understand what exactly happens in both………………………………………..Full Article: Source

UK production slumps as commodities take a hammering

Posted on 11 February 2016 by VRS  |  Email |Print

UK production slumped dramatically in December as resource companies took a hammering from the global commodity price crash. Overall production dropped 1.1% over the period, far outstripping expectations of a 0.1% decline. While manufacturing was little changed, mining and quarrying output led the index lower, down 4%.
A relatively mild winter also took a toll on energy generation, with output falling 5.4% month-on-month. Looking ahead, energy supply output should spring back, but the shake-out of excess production in the oil sector has further to run, noted Samuel Tombs of Pantheon Macroeconomics………………………………………..Full Article: Source

Silver market supply and demand trends for 2016

Posted on 11 February 2016 by VRS  |  Email |Print

Silver is prized for its dual role as a monetary asset as well as an important industrial metal used in a range of existing and growing applications. Factors driving the silver market include supply and demand fundamentals, global economic performance, geopolitical issues, interest rates, currency fluctuations and investor sentiment, among others.
Against this backdrop, the Silver Institute offers the following thoughts on this year’s silver market trends. Silver industrial demand, the largest component of total silver off-take, is set to increase its share of total demand in 2016. Silver is incorporated into a variety of industrial applications and is generally price-insensitive, given the small quantities that are used in some applications and its critical contribution to these applications’ functionality………………………………………..Full Article: Source

Private-Plane Purchases Drop 3.1% as Commodities Market Tumbles

Posted on 11 February 2016 by VRS  |  Email |Print

Spending on business aircraft fell 3.1 percent last year as a commodities downturn crimped demand for long-range jets in emerging markets. Companies and wealthy individuals spent $18.7 billion on private jets, according to the General Aviation Manufacturers Association. The report is adjusted because Bombardier Inc. hasn’t reported fourth-quarter results yet.
Sales of large-cabin planes, such as Bombardier’s Global 5000, were pinched by Brazil’s recession, sanctions against Russia and a stronger U.S. dollar that made aircraft more expensive for foreigners, said Peter Arment, an analyst at Sterne Agee CRT. Some non-U.S. manufacturers price aircraft in dollars………………………………………..Full Article: Source

Negotiating the Commodity Tightrope

Posted on 10 February 2016 by VRS  |  Email |Print

A cocktail of the ‘4Cs’ – Currency headwinds, China headwinds, Contango headwinds, and Cost deflation headwinds – that has driven commodity investor returns into negative territory is not about to change.
Commodities have been caught in a “negative feedback loop” between excess production capacity, US dollar appreciation and weaker emerging market economic growth – what Goldman Sachs term the 3D’s of macro – Deflation (excess production capacity and rising productivity), Divergence (stronger US dollar and weaker EM currencies) and Deleveraging (significant EM credit and macro imbalances)………………………………………..Full Article: Source

IEA warns of ‘false dawn’ in oil prices with market ‘awash’

Posted on 10 February 2016 by VRS  |  Email |Print

Oil stockpiles are forecast to keep swelling this year, meaning the recent uptick in prices could be a “false dawn”, the world’s leading energy body said on Tuesday. In its monthly oil market report the International Energy Agency said the the surplus of supply over demand at the start of 2016 is “even greater” than initially expected.
“With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term,” it said. “In these conditions the short term risk to the downside has increased.”……………………………………….Full Article: Source

Haven buying spurs gold to 8-month peak

Posted on 09 February 2016 by VRS  |  Email |Print

Gold climbed to an eight-month high as a weaker dollar and lower oil prices spurred haven buying and inflows from exchange traded funds. The precious metal rallied to $1,198.70 a troy ounce, the highest level since June last year.
Gold has risen 13 per cent since the start of the year, making it one of the top commodity performers so far in 2016. Brent, the international crude oil benchmark, is down 11 per cent, copper for three-month delivery on the London Metal Exchange is down 2 per cent, and CBOT corn is up 1.4 per cent year-to-date………………………………………..Full Article: Source

China’s gold output dips on lower prices

Posted on 08 February 2016 by VRS  |  Email |Print

China’s annual gold output fell for the first time in 2015 due to lower prices in the global gold market, according to latest industry figures. The country produced 450 tonnes of gold last year, down 0.39 percent year on year, the China Gold Association said on its website.
International gold prices have shed nearly 40 percent since April 2013, squeezing producers’ profits and affecting output, the association said. However, China remained the world’s largest gold producer for a ninth year running and saw gold consumption recovering last year, the association said………………………………………..Full Article: Source

Commodities rout rolls through Australia Inc

Posted on 05 February 2016 by VRS  |  Email |Print

Two of Australia’s biggest companies are slashing costs further and writing down the value of their resources businesses amid a deepening rout in commodities prices. South32, the diversified mining group spun out of BHP Billiton last year, on Thursday outlined plans to book a US$1.7bn writedown on the value of its manganese, coal and alumina assets stretching from Australia to South Africa and Brazil.
The group said it would cut 620 jobs at its manganese joint venture in South Africa and would detail further job cuts in its results statement later in February………………………………………..Full Article: Source

Russia and the Saudis: A 10-billion barrel game of oil bluff

Posted on 05 February 2016 by VRS  |  Email |Print

As oil prices continue to cause market uncertainty, and with low fuel prices wreaking havoc on some countries’ economies, notably Russia’s, the world’s top oil producer has been at the forefront of trying to figure out whether or not a production cut should be implemented in order to support and stabilize prices.
An Organization of the Petroleum Exporting Countries (OPEC) delegate recently said, “It is all in the hands of the Russians now.” Oil production in Russia hit a post-Soviet high in January, which means Russia is adding fuel to the oversupplied oil market fire. Russia itself is sending mixed signals as to how much it’s willing to cooperate with geopolitical foes, like Saudi Arabia………………………………………..Full Article: Source

Commodity Bull Cycle Seen Rising From Ashes as Oil Bottoming

Posted on 04 February 2016 by VRS  |  Email |Print

Europe’s largest publicly traded asset manager is calling the bottom for oil and sees a rebound in prices as one of the spurs that may start a new bull cycle in commodities. Schroders Plc says the oil price could rally almost two-thirds to as high as $50 a barrel in a few months as a slump to a 12-year low means producers will have to cut output.
That should encourage a wave of retail investors to return to raw materials, according to Geoff Blanning, head of commodities at Schroders, where he helps oversee about $2 billion. “In the past three-to-six months, supply growth has been sagging as a direct result of the lower price, but now it looks like a strong bet that supply is actually going to fall, and fall sharply,” he wrote in an internal note to staff on Jan. 21 seen by Bloomberg News………………………………………..Full Article: Source

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