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Commodities Briefing 24.Jun 2016

Posted on 24 June 2016 by VRS |  Email |Print

Orica Ltd., the largest supplier of explosives to the mining industry, has begun to observe stability in commodity markets that have been marked by volatility, sinking profits and job cuts after a global boom ended.
“We still see a lot of volatility, but I think that I’ve seen more stability than I’ve seen in some time,” in the past month, Chief Executive Officer Alberto Calderon said. “When I talk to our customers I get the sense they are saying ‘Well let’s get on with it’………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

Following multiple years of calamitous returns the tide appears to be showing some signs of turning for commodities, with some even calling the end of the sector’s prolonged bear market. Last year witnessed the MSCI World Energy index nosedive 18 per cent. But since the start of 2016 to June 10, the measure has jumped by 16 per cent, according to data from FE Analytics.
Of course, all eyes have been on the oil price, which after crashing below $28 a barrel earlier this year topped the $50 mark in late May. But gold too, bolstered by its safe-haven status, has enjoyed a strong year-to-date run with the price of bullion up 21 per cent………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The resource sector’s devastating five-year bear market saw the Bloomberg Commodity Index drop 60% from its 2011 peak. Naturally, that crushed the world’s dominant resource producers; the top 40 companies saw their market caps shrink by $27 billion in 2015 alone.
All along, these producers have had to clean house, slash spending, reduce headcount, and rationalize every last cent they did spend as production crashed. It was the law of the jungle in action, survival of the fittest. Plenty of producers went straight out of business. It wasn’t easy to watch, and it was even tougher to invest in………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

As the UK begins voting in the EU referendum here are five things to watch in the commodities world. It’s a widely-held view among investors that gold would be among the big beneficiaries of a Brexit. Some analysts reckon the price could rise by as much as 10 per cent to $1,400 after a vote to leave as nervous investors pile in looking for safe places to park cash.
But there are also reasons for thinking gold, a good barometer of risk, could suffer, at least in the near-term. How markets react to Thursday’s vote is a huge unknown but one thing investors have learnt since the financial crisis is how quickly liquidity can dry up and impact markets………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The outlook for commodities–steel-making or coking coal as well as copper in particular–remains bleak, and this certainly doesn’t bode well for struggling coal and base metals miner Teck Resources Ltd.
Nonetheless, it–like a number of other miners, including First Quantum Minerals Ltd. has experienced a massive rally in its share price since the start of 2016 on the back of growing optimism surrounding commodities. However, there are signs that this optimism is unfounded. A range of factors highlight that substantially weaker commodity prices are here to stay. ……………………………………….Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The new Saudi oil minister, Khalid Al-Falih, says the oil glut is over. That means the kingdom’s war against U.S. shale producers is coming to an end, too. Who won it is a tough question to answer; on balance, it’s probably the Saudis, but they have paid a huge price, and the surviving U.S. frackers have also benefited.
In September 2014, Saudi Aramco, the kingdom’s state oil company, simultaneously increased output and discounts to Asian customers, making it difficult for producers with higher costs to compete. The U.S. shale industry responded with desperate bravado, cutting costs, perfecting technologies and pumping like crazy to avoid defaulting on its debts………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

Oil futures, like most risk assets, has been doing better in recent days as traders take heart from a late polls shift to Remain ahead of the EU referendum. Having fallen for six consecutive sessions from a 2016 high of $53 two weeks ago, international benchmark Brent crude returned to $50 earlier this week. It has been held back from further gains by supply concerns – so would a Remain victory send it soaring?
No, says investment bank BNP Paribas. It outlines a lose-lose scenario for oil: either a Leave vote sends the price spiralling lower in response to a demand-dampening surge for the dollar against the pound, or a Remain victory focuses attention back on supply and demand fundamentals that do not support higher prices………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

OPEC’s 13 member countries saw oil export revenues slump to their lowest level in a decade last year. Crude revenues fell nearly 46% to $518 billion in 2015, according to OPEC’s annual bulletin published Wednesday.
Collapsing world oil prices also meant that OPEC countries spent more importing goods than they raised from exports for the first time in 17 years. The cartel posted a combined current account deficit of just under $100 billion in 2015, compared with a surplus of $238 billion in 2014………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

Phil Carr, Co-founder and Director of The Gold & Silver Club, comments his vision on Gold and its correlation with Brexit polls and possible outcomes. When the odds of the Brexit increase, so do gold prices. While when the odds fall, so do gold prices.……………………………………….Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

Gold futures settled with their fifth-straight session loss Thursday, holding ground at two-week lows, as major global stock markets gained ahead of a historic decision on the U.K.’s membership in the European Union. Gold for August delivery declined $6.90, or 0.5%, to $1,263.10 an ounce. Over the past five days, gold has declined 2.7%. The SPDR Gold Trust ETF was down 0.4% on Thursday.
Although referendum polls remained tight, the Ipsos Mori poll for the Evening Standard newspaper, showed 52% of U.K. respondents in the “remain” camp compared with 48% backing the “leave” side. European stocks and the pound extended gains after the poll. Ipsos Mori’s June 16 survey had the “leave” side ahead………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The best start to a year for commodities since 2008 is leaving copper in the dust. The metal is one of the weakest of the 22 raw materials in the Bloomberg Commodity Index of returns this year and the worst of the major metals.
“If you look at where iron ore, coking coal or oil have gone this year, copper really has lagged,” Tyler Broda, an analyst at RBC Capital Markets in London, said by phone. “There is no question that right now copper is relatively tenuous in terms of the outlook. We’re definitely picking up a more neutral near-term outlook on copper than previously.”……………………………………….Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

While base metals have enjoyed a good 2016 so far with only lead (-5%) in negative territory for the year and the likes of zinc (+27%) and tin (+18%) entering bull markets, molybdenum is making a star turn.
A metric tonne of molybdenum on the London Metal Exchange fetched $16,500 on Thursday after customs data from China showed imports of concentrate and oxides surged 131% in May. Over the first five months of the year, China imported 8,851 tonnes of molybdenum concentrates and oxide, up 89% year on year………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

Exchange-traded funds will not be hit as hard as mutual funds if there’s large redemptions of investments in illiquid assets. If there’s a stampede for the exit in the junk bond market, it won’t be investors in exchange-traded funds that get hit hardest.
That’s the conclusion of the Financial Stability Board, whose members include the U.S. Federal Reserve and the Bank of England, published in a consultation document……………………………………….Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

Risk-on sentiments returned at the start the week, catching a lift from receding Brexit fears. Most U.S. equity indices rallied with the Dow Jones industrial average gaining over 100 points. Investors started to position their portfolio taking cues of the fact that chances of Britain staying in the EU is higher.
Also, a dovish Fed meeting in June and chances of a delayed rate hike acted as catalysts to the rally. And most importantly, a rebound in oil prices on easing supply glut led the Dow Jones to stage a sturdy comeback this week. Investors should note that the index lost over 0.6% in the month-to-date frame (as of June 17, 2016) before springing back to gains on June 20, 2016………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The day of decision is finally here for Brexit, the vote that will determine whether or not Great Britain remains part of the European Union. Regardless of the outcome of the Brexit vote, some market observers see big moves ahead for some currency exchange traded funds with an obvious candidate being the CurrencyShares British Pound Sterling Trust.
Polls show mixed results, with online surveys revealing a much closer result while phone calls have suggested a lead for a remain. Sterling has acted as a barometer of sentiment in the run-up to the June 23 referendum, hitting a seven-year low against the U.S. dollar in February after the date of the vote was announced………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The currency markets have priced in a remain vote for the U.K.’s referendum on whether to leave the European Union, meaning Friday could be “very dramatic” if Britons vote to exit, currency investor Mark Astley said Thursday.
“The probability of remain has been factored into the pound to perhaps 85 or even 90 percent,” the CEO of Millennium Global said in an interview with CNBC’s “Power Lunch.” A Brexit vote “would be so unexpected that there could be a visceral reaction.”……………………………………….Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

Currency exchange shops have been stocking up on foreign cash to cope with people “panic-buying” ahead of the EU referendum. Simon Phillips, retail director at No 1 Currency, said demand had rocketed for all foreign currencies, with euros and dollars proving especially popular.
“We’ve dramatically increased stock levels to cope with the surge in demand during the final hours before the result is announced,” Phillips said………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The time is now for carbon market cooperation among China, Japan, and South Korea. The major economies of Northeast Asia are developing carbon markets to help meet their climate change commitments. They would benefit from doing so in concert.
Like much in the current climate change arena, market activities beneath the global scale are booming. Carbon markets have almost doubled since 2012, with 40 states and 23 cities, regions, and provinces pricing emissions worth some $50 billion. Amid vocal calls from the business community for greater continuity in carbon pricing policies, market linkages among national and subnational systems are gaining traction………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The UN secured a new climate change agreement in Paris at the end of last year, with the consensus of all its 196 parties. Since then, 177 parties have signed the deal. The next job is to get all 197 (Palestine has since joined) to ratify it. This means that each country has to go through its domestic procedure to formally approve the agreement, then drop off its paperwork into a UN depository.
Carbon Brief has already explained the broad process of ratification. Essentially, the hard-won deal cannot come into force until at least 55 countries, representing 55% of the world’s emissions, have take the necessary steps at home to formally accept it………………………………………..Full Article: Source

Posted on 24 June 2016 by VRS |  Email |Print

The dominance of finance has made economic volatility the new normal. Why have economic forecasters recently been so wrong? Just two years ago, for example, the common perception was that the big emerging markets would drive global growth. That oil prices would remain above $100 per barrel.
That interest rates would move higher. All of these predictions have been wildly wrong. Yet these variances are neither a coincidence nor a temporary phenomenon. We have entered an age in which economic and financial forecasting is much harder and less reliable………………………………………..Full Article: Source

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