The year 2011 was all about rising costs and expenses. This year is no different either. The liquidity-driven rally in 2012 so far has pushed up the prices of commodities such as zinc (11%), copper (8.78%), Dubai Crude oil (7%), gold (10%) and silver (21%) in US dollar terms.
Firm crude oil prices pose a key risk as it can push up the inflation numbers further in India, as crude oil is the largest item on the import bill. “India is a commodity-deficient country and a rise in commodity prices can push stock prices downwards………………………………………..Full Article: Source

Commodities from copper to crude oil, in three years to five years, may plummet anywhere from 50 percent to 70 percent from existing level prices as a domino effect of a China potentially falling into a recession by 2015, a mutual fund CEO said.
Bill Smead, CEO of Seattle-based mutual fund Smead Capital Management Inc., said China, currently the world’s second-largest economy, has a 30 percent chance to go into recession because of the continuing falling property prices that have as a result hurt the country’s banking industry………………………………………..Full Article: Source

Hedge funds increased bets on rising commodity prices to the highest since September on mounting confidence that growth in the US will strengthen demand. Money managers boosted their combined net-long positions across 18 US futures and options by 13% to 929,199 contracts in the week ended February 7, Commodity Futures Trading Commission data show.
That’s the highest since September 20. Bullish wagers on copper rose to a six-month high, and soybean holdings jumped by the most this year………………………………………..Full Article: Source

The IMF has sharply marked down its forecast for world growth and it now expects a mild recession in the euro area. Naturally, weaker world growth will affect economic activity in Latin America and the Caribbean.
Concretely, the Fund expects the world economy to grow by just 3.25 percent in 2012, three-quarter percentage points lower than our September forecasts………………………………………..Full Article: Source

Trying to forecast world oil demand growth is a tricky job at the best of times. This year abnormal levels of uncertainty about the global economy are making the job even more difficult.
Leading energy demand forecasting agencies last week were divided on whether the prospects for demand growth are improving or deteriorating………………………………………..Full Article: Source

Crude oil output from the Organization of the Petroleum Exporting Countries (OPEC) rose to 30.87 million barrels per day (b/d) in January from 30.83 million b/d in December. This leaves the organization overproducing its brand new production ceiling by 870,000 b/d, according to a just-released Platts survey of OPEC and oil industry officials and analysts.
A 200,000-b/d increase in Libyan production to 1 million b/d – just 600,000 b/d short of pre-uprising output early last year – more than offset combined reductions totalling 170,000 b/d from Angola, Iran, Nigeria andVenezuela. United Arab Emirates production also saw a small increase of 10,000 b/d to 2.56 million b/d. (Press Release)

In 2011, when the Libyan crisis broke out, oil prices started to climb. Libya was a major producer of oil, pumping around 1.4 million barrels per day (bpd). With the Libyan crisis now resolved, production is coming back to normal levels but tensions in the oil market remain thanks to two countries- Iran and South Sudan.
While much has been written about Iran and Strait of Hormuz, very little has been written about South Sudan and its oil supplies. With the country having a disagreement with its neighbour Sudan, South Sudan has closed down its export………………………………………..Full Article: Source

Given that real interest rates are expected to remain negative for longer while concerns over currency debasement and inflationary pressures have resurfaced, the backdrop remains fertile for gold. However, gold still has hurdles to overcome, such as the further strengthening of the dollar, technical resistance levels and profit-taking.
The macro-environment is positive on the back of a stronger than expected US non farm payroll data, lower unemployment and solid growth in factory orders for December. The Eurozone has started 2012 in a good note, with January PMI coming out positive………………………………………..Full Article: Source

Tensions between the West and Iran may be escalating and this could be bullish for gold prices, said HSBC in a research note.
According to HSBC, elections are slated for March 2 in Iran, the first presidential votes since 2009, when Ahmadinejad’s reelection triggered months of riots. Gold prices rose during that time………………………………………..Full Article: Source

In an article published in Fortune Magazine, based on his upcoming annual Berkshire Hathaway shareholder letter, Warren Buffett again reminded everyone how little faith he has in gold.
Buffett once observed, “Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”……………………………………….Full Article: Source

Gold fell by nearly 0.4% last week – its second marginal weekly fall. This is negative technically but healthy for the gold market as gold appears to be consolidating after the sharp 20% gains seen in January.
“The Chinese guys are still buying. Whenever there is a dip in prices, they will buy. There’s no change in their attitude,” said a physical dealer in Hong Kong, who trades gold bars. “They are still buying today, because I think the downside is limited for the time being. Sentiment has improved a little bit.’’……………………………………….Full Article: Source

Spot market gold prices touched $1733 per ounce Monday morning, up 0.5% on last week’s close, as stock markets, commodities and the Euro all rallied following Greece’s vote in favor of new austerity measures.
Silver prices meantime hovered around $33.90 per ounce, up 0.8% on the end of last week, while government bond prices dipped and the Dollar fell on the currency markets. “The weakness in the Dollar … creates a bit of demand for gold,” reckons Bernard Sin, head of currency and metal dealing at Swiss precious metals refiner MKS………………………………………..Full Article: Source

An optimistic approach to skirting a global recession and global growth led copper traders to become bullish for the first time in seven weeks, reports Bloomberg.
As global growth strengthens, demand for infrastructure will diminish the already small copper stockpiles. “Inventories tracked by the London Metal Exchange are already at a two-year low after global mine output dropped by 200,000 metric tons in 2011, Barclays Capital estimates.”……………………………………….Full Article: Source

The largest glut of zinc in almost two decades is threatening to curtail a rally in prices as record production expands inventories to the highest since at least 1984.
Supply will outpace demand by 539,000 metric tons, the most since 1993, according to Standard Bank Plc. Stockpiles of the metal used in brass and steel will reach 2.2 million tons, Barclays Capital estimates. Prices will drop 13 percent to $1,832 a ton this year, the median of 15 analyst and trader estimates compiled by Bloomberg shows. That may curb profit for Zug, Switzerland-based Xstrata Plc, the biggest producer………………………………………..Full Article: Source

Norilsk Nickel is expecting investor positions to be the main driver of price movements this year, rather than industrial demand. Norilsk Nickel is the world’s largest producer of nickel and palladium.
The nickel market is balanced this year, and price movements will largely depend upon fluctuations in investors’ positions, rather than changes in industrial demand, Norilsk’s head of marketing Anton Berlin is reported by Bloomberg as saying………………………………………..Full Article: Source

Flat steel prices rose in Europe and US markets with bullish sentiments prevailing after the Christmas and New Year Break in the month of January 2012, according to a monthly review of steel market by The Steel Index.
Hot Rolled Coil (HRC) prices consolidated at current levels of US $730-750 a shrot ton after witnessing a rise of US $41 per s.ton in the first two weeks of January. Cold Rolled Steel (CRC) steel prices rose by $30 a s.ton in the same period, TSI review said. Severstal NA and Nucor prices for HRC rose to US $770 per short ton signaling a rising trend in the beginning of the year………………………………………..Full Article: Source

Speculators again added to bullish positions in precious and base metals futures and options markets on the Comex division of the New York Mercantile Exchange and on the Nymex, according to U.S. government data released Friday.
For the week ended Feb. 7, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report increased their net-long positions in precious metals, with some metals seeing rises in bullish positions for the sixth week in a row in the disaggregated and legacy reports………………………………………..Full Article: Source

Boliden AB metals company has released its Year-end Report 2011. It says that global demand for base metals continued good during the fourth quarter, remaining on a par with levels in the previous quarter and increasing in comparison with the fourth quarter of 2010. The European metals market weakened, however, during the period and base metal prices were, on average, lower in both USD and SEK than in the preceding quarter.
Boliden’s revenues totalled SEK 9,716 million (SEK 10,120 m). Sales fell in comparison with the previous quarter as a result of lower prices for all metals and lower volumes. The weaker European market has resulted in a higher percentage of sales being made to metal trading companies, and hence, in lower metal premiums. (Press Release)

Energy exchange-traded products see the most investor interest in a very positive week, but alternative energy ETFs rally the most. Inflows into energy helped total commodity-related exchange-traded fund flows register a big gain last week. The space saw $780 million of new capital, sending total assets to $171.9 billion.
Energy ETPs saw a sizable $692 in inflows, while the other sectors all saw much smaller gains. Precious metals, broad market (multicommodity), agriculture, and industrial metals ETPs saw inflows of $60 million, $12 million, $9 million and $6 million, respectively………………………………………..Full Article: Source

Exchange traded funds have matured from basic indexed portfolios tracking major stock benchmarks such as the S&P 500 to branch out in new areas such as fixed income and commodities.
“The next dimension of ETFs will be focused on addressing modern investor needs, assist advisers in their increasingly complex task of constructing portfolios that deliver better risk-adjusted returns and deliver value for the fee charged,” says Barry Gordon, president and chief executive of First Asset and XTF Capital, in a Financial Post report………………………………………..Full Article: Source

Multi Commodity Exchange (MCX), India’s biggest commodity exchange by turnover, plans to launch an initial public offering of shares on Feb. 21 to raise up to $125 million, two sources with direct knowledge of the matter said.
India’s first IPO of the year will be a key test of investor appetite for share sales in Asia’s third-largest economy after weak markets forced many companies to shelve stock offerings last year………………………………………..Full Article: Source

A draft European Union law to crack down on ultra-fast trading and stop abusive positions in commodities needs toughening up, EU lawmakers said on Monday.
Computerised “algorithms” and high-frequency trading (HFT) have been blamed by critics for making markets more volatile, although others say the practice boosts liquidity………………………………………..Full Article: Source

If rising exports are going to lead the economy into a new era of prosperity as President Obama hopes, there isn’t much to cheer about. Last year’s trade numbers, which the Commerce Department released Friday, show exports are rising briskly, but the overall U.S. merchandise trade deficit soared to a record $558 billion. That’s up 11.6 percent from 2010 as imports continued to rise even faster than exports.
The country-by-country breakdown confirmed what every shopper who reads product labels knows………………………………………..Full Article: Source

The European Union’s carbon trading scheme may spark a trade war, according to one of the world’s biggest planemakers. “What started out as a solution for the environment has become a source of potential trade conflict,” Airbus boss Thomas Enders said.
The Emissions Trading System levies a charge on flights in EU airspace based on carbon emissions. But the US and China are opposed to their airlines joining the scheme……………………………………….Full Article: Source