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Commodities Briefing 07.Oct 2008

Posted on 07 October 2008 by VRS |  Email |Print

From Time: Environmentalists are often accused — not always unfairly — of overplaying the fear card. With apocalyptic references to melting polar ice caps, rising sea levels and widespread species extinction, the driving message of environmentalism is that the future is doomed, unless we act now to save it.

But what happens when another more alarming, more immediate catastrophe co-opts people’s fear? That’s the predicament greens find themselves in now, with what is potentially the worst financial crisis since the Great Depression scaring Americans out of their wits. With the tanking economy dominating the news, and the government willing to virtually bankrupt itself to bail out the financial sector, it could be hard to push the climate change agenda — and possibly hard to find any money left to support it….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Business-standard.com: Commodities markets are heading for the biggest annual decline since 2001 as investors exit leveraged bets and slowing economic growth erodes demand for raw materials.

The value of the 19 commodities in the Reuters-Jefferies CRB Index fell $280.6 billion, or 43 per cent, from its July 3 peak, a loss larger than their total worth two years ago, data compiled by Bloomberg show. UBS AG, the Zurich-based bank that bought Enron Corp’s energy unit in 2002, plans to exit most commodity trading. About 15 per cent of investors in Boone Pickens’s BP Capital LLC hedge fund may want their money back…… Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Bloomberg: Canadian stocks fell, sending the main index to the lowest in three years, as commodity producers slid on concern their profits will be hurt by a global recession.

Suncor Energy Inc. dropped as much as 21 percent as oil fell to less than $88 a barrel. Potash Corp. of Saskatchewan Inc. paced the slide in raw-materials shares as at least three banks said Canada will slip into recession because of the U.S. slowdown and the deepening global credit crisis. The Standard & Poor’s/TSX Composite Index pared losses in the last hour of trading on speculation that central banks, led by the U.S. Federal Reserve, may cut interest rates to unlock bank lending. …. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From People.com.cn: China and its top trading partner EU have managed in the latest ministerial level dialogue to draw a roadmap to more business opportunities and less restrictions on bilateral trade and investment. The two sides also make commitments on working together to push the Doha round forward.

The meeting took place when world economies are grappling with their internal inflation and the US financial crisis. Declining demand in the US and Europe does not bode well for their trading partners. Altogether 23 points of consensus have been reached at the 23rd China-EU Economic and Trade Joint Committee which was co-chaired by Chinese Minister of Commerce Chen Deming and European Trade Commissioner Peter Mandelson on Sept. 25 in Beijing….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From AFP: Crude oil nosedived below 90 dollars a barrel Monday as deepening global financial turmoil and plunging stock markets raised fears about slowing demand for energy. New York’s main contract, light sweet crude for November, plunged 6.07 dollars to close at 87.81 dollars a barrel.

In London, Brent North Sea crude for delivery in November tumbled 6.57 dollars to settle at 83.68 dollars a barrel. Earlier the two futures contracts had fallen to lows last seen in early February, at 87.56 dollars in New York and 83.36 dollars in London. Crude futures contracts skidded as global stock markets tumbled after a 700-billion-dollar US financial rescue package signed into law Friday failed to calm investors’ nerves about frozen global credit flows…… Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Theaustralian.news.com.au: Gold rose sharply in New York as worries about the global financial system continued and sent global equities sharply lower.
“It’s capitalising on its safe-haven credentials,” said Bart Melek, global commodity strategist with BMO Capital Markets.

December gold rose $US33 to settle at $US866.20 an ounce on the Comex division of the New York Mercantile Exchange. It was one of the few commodities to rise, as most - including silver - fell on worries about economic prospects…… Full Article: Source

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From Cattlenetwork.com: Panic selling across equities and commodities amid fears of a global financial system meltdown is pummeling major commodity indexes to nearly 3 1/2-year lows.

Continued financial uncertainty and evidence of spreading contagion in Europe is driving investors away from risky assets and into safe havens such as gold. Despite the condition of the U.S. markets and economy, traders continue to buy dollars as a testament to its ongoing strength and faith that things will eventually turn around, analysts said. Until then, however, traders continue to liquidate commodity and stock holdings…… Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Independent.co.uk: Britain’s energy industry is working well for most customers but at least 4.3 million are being overcharged, the regulator Ofgem said.

During a seven-month inquiry into the energy markets, Ofgem found that after costs companies made about £1bn a year, or 4 per cent of total sales, from “premiums” charged to certain sets of customers, many of them vulnerable. Of the UK’s 33 million energy customers, 4.3 million electricity-only households were experiencing a lack of competition and many of the 5.4 million on pre-payment meters (PPMs) were being overcharged, the regulator said….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Thepeninsulaqatar.com: Global commodity markets continue to suffer in the wake of the ongoing credit crisis. Despite a yes vote from the US Senate backing the new bail-out bill, the overwhelming fear in the market is that a prolonged slowdown, or even a recession, is going to hit the US economy.

Energy - This week has seen a return to the well-established negative trend on Crude Oil November (CLX8). Although we have not seen new lows, the sentiment in the market is still overwhelmingly negative. Several factors determined this. First of all, there was the renewed strength of the dollar on suspicions that the next set of bad news could come out of Europe and second, very high short-term rates have made dollar selling very expensive…… Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Forbes: Shares of Titanium Metals Corp. lost fell Monday amid fears that government bailout efforts may fail to halt a global economic slowdown. Titanium shares fell $2.15, or about 24 percent, to $6.99 before regaining some of the losses to end down 50 cents, or 5.5 percent, to $8.64.

The last time the Dallas-based company’s stock, which is a component of the Standard & Poor’s 500 index, was $6.99 was in July of 2005. Titanium Metals’ customers include aerospace companies like Boeing Co. The slide was part of a larger collapse in stocks, with the Dow Jones industrial average closing below 10,000 for the first time in four years, as investors worried about the credit crisis weighing on financial markets….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Focus-fen.net: The XII session of the intergovernmental Bulgarian – Russian commission for economy and science-technical co-operation will be held on October 8 and 9in Sofia, FOCUS News Agency reporter informed. Five-day national Russian exhibition will be exposed in the Iner Expo complex on October 8.

Bulgarian Deputy Minister of Economy Yavor Kyumdzhiev, Deputy Director of the all-Russian exhibition centre Nikolay Bugaev and Russia’s trade representative to Bulgaria Alexander Tomilov informed about more details for the forthcoming event at a press conference…… Full Article: Source

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From Indiatimes.com: There seems to no solution in sight to the deepening global credit crisis. Concerted efforts by governments across the world have failed to calm jittery investors. Even commodity markets, which were once perceived to be safe, have been hit hard.

Prices have tumbled across the board as commodity investors are exiting the markets in panic. Brokers feel that the situation could get more worse and only a drastic change in the demand scenario would keep prices afloat…… Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Seekingalpha.com: In December 1998, the Select Sector SPDRs were born. This proved to be a groundbreaking and historic event that has forever altered the way people invest in the stock markets. These nine exchange-traded funds (ETFs) are a core group of ETFs that allow investors to customize their portfolios with focus on individual sectors that collectively make up the S&P 500.

And it is this group of ETFs that ultimately made this type of investment vehicle so wildly popular. XLY, XLP, XLE, XLF, XLV, XLI, XLB, XLK, and XLU now have combined assets in excess of $26b! Among this core group of ETFs were the very first commodities-based ETFs, and this built the foundation for a commodities ETF revolution….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Commodityonline.com: Globally, many commodity futures group tumbled sharply last week as speculators felt that the proposed $700 bn bailout programme may not be enough to stop economies from plunging into recession.

Huge price declines were visible in precious metals, industrial metals, energy markets, rubber futures. Most commodity futures groups took a sharp tumble midweek as speculators considered the troubling prospect that the proposed $700 million bailout may not be enough to stop world economies from plunging into a severe recession….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Bloomberg: The International Emissions Trading Association, a Geneva-based lobby group, called on European Union lawmakers to ease limits on the import of United Nations carbon credits to avoid a potential “famine.”

The European Commission, regulator of the EU carbon dioxide program, in January proposed to restrict use of UN credits to about 1.4 billion metric tons in the 13 years through 2020, assuming there’s no international climate-protection agreement. The EU has the world’s largest emissions-trading program….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Livemint.com: The NSE has developed a new trading application, NOW, which connects its trading members to the exchange through the Internet. The National Stock Exchange (NSE) has developed a new trading application, NOW, which connects its trading members to the exchange through the Internet.

The new application has a host of additional features compared with NSE’s previous offerings, NEAT and NEAT PLUS, especially to do with risk management at various levels for a trading member. These include setting trading limits, disallowing trades in certain securities and automatically closing positions of clients who fall short on margins….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Business-standard.com: Last week, global commodity prices recorded their biggest weekly fall in over 50 years. This is not a flash in the pan, as the decline has been accelerating since prices peaked in July; values are down by a third since then, and still falling.

This mirrors the behaviour of international crude oil prices, which are also similarly down from their July peaks. The dramatic drop in the Baltic freight index for shipping rates, to about a third of what it used to be, tells the story very succinctly of the sudden shift in outlook. Indian commodity prices too have been falling, but rupee prices have been cushioned to some extent by the fall of the rupee against the US dollar, by 3 per cent in as many weeks and 16 per cent fall in the last six months….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From FT: Several of China’s largest steelmakers are expected to cut output by about 20 per cent this month in a bid to support falling steel prices at a time of weakening demand.

Steel mills in northern China, including Shougang Steel, Shandong Iron and Steel, Hebei Iron and Steel, and Angang Steel met last week to discuss cuts that could total 20m tonnes….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Telegraph.co.uk: Oil, grains, and industrial metals all crumbled as the week began despite the passage of the Paulson bail-out plan in Washington and dramatic moves by European governments to shore up their banking systems, compounding the steepest commodity crash in over half a century.

The big exception yesterday was gold, which surged $34 to $864 an ounce on safe-haven buying as the markets came face to face with the unsettling reality that the euro is no healthier than the dollar, and perhaps sicker…… Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Seekingalpha.com: The parade of advisers on financial television has a new and growing club. These are people recommending: “You should be in cash, since nothing is working.”

What they really mean is: “You should have been in cash, since nothing worked.” Where were they a month or so ago? In most market climates there are some sectors that perform well. There’s always a bull market somewhere….well, nearly always…… Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Forbes: Industrial metals traded deeper into negative territory Monday, with copper tumbling to its lowest levels since early 2007 on fears over the health of the global economy amid the deepening credit crisis.

Copper — often seen as a gauge of real economic activity — sank to its lowest level in 20 months, while aluminium and nickel hit their weakest points since January 2006….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Theglobeandmail.com: The metals sector is bracing for a wave of mine shutdowns and development project cancellations amid a deepening crash in commodity prices.

Plunging metals prices are forcing executives to reconsider the economic viability of mines as commodity values fall toward the cost of production at many operations. Copper, considered a gauge of economic activity, fell to its lowest level in 20 months on the London Metal Exchange Monday, closing at $5,560 (U.S.) a tonne or about $2.52 a pound….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Mineweb.com: BMO Capital Markets said gold will “outperform its commodity peers as investors seek refuge from risks associated with the U.S. dollar, shaky banks and extremely volatile equity markets.”

In a recent update, BMO mining and metals analysts also predicted that base metals and bulks will remain under considerable selling pressure in the months leading into 2009, “but a sustained commodity bust is not foreseen.”….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Bloomberg: Wheat fell, dropping under $6 a bushel for the first time in 14 months, as a rally in the dollar erodes the appeal of U.S. exports for overseas buyers.

The U.S. Dollar Index gained as much as 1.7 percent today and is up 10 percent in the past two months, during which wheat plunged 25 percent. The dollar also rose against the pound today on speculation the Bank of England will cut interest rates in an attempt to boost the British economy….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Indiatimes.com: The government may soon allow 100% foreign direct investment (FDI) in commodity broking business. The proposal has obtained in-principle approval of the finance ministry and department of industrial policy & promotion (Dipp).

However, the views of the Reserve Bank are awaited and a final decision is expected after the central bank’s stand on the issue is considered. As of now, only 12 services under the financial services category are open for FDI….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Arabianbusiness.com: Dubai Gold and Commodities Exchange (DGCX) said on Monday that year-to-date (Jan.-Sept.) volume had passed the one million contracts mark for the first time, up 52 per cent on last year.

Higher trading activity was led by currencies, precious metals and crude oil….. Full Article: Source

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From Mineweb.com: The South African diamond cutting industry is in crisis over the short supply of rough diamonds and has convened an industry meeting this month to address the woes that have shrunk the sector.

President of the World Federation of Diamond Bourses Ernest Blom told Mineweb the South African industry was suffering as the newly established State Diamond Trader was not providing the sector with adequate rough diamond supply for beneficiation yet. The industry was also no longer receiving rough diamond supply from De Beers subsidiary Diamdel….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Forbes: Key commodities were clobbered Monday by deepening fears of a global recession, with gold being the only exception as investors embraced the safe haven of the precious metal.

Oil dropped more than 6 percent to below $88 a barrel, copper slumped over 7 percent to 19-month lows and soybeans dove 7 percent to their lowest levels in nearly a year….. Full Article: Source

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From News.com.au: Big business will put more pressure on the Rudd Government to delay its emissions trading scheme - predicting a million jobs may be lost if it goes ahead.

The Australian Industry Group’s formal response to the Government’s green paper has recommended a “gentle start” to an emissions trading scheme, with low administration costs. In a move that was likely to fuel Opposition Leader Malcolm Turnbull’s assault on the Government’s intention to start an ETS by 2010, the Ai Group warned that industries such as smelters, manufacturers and cement makers could be forced to move offshore….. Full Article: Source

Posted on 07 October 2008 by VRS |  Email |Print

From Cattlenetwork.com: Market upheaval hasn’t spared hedge fund managers specializing in commodities, though unique circumstances have so far armored them against some of the harshest effects of the credit crisis.

Managers of commodity-oriented funds say investors are clamoring to cash out profits from their funds to cover losses elsewhere. Their flight may aggravate the steep drop in oil, agriculture and other commodity prices of recent months…… Full Article: Source

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