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Commodities Briefing 10.Oct 2008

Posted on 10 October 2008 by VRS |  Email |Print

From Guardian: The credit crisis has hammered most commodity prices to multi-month lows as investors pulled billions of dollars from the sector, but trend-following traders have survived, and even profited.

About $50 billion-$60 billion of value has been wiped off commodity markets in the last quarter, according to bankers’ estimates. Oil, metals and grains prices are down double-digits in percentage terms from the year’s peak, crushing some hedge funds that bet on a continued rise in prices….. Full Article: Source

Posted on 10 October 2008 by VRS |  Email |Print

From Canadianbusiness.com: Oil prices extended their losses Thursday even as OPEC hinted it might cut output to halt the market’s dramatic slide at an emergency meeting next month.

Fearful that oil prices could fall too far and harm their petroleum-dependent economies, OPEC said it would hold an extraordinary meeting Nov. 18 in Vienna, Austria to discuss the widening economic crisis and how it’s affecting the oil market….. Full Article: Source

Posted on 10 October 2008 by VRS |  Email |Print

From Bloomberg: Goldman Sachs JBWere Pty cut its forecasts for iron ore and coal, saying prices will remain unchanged next year as “deteriorating” global economic growth will curb demand for raw materials.

Goldman expects iron ore contract prices for the year starting April 1 to stay at 144.66 cents per dry metric ton unit, down from a Sept. 17 forecast for an 18 percent increase, analysts led by Melbourne-based Malcolm Southwood said in a report. Coking and thermal coal prices may also remain unchanged in 2009, down from earlier estimates for gains of 10 percent and 20 percent respectively….. Full Article: Source &sid=aWWJ10DBXJ5I&refer=australia

Posted on 10 October 2008 by VRS |  Email |Print

From Etftrends.com: The hot streak commodity exchange traded funds (ETFs) saw this year is now on a cooling trend, as values have dropped 26-44% in the three months leading to Tuesday.

The commodities slide is vast, and mutual funds have also taken hits. Crude oil is down 35% over the past three months, and metals such as silver and platinum are down in the range of 34% to 49%. Gold is the only metal that has sustained the dropoff, …. Full Article: Source

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From Economist: Climb a steep flight of stairs down a small side street in Fatehpuri, part of the bustling commercial hub of Old Delhi, and you will come to a set of rooms overlooking an imposing internal courtyard. In one of them, half a dozen men lounge on mats beneath a poster of Lakshmi, the Hindu goddess of wealth.

Next to them is a clutch of telephone sets, each on a long wire cord. Outside hangs a blackboard with prices scrawled in chalk. This is the trading floor of the Rajdhani Oils and Oilseeds Exchange, where futures contracts for soyabean oil, mustard seed and jaggery (sugar) are bought and sold….. Full Article: Source

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From Theaustralian.news.com.au: Concerns about a global slowdown are continuing to put metal prices under pressure. CMC Markets senior dealer Matthew Lewis said base metals were hammered in New York and London overnight on Wednesday as hedge funds liquidated their holdings.

“There is growing concern about the slowing of global growth and the impact that will have on base metals demand,” he said. “Junior iron ore explorers have been really hurt, which has been directly linked to concerns that China’s steel mills may reduce intake by up to 20 per cent. …. Full Article: Source

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From Reuters: New carbon commodities are government-guaranteed in the climate change fight, but are still too complex and immature to provide a haven for investors fleeing financial markets’ rout.

Cap and trade schemes place a limit on industry emissions of heat-trapping gases like carbon dioxide, introducing a growing global trade in carbon permits worth $64 billion last year….. Full Article: Source

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From Theage.com.au: US gold futures jumped 5% in electronic trading on Friday as investors frantically searched for assets that might be safe havens after heavy losses in equity markets. Japan’s Nikkei average fell 11% in the opening minutes of trade, boosting gold’s appeal as an alternative investment.

The gold futures contract for December delivery on the COMEX division of the New York Mercantile Exchange hit a high of $US931.3 an ounce, up $US44.8 from Thursday’s settlement of $US886.5 in New York. Cash gold jumped more than 1% to reflect gains in futures….. Full Article: Source

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From Businessdayonline.com: I have every reason to believe that Nigeria is in deed a lucky country. In all respects, the country is blessed but more especially in economic resources. It is for this reason also that many think that Nigerians are lazy people (sitting on top of resources and yet living in abject poverty).

However, if you are one of those who are tempted to worry, for instance, about what will happen to Nigeria once its crude oil wells dry up, then it means you are equally not aware of the country’s wealth in solid minerals and agricultural commodities both of which have yet received practically little or no attention….. Full Article: Source

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From Financialpost.com: The fall in commodity prices is being exacerbated as international buyers delay or even back out of purchases in the hope that the market will go still lower.

“Everything is affected, from copper concentrates to oil and gas,” said Knut Jensen, executive vice-president of Montreal-based Canfornav Inc., which operates a global fleet of 30 bulk carriers. “People are waiting as long as they can for the market to start going sideways instead of down so they can get a better price.”…. Full Article: Source

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From SMH: Australia’s best shield from global economic turmoil - the high value of its commodity exports - is under threat with news that China has told suppliers to slow iron ore shipments and predictions that iron ore and coal prices could fall by 20 per cent next year.

Australia’s fifth-largest iron ore exporter, Mount Gibson Iron, shocked the sharemarket yesterday by warning that its Chinese customers were asking it to delay shipments as demand slowed due to economic uncertainty and the tightening of credit facilities. …. Full Article: Source

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From Bloomberg: Canada’s currency dropped to the lowest since April 2007 as crude oil declined and an index of the nation’s commodity exports fell the most in three years.

The currency has depreciated 5.3 percent so far this week following a fall of 4.5 percent during the period through Oct. 3, which was the biggest weekly loss since at least January 1971 when Bloomberg records begin. Canada relies on commodities for about half its export revenue. The U.S. is Canada’s largest trading partner. …. Full Article: Source

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From Investorschronicle.co.uk: With attention focused on the banking sector, headline-writers have missed the other ongoing massacre, which is taking place in the mining sector. In the past month, shares in the four diversified mining behemoths of BHP Billiton, Rio Tinto, Xstrata and Anglo American have respectively fallen 27 per cent, 35 per cent, 44 per cent and 34 per cent.

While industrial metals prices have been in retreat for some time, what has finally done for the large diversified miners is a swift collapse in both confidence and prices in the global steel industry….. Full Article: Source

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From CNBC: Along with stocks, oil plunged on Thursday as panic selling swept across the markets. Commodity stocks could be heading for the biggest annual decline since 2001.

The story of global growth that brought this bull market to a peak one year ago Thursday has become completely unwound, adds Dylan Ratigan. For insights we turn to celebrated commodity trader Dennis Gartman, author of The Gartman Letter….. Full Article: Source

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From Chron.com: The government’s top securities regulator pressed Congress anew to quickly rein in the market for credit default swaps, complex investments partly blamed for the widening financial crisis.

The roughly $60 trillion market for credit default swaps lacks transparency, is unregulated and creates an environment for market manipulation, Securities and Exchange Commission Chairman Christopher Cox said. The market’s size exceeds the gross domestic product of every country in the world combined, he noted….. Full Article: Source

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From Reuters.com: Sharp falls in commodity prices have yet to cause an exodus by pension fund investors from raw materials but the credit crisis could prompt a shift to simplicity and away from complex derivatives.

“We haven’t seen them (pension funds) coming out yet and we don’t anticipate it,” said Eric Kolts, vice president, Commodity Indices at Standard & Poor’s. But he said he believed investors would look for simpler products….. Full Article: Source

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From Xinhuanet.com: The dollar rose against major currencies on Thursday as Wall Street fell sharply. Investors were still worrying about the credit crisis despite global rate cuts on Wednesday. Stocks of General Motors fell 30 percent after a major credit ratings agency said it was considering cutting its rating on the largest car manufacturer, dragging broader stocks down.

The Dow Jones industrial average fell 678.91 points, or 7.3 percent, to close at 8579.19. It was the first time that Dow closed below 9,000 since June 30, 2003. Falling stocks boosted demand of the dollar as a risk aversion currency, sending it rising against the euro and other major currencies. …. Full Article: Source

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From Guardian: European ministers are meeting in Brussels to discuss the renewable energy directive, a ground-breaking piece of legislation that could kick-start the energy revolution we desperately need to tackle the dual challenges of climate change and energy insecurity.

However, rather than wholeheartedly supporting this green energy plan, the UK has until now worked behind the scenes to seriously undermine the agreement - for example by omitting energy from aviation when calculating the renewable energy targets. We hope the creation of a Department of Energy and Climate Change signals a change in direction….. Full Article: Source

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From Thetimes.co.za: The rand recovered from a six-year worst level against the dollar overnight and was back below the 9 rand per dollar level in late trade. This happened as some confidence began to seep back into equity markets after yesterday’s coordinated rate cuts by central banks and investors pinned their hopes on further cuts.

Prior to the rate cut announcements on Wednesday the rand weakened to 9.4595 to the dollar - its worst level against the greenback since November 2002. But on Thursday, dealers said they were seeing a recovery in the local currency as some risk appetite returned to markets amid cautious optimism….. Full Article: Source

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From Newsreview.com: Environmentalists debate the merits of the state’s greenhouse-gas reduction proposal. California’s environmentalists don’t always see eye to eye. That’s especially true when it comes to the best way to reduce the state’s carbon emissions, as required by the landmark Global Warming Solutions Act of 2006, better known as Assembly Bill 32.

Some environmentalists argue that carbon-trading programs offer the best compromise between free enterprise and government regulation. But environmentalists who oppose so-called “cap-and-trade” programs claim that compromise comes at the expense of the poor and minorities, whose communities are often the hardest hit by air pollution….. Full Article: Source

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From Xinhuanet.com: China’s Ministry of Commerce said the prices of iron ore and steel products have further room for slide following recent retreat. Prices of domestic iron ore were at 1,200 yuan (176 U.S. dollars) per ton at the end of September, 12.4 percent lower than a month ago on slumping shipping rate, the ministry said.

Prices of steel on average last month slid 5.9 percent month-on-month to 5,670 yuan (830 U.S. dollars) per ton. The slide was because of falling production costs and weaken demand in economic slowdown….. Full Article: Source

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From Bloomberg: The global financial crisis has hurt the commodities industry in South Korea, Asia’s fourth-largest economy, as banks reduce financing and the currency tumbles to the lowest in a decade.

South Korea buys overseas most of its raw materials from copper and grain to oil and coal. The won, Asia’s worst performing currency, plunged 50 percent against the dollar this year to a level last seen during the Asian financial crisis, when the nation had to take out a $57 billion emergency loan from the International Monetary Fund….. Full Article: Source

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From Reuters: Gold prices could exceed $1,000 an ounce within the next few months as investors exit other commodities on heightened fears over a global economic downturn, said Barclays Capital.

Barclays’ metal analysts, speaking at a press briefing on Thursday, said the current market turmoil is likely to lead to short-covering in base metals while long-term investors head for gold which is perceived a relatively safe asset….. Full Article: Source

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From Engineeringnews.co.za: South Africa’s largest steel producer ArcelorMittal South Africa has notified its customers that there will be another, even larger, price cut on both long and flat steel as from November 1, having last month confirmed an average 5% cut from October 1 - the October price reduction was the first for 2008.

In a note to its customers, the group said that the base price for both long and flat products would decline by an average of R1 000/t for orders confirmed for delivery from November 1. This would effectively translate into a decline of about 10% across the various grades of steel the group supplied….. Full Article: Source

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From Reuters: F&C Asset Management Plc said on Thursday it had launched a new derivatives-based fund to open up strategies used in its Sapphire hedge fund to more investors.

The F&C Active Return Fund will be managed by Stephen Crewe and Chris Childs and will target returns of 2-4 percent per annum over short-term money market rates, net of costs, and with low volatility. Fund launches have been thin on the ground while the credit crisis grinds on and as asset managers are stung by heavy redemptions….. Full Article: Source

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From CBC: The global economy is not heading towards a worldwide depression despite the appearance of a probable recession among OECD countries, according to a new report released by CIBC Thursday.

Economies — and equity markets — could rebound next year, said Jeff Rubin, CIBC World Markets chief economist and strategist, in his latest Canadian Portfolio Strategy Outlook Report…… Full Article: Source

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From Indiatimes.com: Responding to IMF’s scaling down of India’s growth rate to 7.9%, Indian finance minister Chidambaram said, “(Even at 7.9%) India will still be the second fastest growing economy in the world.”

That, Mr FM, is not quite true. In fact, this is just a frequently repeated myth that is fast acquiring such legitimacy that everyone believes it. Actually, there were 23 countries whose economies grew faster in 2007, with 19 growing at double-digit rates. Even China, with its 11.4% growth ranked only 12th in the list….. Full Article: Source

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From News.com.au: Carbon trading could put a million Australian jobs at risk if it is intoduced too quickly or too steeply, warn industry groups. The Rudd Government’s emissions trading scheme will fundamentally change business strategies and management, accounting body CPA Australia warns.

The association has released a discussion paper on issues that will affect business under the federal Carbon Pollution Reduction Scheme - issues that stretch beyond accounting questions….. Full Article: Source

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From Reuters: Oil prices fell $3 to a fresh one-year low below $84 a barrel on Friday, as fears that market turmoil will send demand for fuel slumping outweighed news that OPEC will hold an extraordinary meeting in November.

With the financial crisis now almost a month old, Japan’s Nikkei stock index plunged 11 percent on Friday, while the yen and gold rose on growing concerns that no government effort so far has kept the global economy from a path to recession….. Full Article: Source

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