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Commodities Briefing 16.Oct 2008

Posted on 16 October 2008 by VRS |  Email |Print

From Telegraph: Rio Tinto, the Anglo-Australian mining group, warned that the world’s biggest consumer of steel, coal, aluminium, copper and seaborne iron ore had started to show signs of a slowdown. Rio’s shares, and those of rival BHP Billiton, fell almost 10pc, wiping almost £10bn off their market values. So much for decoupling.

Miners like Rio and BHP are betting on China in a big way. The Middle Kingdom accounts for more than 40pc of the global growth in demand for major commodities, by Deutsche Bank estimates….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Hardassetsinvestor.com: We talked about the rationale for the commodities, for the hard assets. It’s embraced as an asset now; investors want them for all the reasons that you mentioned in our last segment.

Let’s look at the outlook. I mean, we’ve had six years … I don’t think anyone could have predicted the extent of the gains that some of these markets experienced; but now we’re having a pullback. Is that it? You sort of kind of hinted to that when you said it depends on the stock market, but is that really it?…. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Mineweb.com: JP Morgan is raising its gold price forecasts for 2008 and 2009 as it anticipates investors seeking risk aversion investment options. JP Morgan said on Wednesday it is raising its price forecast for gold for 2008 and 2009 on expectations investors will buy into bullion as a haven from risk.

However, it is trimming its expectations for platinum, palladium and silver prices on fears over falling demand for the more industrial precious metals. The bank now sees gold prices at $904 an ounce in 2008, against a previous forecast of $884, and at $875 an ounce next year, up from $854 previously expectated….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Cambridgenetwork.co.uk: The UK is the European hotbed of investment and innovation in low carbon technologies, attracting 41% of the total venture capital and private equity investment in low-carbon companies in the EU, according to a report.

The new research also reveals that the global low carbon energy market opportunity could reach £2,000 billion per annum by 2030…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Businessweek.com: What goes up must come down. After a record-breaking 10-year boom for commodities, it was inevitable that prices would have to retreat—especially in the face of global financial turmoil and sagging economic growth. And retreat they have: The prices of some metals are down by more than 50% since the start of 2008, dragging with them shares in mining giants such as BHP Billiton (BBL) and Rio Tinto (RTP).

Is it the end of the party for natural resources? “We’re definitely seeing a slowdown in the mining sector,” says Iain Armstrong, divisional director at investment firm Brewin Dolphin in London. “Company [share] prices will remain weak, as we’re past the best of the current commodity cycle.”…. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Seekingalpha.com: Although there is no strong evidence yet that the European Union’s Emissions Trading Scheme is driving industries away to more pollution-tolerant parts of the world, it seems likely that this may occur.

That appears to be the tentative conclusion of a working paper from the International Energy Agency examining the impact of the ETS scheme on the European aluminum smelting industry. The purpose of the paper was to explore the issue of “carbon leakage,” the increase in emissions outside a region as a direct result of the policy to cap emission within that region…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From SMH: US gold futures ended a touch lower on Wednesday, limiting losses in spite of plunging stock markets and widespread decline in commodities as investors turned to gold as a safe store amid fears of a global recession, traders said.

December gold settled down 50 cents at $US839.00 an ounce on the COMEX division of the New York Mercantile Exchange. December futures ranged from a low of $US833.10 to a peak of $US859.20. Gold accelerated gains on fresh buying and short covering due to the weaker stock markets - COMEX floor trader….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Reuters: Dabbling in commodities markets has fallen out of favor with the wealthy who are abandoning the sector in droves as energy and metal prices slide, private bankers say.

Commodity prices, which have surged for most of the past six years, have imploded over the last three months. Estimates by Citigroup and Barclays Capital put third-quarter losses in the asset class at between $50 billion and $60 billion…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Thenational.ae: As the price of a barrel of oil fell below US$75, Opec predicted a sharp drop in demand this year and the next. The supplier of more than 40 per cent of the world’s oil unveiled its latest gloomy oil-market forecast amid continued global economic turmoil as the world faces its worst financial crisis since the 1930s, and as its 13 members prepare to meet in Vienna at an emergency meeting set for Nov 18.

“Dramatically worsening conditions in financial markets indicate strong fallout on the real economy is now inevitable,” Opec said yesterday in its latest monthly oil market report. “Ongoing financial market turmoil is expected to continue to impact oil demand well into the coming year….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From FT: Stock markets around the world tumbled yesterday and commodity prices weakened as investors switched their focus from banking bail-outs to deteriorating economic fundamentals and the looming prospect of a global recession.

US oil prices dropped below the $75 level for the first time in more than a year, base metals fell sharply and the Baltic Dry index, a key measure of shipping costs, plunged a further 10 per cent…… Full Article: Source

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From Theaustralian.news.com.au: The federal Government’s proposed carbon trading scheme is a greater risk to business than the global financial crisis. This is the view of senior executives in charge of one of Japan’s biggest offshore capital investments.

While finance for Inpex Corporation’s $20 billion development of the Ichthys gas field in the Browse Basin off Western Australia was not an issue because of the company’s healthy balance sheet, the executives warned that the project’s “sustainability” could be affected by the proposed carbon trading scheme….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Reuters: Base metals tumbled on Thursday, with Shanghai copper and zinc futures hitting their downside limit and London copper fell by 5 percent, after the Fed warned that the U.S. economy faces a big threat.

The benchmark Shanghai copper SCFc3 and Shanghai zinc SZNc3 fell by their 4 percent daily limit at the opening, while aluminium SAFc3 touched its downside limit before recovering…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Theglobeandmail.com: Industrial metals tumbled Wednesday, with copper plunging more than 9 per cent in late business as a sharp downturn in U.S. equity markets reinforced fears of a global economic recession.

Copper for delivery in three months on the London Metal Exchange (LME) closed at $4,920 (U.S.) a tonne, down $378 from Tuesday’s closing bid of $5,298. In after-hours electronic business, the red metal fell as low as $4,820. In New York, copper for December delivery plunged 18.40 cents, or 7.7 per cent, to close at $2.2105 a pound on the New York Mercantile Exchange’s Comex division….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Resourceinvestor.com: Wobbly financial markets and tumbling commodity prices are causing major headaches for the oil and gas sector, with some players reconsidering the plans they made when the economic picture looked rosier.

EnCana Corp. (ECA) suspended Wednesday its planned split into separate oil and gas companies “given the uncertainty and volatility in the global financial markets.” It said it would not hold a shareholder vote on the restructuring, originally set for mid-December, “until clear signs of stabilization return to the financial markets…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From WSJ: Oil giant BP PLC is exploring a potential deal to buy natural-gas properties from once highflying Chesapeake Energy Corp., according to people close to the British company’s thinking.

A deal would be an early sign that cash-rich global oil companies are prepared to embark on a spending spree as smaller natural gas producers scramble to raise cash amid declining energy prices and tight capital markets….. Full Article: Source

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From Guardian: Gold weathered a widespread decline in commodities on Wednesday, ending slightly lower in New York futures trade as plunging stock markets sent some investors to gold as a safe haven.

A slide in U.S. and European equity markets triggered buying in the bullion market, offsetting some selling related to a decline in crude oil and commodities, traders said.
Silver fell 5 percent, platinum nearly 5 percent and rhodium more than 20 percent amid fears a recession would hit demand for precious metals with an industrial use….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Reuters: The Toronto Stock Exchange’s main index plunged again on Wednesday as resource stocks were pressured by falling commodity prices on concerns global economic weakness would cut demand.

The tumble chipped away at big gains made on Tuesday when the benchmark index logged a record 9.82 percent rise on hopes that moves by policy-makers around the globe would help fix the financial crisis. The heavily-weighted energy sector led the way down, dropping 11.8 percent as U.S. crude plummeted $4.09 a barrel to settle at $74.54 a barrel on recession fears….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Financialexpress.com: Maintaining a ‘cautious’ approach prior to inviting foreign capital due to the recent turmoil in the international financial markets, India’s commodities market regulator - Forward Markets Commission (FMC) - on Wednesday said that private equities (PEs) fund and hedge funds would not be allowed to participate in the commodity exchanges in the country.

“In due course of time, we would like to invite foreign institutional investors (FII) into commodity exchanges in our terms. But we are against short-term high return seeking funds participating in the commodity trading,” BC Khatua, chairman, said …. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Allaboutalpha.com: Canadians aren’t naive. They know why the global hedge fund community has beaten a path to their door over the past few years. It starts with “energy…” and ends with “…and basic materials”.

While they bristle at moniker “hewers of wood and drawers of water”, Canadians have been the beneficiaries of a global energy and basis materials boom for several years. And as the Chairman of AIMA’s Canadian chapter, Phil Schmitt, argued last year, that’s okay with them - as long as investors stick around after the boom. Well, the energy and basic materials boom seems to be taking a bit of breather right now…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Reuters: Creation of a clearinghouse for credit default swaps will reduce the risk posed by the financial derivatives, three U.S. regulatory agencies said on Wednesday and one of them urged broader reform of over-the-counter derivatives markets.

Officials from the Federal Reserve System, the Securities and Exchange Commission and the Commodity Futures Commission said U.S. regulatory changes must be coordinated with the financial overseers overseas so rules are uniform globally….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Guardian: The end of a long global commodities boom threatens to hit Latin America harder than any other region, putting a sharp brake on its economies and pressuring government spending plans.

From bulging foreign reserves and the emergence of corporate giants to the destruction of vast areas of the Amazon rain forest, booming commodity prices have reshaped Latin America as supplier of the world’s raw materials and underpinned its resurgent economies…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From FT: Mining shares plunged after commodity prices fell and Rio Tinto said it was reviewing its capital expenditure plans in the light of a slowdown in Chinese metals demand.

The five biggest fallers in the FTSE 100 index yesterday were all mining companies, with shares in ENRC, Kazakhmys, Anglo American, Xstrata and Vedantalosing more than 17 per cent. Rio Tinto shares lost almost 17 per cent, while those of its rival and suitor BHP Billiton fell 15 per cent…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From WSJ: Asia’s foreign-exchange reserves eased in September from August but remained at historically high levels, signaling that the region is well-stocked with funds to help stabilize jittery markets.

Reserves held by 12 central banks in the region stood at $4.351 trillion at the end of September, down from $4.357 trillion at the end of August, according to calculations by Dow Jones Newswires….. Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Indiatimes.com: National Spot Exchange (NSEL), an electronic trading platform in commodities, today started operation by launching gold, gold mini, silver and cotton contracts.

“We have launched gold, mini gold, silver and cotton contracts and will launch more commodities every week,” NSEL Managing Director Anjani Sinha said from Mumbai. He said, while gold and silver have to be delivered at designated warehouses in Ahmedabad, delivery centre for cotton is Mumbai…… Full Article: Source

Posted on 16 October 2008 by VRS |  Email |Print

From Business24-7.ae: Oil fell for a third day on Thursday, plumbing a new 13-month low below $73 (Dh268.64) as commodity investors again rushed for the exit on fears of a collapse in demand growth as the world economy tilts toward recession.

Bleak US economic data and warnings from the US Fed that tough times are not over led Wall Street to its worst day since the 1987 stock market crash, wiping out earlier optimism fuelled by government steps to avert a financial meltdown. Japan’s Nikkei index dived 9.55 per cent in early trade…… Full Article: Source

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