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Commodities Briefing 27.Oct 2008

Australia: Commodities crash to strain deficits
China's troubled steelmakers spar with suppliers
Investors now flocking to 'safe haven' yen
Fitch says gold price will hold up reasonably well over 12-18 months
UAE: Credit crisis hurts commodity markets
From how high, to how low?
Brazilian giant Vale set for quiet ore demand
Commodities take a battering on global market
Market swings expose Chinese offshore derivatives trades
Qatar Steel sees local demand remaining ‘very high’
Regulators may raise exposure cap in currency futures
Lucrative deal in works of CME
Oil steady despite OPEC cuts
Emerging market funds face heat
GCC single currency: monetary independence first
Gold climbs in N.Y. as investors seek haven from falling shares
How to buy physical gold and silver on the COMEX
GCC Food Security Forum next week to discuss more active food production
Iran says OPEC could make further cuts
Some comfort in commodities price plunges
Gas prices fall nearly 53 cents in 2 weeks
Russia feels chill winds of the global downturn
Where might gold go?
China's top aluminum maker Chalco net dives 92 percent
Financial crisis takes toll on carbon scheme
Commodity Fund that tracks global coal price
Jewel industry glitters in a gloomy financial market
Carbon ends down 5%
Weak sentiment across commodities
Australia will avoid recession despite resource sector reliance
Gold-diggers swoop after bullion falls below $US700
MGEX Board recommends trading exclusively electronically
Cocoa prices drop to one-year low as emerging-market use wanes
Indian Bank to launch gold bullion trading
Commodities take a hit

Posted on 27 October 2008 by VRS |  Email |Print

From The Australian: Australia is likely to confront a balance of payments crisis next year as the commodities boom ends with a crash.

Around the world, nations with current account deficits are being punished by markets. Australia will be swept into the contagion, which is likely to choke business funding and force up market interest rates…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Forbes: The sparring between China’s suddenly troubled steelmakers and their suppliers has gone another round. Cia. Vale do Rio Doce, the Brazilian iron ore producer that is the world’s biggest, has threatened to withhold supplies if China’s big steelmakers don’t pony up a 12% premium on their annual contract price, which was already 71% higher than 2007’s.

The Chinese companies seem to have backslid on a mid-year agreement to pay the premium after their Australian suppliers, such as BHP Billiton, Rio Tinto and Fortescue Metals, had also hiked prices…. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Economic Times: After years of gorging on Japanese credit to buy lucrative assets such as Icelandic bonds, Brazilian equities or the Hungarian forint, inv estors are now rushing back to the safe-haven yen, which is soaring.

The stampede out of stocks, commodities and other risky assets drove the yen up to a 13-year high against the dollar and to a six-year peak versus the euro on Friday as investors piled back into the currency…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Mineweb: Fitch Ratings Thursday said liquidity for the mining and metals sector is generally healthy as “most companies have taken advantage of strong prices to improve their assets and capital structure.”

In their analysis on the liquidity of North American mining and metals, Fitch analysts Monica Bonar and Sean Sexton forecast that “gold producers should continue to benefit from a very strong pricing environment” as gold prices “hold up reasonably well over the next 12-18 months.”…. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From AME Info: The global sell-off not only hits stock markets, but also commodities. Two weeks ago, the Dubai Financial Market (DFM) General Index tumbled to a multiyear low of around 3,000 points.

The federal government of the UAE guaranteed all interbank lending between UAE-based institutions and all deposits held by UAE-based commercial banks. Nevertheless last week the panic did not vanish, rather intensified: resulting in a severe collapse of the financial markets…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Chron: Weren’t we just in an oil boom? Three months ago, crude had rocketed to a record $147 a barrel because investors were confident the world’s thirst for oil would only continue to grow.

Now, with the credit markets stuck in deep-freeze and economies around the globe tumbling into recession, world oil demand has flat-lined. The price of crude has dropped by more than half since the summer….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From The Australian: Brazilian mining giant Vale has warned that demand for commodities will continue to weaken and has joined rival Rio Tinto in saying China will not bounce back this year.

The company also flagged cuts to about 30 million tonnes of its higher-cost iron ore production and some nickel output…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Live News: Once again nothing was spared in last week’s selling crunch in commodity markets. Shares, currencies and commodities were either pounded or pursued, such as the yen and the greenback.

Major commodity indices told the story in that sector: the Standard & Poor’s GSCI Index - which tracks the prices of two dozen raw materials including wheat, corn, sugar, copper and lead - has dropped nearly 29% from the start of the month. The Reuters Jefferies/CRB-Jeffries is off a similar amount. It fell more than 9% and is down 46% from a record in July….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From FT: Large fluctuations in global commodity and currency markets have exposed a string of offshore derivatives trades made by large Chinese companies, prompting the government to issue a warning to speculators.

China has been largely insulated from the direct effects of the global financial crisis because of its tight cross-border capital controls, but last week a procession of state-owned companies with offshore operations reported large losses from bad currency and commodity bets…… Full Article: Source

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From Gulf Times: “While the prices have slumped, it is not panic situation yet. The prices scaled up to unsustainable levels in the past due to the rising global demand and are now seeing a correction because of the economic crisis,” Qatar Steel commercial manager Ali bin Hassan al-Muraikhi said.

He said the drop in oil prices also had an impact on steel and other commodities. Qatar Steel marketing manager Mohamed Ahmed al-Saadi said steel was not the only commodity to be hit by the global economic turbulence…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Economic Times: With the successful launch of currency futures, regulators are now looking at taking a series of measures to further deepen the currency derivatives market. Apart from introducing trading in 4-5 more currencies, the regulators — the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) — are considering raising the exposure limit for players.

Besides rupee-dollar futures, which are currently available, the regulators are planning to introduce rupee-yen, rupee-euro, rupee-yuan and rupee-pound futures as well. More players, including foreign institutional investors and non-resident Indians (NRIs), may also be allowed to operate in the market….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Sun Times: Financial regulation in Washington is a jumble, as Congress and the bureaucrats kick around ideas for putting freewheeling credit default swaps under somebody’s control. CME Group (CME), owner of the Chicago Mercantile Exchange and the Chicago Board of Trade, has center stage in the negotiations and is liable to benefit hugely from regulatory change.

But nothing comes cheap in Washington. CME probably will win government blessing for its push to bring the $55 trillion credit default market under its wing. In return, it may need to give up two of its longheld lobbying views…… Full Article: Source

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From The Age: Crude oil was little changed in New York near a 16-month low amid expectations that OPEC’s decision to cut production will start to bring supply back in line with demand that is being curbed by the global financial crisis.

The 13 members of the Organization of Petroleum Exporting Countries agreed October 24 to lower supply by 1.5 million barrels a day starting in November. The group is likely to reduce production further if the latest cut doesn’t stabilize prices, Agence France-Presse said, citing an interview Iran’s OPEC representative Mohammad Ali Khatibi gave on state television….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Economic Times: Emerging market equity funds lost about a tenth of their value for the week ended October 22 as fears of a global recession loomed. Most m
ajor fund groups tuned to developed markets, meanwhile, were down 4-5%.

However, for the second week running, outflows were generally modest — with the exception of some fixed-income fund groups. Net redemptions from equity fund groups were just over $2 billion, according to the weekly report by Emerging markets Portfolio Funds Research (EPFR)…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Khaleej Times: A single currency for the Gulf Cooperation Council emerged as one of the highlights of the discussions held between the finance ministers of the member states in Riyadh on the weekend.

Some ministers pointed out that the current global financial crisis has in fact strengthened the case of a single currency to be managed by a single central bank through a unified monetary policy…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Bloomberg: Gold climbed in New York, erasing earlier losses, as equities tumbled worldwide, boosting demand for the precious metal as a safe harbor. Silver fell.

U.S. Treasuries rose as investors bought government securities amid a worldwide collapse in shares. The dollar climbed as much as 1.9 percent against a weighted basket of six major currencies before paring gains…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Resource Investor: It is perhaps the ultimate irony in this great crash market of 2008. Exactly when precious metals ought to be soaring on safe haven demand; when they should be stronger than a acre of garlic as a place for people to store wealth away from the hurricane of uncertainty that has become of the forex market (and the bizarre fluctuations of its now hugely inflated fiat currencies);

The two most popular precious metals are instead being sold off on the futures markets just like all the other overly-leveraged commodities. The ongoing deleveraging and intense flight to cash has buyers terrified worldwide. They are locked-up, deer-in-the-headlights fashion, which gives the hedgers and short sellers supernatural strength…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Kuna: The Federation of Gulf Cooperation Council (GCC) Chambers of Commerce stressed believes it is importance to join GCC efforts to fill the gap in food commodity production, according to its Secretary General Abdulrahim Naqi on Sunday.

In a statement on the occasion of the Food Security Forum to be held next Saturday in Muscat, Oman, Naqi said that there were a number of strategies on the way aimed at agricultural integration and unified food production, especially after the launch of the GCC Common Market…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Rthk.org.hk: Iran, the number two oil producer in OPEC, says the cartel is likely to cut back further on production if the latest reduction does not stabilise crude prices.

The Organisation of Petroleum Exporting Countries, which produces 40 percent of world crude, decided Friday to reduce its production quota by 1.5 million barrels per day as of November to a level of 27.3 million bpd. Despite the announcement, the price of Brent North Sea crude sank to $US61, the lowest point for 17 months….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Business Spectator: Access Economics states in its latest “Business Outlook” report that commodity markets have entered a dangerous phase.

The slowdown in major economies has negatively affected commodity prices, with nickel and zinc prices falling more than 70 per cent below their peaks….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From IBTimes: A national survey shows gas prices continue to decline, tumbling nearly 53 cents a gallon in the last two weeks.

The average price of a gallon of regular gasoline at self-serve stations was $2.78 Friday. Mid-grade was at $2.93 and premium was at $3.05. That’s according to the Lundberg Survey of 5,000 gas stations nationwide, released Sunday….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Telegraph: On Friday, both Russia’s stock exchanges saw dramatic falls – with MICEX, the leading exchange controlling 99pc of volume in Russian shares, bonds and commodities, falling 14.2pc after being suspended twice and closing early.

Moreover, MICEX chose to suspend all trading today , to allow investors time to digest what appears to be the new economic order, before reopening tomorrow….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Theaureport.com: Jon Nadler, Kitco’s well-known senior investment products analyst, elicits both criticism and acclaim for opinions that some characterize as contrarian. In this installment of an exclusive interview with The Gold Report, he brings his three decades of experience to bear (no pun intended) on the outlook for gold, promoting the precious metal as a key asset in a balanced portfolio, as well as for its intrinsic value and “insurance” attributes.

The Gold Report: Economic theory tells us gold should be taking off, given all the uncertainty in the marketplace. But we haven’t seen that happen. What is going on?…. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Reuters: Aluminum Corp of China Ltd, the world’s No.3 alumina producer, said its third quarter net profit dived 92 percent, dented by high production costs and sliding aluminum prices amid weakening demand in a slowing world economy.

Also known as Chalco, the country’s top alumina and aluminum maker reported a net profit of 182.9 million yuan ($26.7 million) in the quarter ended September, down from a restated profit of 2.29 billion yuan a year ago, under Chinese accounting standards…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Iol.co.za: Australia’s Prime Minister Kevin Rudd won office promising to be a climate change warrior but his chief weapon - a carbon trade scheme to slash emissions - is falling victim to shifting politics and world financial tumult.

A former diplomat, Rudd made ratification of the Kyoto climate pact - opposed by the former conservative government for more than a decade - his first act after winning November elections tinged green by the seeming onrush of climate shift…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Seeking Alpha: The accompanying table contains a summary and statistics for 16 ETFI global equity indexes and two commodity pool fund ideas, with the short/inverse and defensive themes outpacing the overall market averages over the past year in the midst of ongoing market turmoil around the world.

Although currently out of favor with investors, new commodity pool fund ideas include timber and coal. The CoalFund is a commodity pool that is structured to track the performance of exchange-traded, near-month futures contracts for global coal prices from the following four major coal-producing/exporting regions in the world as specified below….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Zawya: The slump on global equity and general economic sector has benefited the jewellery market, said Tamjid Abdullah, deputy managing director of UAE-based Damas.

“The gold and related jewellery business is on the up as it gives the best value for cash,” he told Gulf News during the jewellery giant’s launch of a range of products in Muscat…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Commodities Now: European carbon allowances plunged more than 5 per cent today amid a wave of selling in financial and commodities markets prompted by heightened fears of a worldwide economic recession.

EU allowances for December 2008 delivery closed at €19.10, down €1.05 from Thursday’s close in the cleared brokered market. The December 2008 carbon price has fallen by more than a third from its peak of nearly €30 it struck in July. ….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From The Hindu Business Line: It was a disastrous week for the commodities market. There was an across-the-board collapse covering especially industrial metals, base metals, precious metals, ferroalloys, scrap and energy products.

Among commodity groups, it is noticeable that energy and industrial metals saw the steepest falls, followed by precious metals. Agriculture markets have declined less…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Mineweb: A paper presented by Mike Smith, Chief Executive of the ANZ Bank, one of Australia’s major banks, to Prime Minister Rudd and Federal Treasurer Wayne Swan on October 23 has been released by its Author Saul Eslake.

While not painting a rosy picture, Saul Eslake - who is the ANZ’s chief economist - said the bank does not expect Australia will experience recession, “in the popular sense of consecutive quarters of negative economic growth.” However, many other Western economies will…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Business Spectator: On 24 October 2008, gold prices fell below $US700 an ounce for the first time in more than one year. Gold for December delivery traded at $US695.20 an ounce.

Spot gold traded at $US709.03 on the COMEX division of the New York Mercantile Exchange….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Commodities Now: After a long history of futures and options open outcry trading, MGEX (Minneapolis Grain Exchange or Exchange) is closing its trading pits effective December 19, 2008.

The decision to make the transition to exclusively electronic trading was unanimously approved by the MGEX Board of Directors and is pending MGEX ownership approval. The Exchange’s electronic trading operations on the CME Globex® electronic trading platform will remain unchanged. ….. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Bloomberg: Cocoa prices fell to a one-year low in New York on speculation that emerging economies are heading for a slump, slashing commodity use.

Cocoa climbed 35 percent in the two years through Dec. 31 as demand for chocolate climbed in countries including China and India. Chinese President Hu Jintao said today his country faces “uncertainties” because of the global financial crisis. India faces a “temporary slowdown,” Prime Minister Manmohan Singh has said. …. Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From Business Standard: Chennai-based Indian Bank is planning to launch gold bullion trading. A proposal to this effect was recently cleared by the board of directors.

Speaking to Business Standard here, MS Sundara Rajan, chairman and managing director, Indian Bank, said the bank was now offering all financial services under one roof and trading in bullion would be one step forward in that direction. The bank would soon sign an agreement with an overseas supplier in this regard, he added…… Full Article: Source

Posted on 27 October 2008 by VRS |  Email |Print

From CNN: It’s not just stocks suffering the pain of the global financial mayhem. Commodities like corn, coffee and oil are also taking a big hit. The weakening world economy - and the stronger dollar - are causing many investors to bail out of commodities.

The S&P GSCI Index - which tracks the prices of two dozen raw materials including wheat, corn, sugar, copper and lead - has dropped nearly 29% from the start of the month…… Full Article: Source

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