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Commodities Briefing 11.Nov 2008

Posted on 11 November 2008 by VRS |  Email |Print

From FT: Commodity markets managed only a brief rally even after China’s government announced a $586bn economic stimulus package. Traders said the size of the package, equal to 16 per cent of China’s gross domestic product, underlined growing nervousness in Beijing at the country’s economic slowdown.

The spending programme is aimed at a wide range of infrastructure projects but the boost to commodity markets proved short-lived, as energy and metals prices pared their gains later in Monday’s session….. Full Article: Source

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From Xinhuanet.com: The U.S. dollar was mixed against major currencies on Monday as China’s massive economic stimulus boosted confidence in financial markets while recession worries still dominated foreign exchange trading.

China said Sunday it will loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand….. Full Article: Source

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From Mineweb.com: About 750-800t of gold currently held in ETFs was bought at prices below $750/ounce and only 300t at prices above this level. This implied that many investors in gold ETFs were still sitting on large profits, but if the gold price fell to $600/ounce large outflows of gold could occur, says the Fortis hedging and financial gold report.

The November report by the VM Group and Fortis Bank said it believed that very little investment in gold ETFs was bought at $300/ounce to $400/ounce. The VM Group says many investors in gold ETFs are still sitting on large profits as it examines if gold ETFs have been a successful investment….. Full Article: Source

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From Marketwatch.com: On Friday, the US government will report on retail sales for October. Given the credit squeeze, as well as exhaustion and despondence among consumers, bad news is expected. Analysts see a fourth consecutive month of falling retail sales. A fourth drop would be the first time there has been such an extended decline since 1974.

For September, the Commerce Department reported that U.S. retail sales fell 1.2%, with weak results in almost all kinds of stores. For October, economists surveyed by MarketWatch are looking for a drop of 2% — the biggest decline since 2001…. Full Article: Source

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From Climatechangecorp.com: Corporate managers tasked with overcoming today’s water challenges could look to their carbon management programmes for inspiration. Energy use and water use have some common traits. Both are intrinsic parts of many industrial processes, both have huge public impacts and both need to be reduced.

Arguably, measuring and managing water use should be even more of a priority for companies than cutting carbon emissions, says Mike Tuffrey, director at UK consultancy Corporate Citizenship….. Full Article: Source

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From Hardassetsinvestor.com: For the most part, tin doesn’t get a lot of attention. For the uninitiated, tin seems like something for woodsmen and cups.

But lowly, nonglamorous tin is becoming increasingly important, overtaking lead as the metal of choice in modern electronics soldering, especially after EU regulations requiring lead-free solders was implemented in 2006. In 2006, tin accounted for 50% of solders; in 2007, that market share grew to 52%. This demand creep, however, isn’t the sole reason for the positive feelings toward tin…… Full Article: Source

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From Guardian: Gold rose more than 4 percent on Monday as dollar weakness and sharp gains across commodities sharpened appetite for the precious metal, but retreated from highs as the dollar recovered some lost ground against the euro.

A near $600 billion economic stimulus package announced by China on Sunday helped allay risk aversion and fuelled gains in equities as well as oil and base metals, carrying gold higher. Spot gold hit a peak of $767.80 an ounce, before easing back to $751.10/753.10 by 1552 GMT, against $735.95 late in New York on Friday….. Full Article: Source

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From Bloomberg: Noble Group Ltd., the commodity supplier that more than doubled third-quarter profit, forecast a rebound in demand for metals and grains over the next 12 to 18 months as government investment programs boost economic growth.

“I’m seeing the bottom,” Chief Executive Officer Richard Elman said in Singapore. “I wouldn’t be surprised to see in a year to 18 months’ time we take off again.”…. Full Article: Source

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From Middleeastevents.com: Dubai Multi Commodities Centre (DMCC) will host the first Middle East-India Diamond and Jewellery Summit next year as part of forging successful partnerships to sustain growth in the industry, and make use of the opportunities in the emerging markets of the world.

The two-day forum will be held at the Atlantis hotel, Palm Jumeirah from November 2 to 3, 2009, as announced yesterday by Ahmed Bin Sulayem, Executive Chairman of DMCC, at the concluding session of the first Middle East-China Diamond & Jewellery Summit in Dubai….. Full Article: Source

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From Business-standard.com: Banks allowed to issue guarantees or LCs for payment obligations. The Reserve Bank of India has allowed banks to issue guarantees or standby letters of credit in support of payment obligations for commodity derivative deals overseas.

Earlier, banks were only allowed to remit funds towards the payment obligations of the commodity importers (primarily oil and metals) for their derivative transactions overseas….. Full Article: Source

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From Commodityonline.com: Commodity prices got a little boost this morning from news that China will spend $586 billion over the next two years on infrastructure and social welfare in an effort to stimulate its economy. Overall, however, the economic outlook remains gloomy after Friday’s U.S. unemployment report showed a loss of 240,000 jobs in October.

The September 2009 eurodollars finished up .10 at a new contract high of 97.91….. Full Article: Source

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From Guardian: Europe should erect more wind turbines, keep a closer watch on oil stocks and improve access to Caspian gas, Europe’s energy chief will say this week.

The 27-nation bloc is seeking to reduce its reliance on Russian gas after pricing disputes between Russia and transit states disrupted supplies in recent years and Russia’s invasion of Georgia in August stoked tensions….. Full Article: Source

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From Guardian: Oil should be above $70 a barrel to encourage investment in increased production capacity and avoid creating future supply crises, Qatar’s oil minister said.

U.S. oil traded around $63 a barrel on Monday, having tumbled more than 50 percent from its July peak above $147 as the global economic slowdown eats into demand. “Now what we are seeing is that the oil price went to a level that leads me to be concerned it will create another crisis in the short term or medium term for supply,” Abdullah bin Hamad al-Attiyah said on the sidelines of an energy conference in Qatar….. Full Article: Source

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From Marketwatch.com: The over the counter (OTC) markets, which trade securities worth over $5 trillion per day, form the backbone of the world’s financial system.

The White Paper looks at ways to improve their liquidity and transparency and reduce operational risk, as well as recognising the contribution the OTC market has already made at reducing systemic risk through mechanisms such as portfolio compression….. Full Article: Source

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From Ukpress.google.com: British holidaymakers in Europe have been hit in the pocket as the euro reached a record high against the pound. At the low point in trading on Monday, one pound bought just under 1.22 euros - marking the currency’s weakest performance against the euro since its launch in 1999.

The euro’s strength comes in the wake of UK interest rates being slashed by 1.5% to 3% last week by the Bank of England….. Full Article: Source

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From Commodities-now.com: Fuel cell makers are in overdrive trying to deliver efficient and environmentally friendly technologies. If their enterprises are to succeed, they must illustrate clearly that their ideas are practical and will “change the world.

But economic doldrums are dampening energy demand and affecting the level of investment in emerging technologies. In due course, however, that will change. As the demand for power resumes, regulatory bodies around the globe will insist on greater efficiencies and less pollution. And therein lay the possibilities for fuel cells, which have matured and may soon be ready for prime time….. Full Article: Source

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From Commodityonline.com: The commodities derivatives markets are deep and broad, presenting both challenges and opportunities in their wakes. It has been the experience of participants that they have been besieged by the vastness of the market and the types of underlying assets available.

Despite millennia of commerce in commodities, we are still perplexed by the questions, “what should we trade in?”, “how much do we buy or sell?”, “how do we give or take delivery of the commodities?”, “when is the ideal time to enter and exit the market” etc….. Full Article: Source

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From Marketwatch.com: ME Group and the Dubai Mercantile Exchange (DME) announced that DME’s contracts will exclusively trade electronically on the CME Globex(R) platform in the first quarter of 2009, subject to final DME board approval of the definitive agreement.

The CME Globex platform offers virtually around the clock access to the broadest array of derivatives products in every major asset class in more than 85 countries and foreign territories worldwide. …. Full Article: Source

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From Commodities-now.com: Global warming, energy security and rising oil prices have resuscitated the marine energy sector. Ocean energy is a predictable and abundant source of energy with the ability to supply approximately 10% of the world’s electricity needs.

The value of worldwide electricity revenues from wave and tidal stream projects could ultimately be between £60bn (€77.40bn) and £190bn (€245.10bn) per year. The United Kingdom is a clear leader both in terms of activity and in terms of support to the sector. …. Full Article: Source

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From Gulf-news.com: Due to the financial turmoil, the demand for aluminium is falling worldwide and is expected to drop further next year, prompting at least one Gulf company to review its production target.

According to Abdullah Kalban, president and chief executive of Dubai Aluminium Company (Dubal), aluminium inventories have peaked worldwide, from 900,000 tonnes early this year to 1.6 million tonnes recently….. Full Article: Source

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From Boston.com: The Agriculture Department on Monday lowered its forecasts for this year’s U.S. corn and soybean harvests, pushing up the prices of both commodities while knocking down the shares of meat producers.

Chicken, pork and beef companies such as Smithfield Foods Inc., Tyson Foods Inc. and Hormel Foods Corp. use corn and soybeans for livestock feed. Tyson said Monday its chicken unit lost $91 million in its most recent quarter due to a $230 million increase in grain costs….. Full Article: Source

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From Commodityonline.com: The new week got off to a ’stimulating’ start in the commodities markets, following China’s weekend announcement of a massive spending plan aimed at getting its (and, indeed, the world) economy back on track.

While much of that track had been laid on loose speculative gravel and contained many a worn-out section, the alternative of heading into the dark tunnel of depression was not seen as palatable in Beijing. We are talking about the largest contributor to global growth here….. Full Article: Source

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From WSJ: In currency markets gripped by turmoil, investors have targeted one group for special punishment: big commodity exporters. This cluster includes the currencies of countries like Canada, Australia and New Zealand, which have significant exports of natural resources and agricultural goods.

With the global economy headed toward recession, weakening demand for everything from oil to iron ore, these currencies could face a further battering….. Full Article: Source

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From Monitor.co.ug: Uganda’s coffee exports will be adversely affected by the ongoing economic meltdown in the West as commodity markets across the globe slump, cooled by decelerating demand.

The Managing Director of Uganda of Coffee Development Authority, Mr Henry Ngabirano said coffee was the most traded commodity in the world after oil and that there was no way it would not be impacted by the economic lethargy spreading across Europe and US, the world’s biggest coffee consuming regions….. Full Article: Source

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From Zawya.com: World oil prices were higher in Asian trade Monday after OPEC refused to rule out further output cuts, dealers said. New York’s main contract, light sweet crude for December delivery advanced 2.80 dollars to 63.84 dollars.

Brent North Sea crude for December delivery rose 2.72 dollars to 60.07 dollars. OPEC president Chakib Khelil indicated over the weekend another round of production cuts may be on the cards if oil prices remained below the cartel’s preferred range of 70 to 90 dollars a barrel….. Full Article: Source

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From Reuters: The FTSE 100 rose 0.9 percent in a global equities rally on Monday, powered by mining stocks after China’s almost $600 billion (382 billion pound) stimulus package plan boosted hopes of solid demand for commodities.

The share index .FTSE ended 38.96 points higher at 4,403.92 points, but way off its day’s high of 4,524.87 points. Metal prices surged after China approved 4 trillion yuan (373 billion pounds) in new government spending, and the G20 group of nations pledged to take all necessary steps to put financial markets back on their feet….. Full Article: Source

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From Indiatimes.com: An exchange traded fund (ETF) is essentially an index fund that trades like a stock and is listed on the exchange. Although popular abroad, it’s still a new concept in India.

An ETF is a single security representing a basket of stocks that corresponds to a particular index, say, the S&P CNX Nifty or Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents….. Full Article: Source

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