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Commodities Briefing 19.Nov 2008

Posted on 19 November 2008 by VRS |  Email |Print

From Theage.com.au: Australia’s mining and energy industries continue to boom - but it’s too early to tell what impact the global financial crisis might have on the resources sector.

Fresh data from the Australian Bureau of Agricultural and Resource Economics (ABARE) shows exploration in the mining and energy sector reached record highs in the 2007-08 financial year….. Full Article: Source

Posted on 19 November 2008 by VRS |  Email |Print

From Mineweb.com: Across the broad landscape of globally listed mining companies, silver bullion miners, developers and explorers are less wanted than anything else.

Looking at 43 names listed in the category, the average stock price loss from highs, measured on a weighed basis, is currently around 83%, leaving especially the smaller stocks fully vulnerable to facing the prospect of shorter term bankruptcy….. Full Article: Source

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From Hardassetsinvestor.com: It’s not an easy decision to make. The explosion of interest in commodities investing has been accompanied by an explosion in the types and styles of financial products available to investors.

And though many of the products appear similar, they can be quite varied in their risks and reward profiles. Choosing one product type over another can dramatically influence both performance and tax considerations….. Full Article: Source

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From WSJ: U.S. producer prices posted a record drop last month, sliding for a third straight month as raw material and energy prices tumbled.

While core prices remained higher, price pressures deeper in the production pipeline continued to decline sharply. Raw materials registered another record drop in prices, while energy prices posted the biggest decline in over 22 years….. Full Article: Source

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From Forbes: JPMorgan expects agricultural commodity prices to outperform industrial raw materials and oil next year and has cut forecasts for crude due to what it calls “an endless chain of bearish economic data”.

It expects precious metals to be the worst performing commodities sector over the next year….. Full Article: Source

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From Wealth-bulletin.com: Threadneedle Asset Management is to launch its first fund to invest long and short in instruments linked to commodities.

The asset class has helped both computer-driven and discretionary portfolios investing in it make doube-digit returns and buck the hedge fund industry’s losing trend this year….. Full Article: Source

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From Bloomberg: Gold fell for the second straight day on speculation that the slumping global economy will reduce demand for commodities, eroding the appeal of the precious metal as a hedge against inflation. Platinum gained.

Prices paid to U.S. producers tumbled in October by the most on record, the Labor Department said today. The Reuters/Jefferies CRB Index of 19 raw materials is down 32 percent this year, and gold is headed for its first annual decline in eight years….. Full Article: Source

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From Mineweb.com: Johnson Matthey says there are a number of positives for next year’s platinum production from South Africa, but warns against too high expectations for price increases.

South Africa which produces the bulk of the world’s platinum production will probably see output increase “modestly” next year as a number of positives such as first significant production from new platinum mines and established mines’ recovery from operating problems come into play….. Full Article: Source

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From Reuters: The global economic turmoil that has cost banks billions of dollars in losses and slammed hedge funds has dimmed the appeal of grains as an asset class, with fundamentals for corn and wheat pointing to lower prices.

Lately, supply and demand factors have been playing a greater role in determining grain prices than they did during the past two years when grains gyrated with moves in the stock, crude oil and gold markets, traders and analysts noted….. Full Article: Source

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From Marketwatch.com: Exchange-traded funds are seeing massive volume during the financial storm as trading levels spiked to all-time highs during October’s market meltdown.

In October, ETFs represented almost 40% of all equity trading volume in the U.S., according to research from Barclays Global Investors. That’s an amazing figure considering the first U.S.-listed ETF was introduced in 1993 and the products are relative newcomers on the financial scene….. Full Article: Source

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From Guardian: Weakness in commodity markets as well as tight credit are causing huge cutbacks in capital spending and exploration in the Canadian mining industry, a senior mining official said on Tuesday.

“It has a huge impact on the mining industry because all the capital gets readjusted,” Jim Gowans, chairman of the Mining Association of Canada, said….. Full Article: Source

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From Livemint.com: The decline in global commodity prices will ease pressure on Indian companies and the government’s balance of payments, Ashok Chawla, economic affairs secretary, said.

The decline in commodity prices will give Indian companies “greater flexibility and leeway”, Chawla said. “It is also giving the government positive flexibility and variants in terms of the balance of payments position.”…. Full Article: Source

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From Silverseek.com: The Dubai Multi Commodities Center is understood to be putting the finishing touches to an exchange traded fund for silver with a launch likely next month as demand for silver has surged in the past six months.

Local bullion dealers are having to fly heavy silver bullion bars in from around the globe to meet demand as traditional sources closer to Dubai have been exhausted. The DMCC has successfully established itself as a regional hub for commodities trading over the past few years, and has its own swanky new business park with its gold, silver and diamond towers….. Full Article: Source

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From Theaustralian.news.com.au: Aluminium touched a 3-year low, before tracking equities higher, while a poor demand outlook for metals continued to dampen sentiment.

Zinc, mainly used to galvanise steel, rose 6.5 per cent as investors covered their short positions and the world’s largest producer, Nyrstar, decided to cut back production….. Full Article: Source

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From Guardian: The government should not use energy security as an excuse to build unabated coal power plants, according to a study by energy and climate experts.

Investment should instead be focused on the country’s gas power network to keep energy supplies secure while keeping a check on rapid increases in carbon emissions over the next decade, policy researchers have said….. Full Article: Source

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From BBC: Falling energy costs meant US wholesale prices dropped by 2.8% in October, the biggest one-month decline since records began more than 60 years ago.

The larger-than-expected fall was triggered by a 12.8% drop in energy prices, the biggest monthly decline for 22 years. Core producer inflation, which excludes energy and food costs, was up by 0.4%….. Full Article: Source

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From MSN: It may sound odd to say it, but for the long-term fuelling of the global economy the huge drop in oil prices seen since the summer is nothing short of a disaster.

As economies slow, the price of crude has tumbled from a peak of $142 to under $55 in just six months. Prices at the pump have fallen more slowly, but are at least 15p a litre cheaper than in May. This has been reflected in recent news on UK inflation, which in October fell by the largest amount in 16 years….. Full Article: Source

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From Xinhuanet.com: The dollar rose against most major currencies on Tuesday as latest economic data continued to show weakness in U.S. economy.

The national median price of a single-family home in U.S. fell in the third quarter by a record 9 percent year-to-year, the National Association of Realtors (NAR) reported on Tuesday. A flood of foreclosures has driven home prices down, NAR said….. Full Article: Source

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From BBC: Russian oil companies could cut output if crude prices stay at current levels, Russia’s energy minister has said.

But it would be up to them, not to the government, to make the decision, Sergei Shmatko said about a possibility of Russia joining Opec production cuts. He said that the supply level was not the only key factor that influences the market’s mood….. Full Article: Source

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From Indiatimes.com: The current financial crisis and economic turmoil has engulfed the entire world. India, too, is significantly affected. Due to a globalised economy, it is natural that the ripples of such turbulences in one country are also felt by other countries.

But the speed and magnitude of the global impact of the ongoing US financial crisis have been astonishing. This is primarily due to the strength of the US dollar vis-a-vis other currencies in terms of its perception as a safe and reserved currency….. Full Article: Source

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From Stuff.co.nz: Prime Minister-in-waiting John Key has put a carbon tax back on the agenda, three years after it failed to win widespread political support.

Labour said Mr Key’s U-turn on the emissions trading scheme was his first broken promise. Mr Key told Federated Farmers’ national council yesterday a tax would be considered, along with other alternatives, in a select committee review of the emissions trading scheme….. Full Article: Source

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From Gulf-times.com: While much of the financial community is pulling out of commodities and commodities stocks, the Dubai government is investing $200mn in a new platform for funds to buy commodity stocks that comply with Islamic law, Shariah, on the expectation that prices are bound to recover.

With low debt a key requirement for Shariah investments, commodity companies tend to be a perfect fit because they often have low levels of debt and as a result will benefit as the Shariah market expands in Dubai and abroad….. Full Article: Source

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From FT: US farmers face tighter credit conditions as they approach the next crop season, the Federal Reserve Bank of Kansas City said on Tuesday, in the first concrete sign that the financial crisis was affecting agricultural markets.

In its quarterly survey of farming credit conditions, the Kansas City Fed said agricultural lenders were reporting tighter credit standards and warned of a further reduction in the availability of funding….. Full Article: Source

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From Bloomberg: Platinum demand for jewelry in China and Japan, the two largest consumers, will probably rise next year regardless of a global recession after prices fell from a record and as metal recycling declines, Johnson Matthey Plc said.

Platinum jewelry demand in China will drop 22 percent to 610,000 ounces this year, the lowest in a decade, Johnson Matthey said in a report. Demand in Japan will shrink 78 percent to 40,000 ounces this year, the lowest in at least 10 years, after soaring prices discouraged buying from consumers and spurred them to sell the metal, Johnson Matthey said….. Full Article: Source

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From Mineweb.com: Despite a dire outlook for commodities prices, Goldman Sachs JBWere analysts say copper is their preferred base metal because of severe production constraints and the potential for Chinese restocking.

Australian investing banking and securities group, Goldman Sachs JBWere, Monday made further downgrades to commodity price forecasts for 2008 and beyond, reflecting a deteriorating outlook for base metals, iron ore and some types of coal….. Full Article: Source

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From FT: The double-digit growth in seaborne trade of dry bulk commodities, such as iron ore and grains, over the past few years will come to a halt in 2009 as economic growth in China and elsewhere slows down, commodity analysts and shipbrokers say.

Peter Norfolk, director of research at Simpson Spence and Young ship brokers in London, says: “We will see some growth next year, but nothing close to the strong increases of the last few years. It is a big slowdown”….. Full Article: Source

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From Mineweb.com: Despite the flood of asset liquidations, ScotiaMocatta notes that long-term investors are holding on to their gold holdings and the long term remains bullish for the precious metal, while silver and platinum are also favored.

In spite of poor demand outlook in the short term, ScotiaMocatta insists the long-term outlook for precious metals remains bullish….. Full Article: Source

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From 3news.co.nz: Even before it is sworn into government the National Party is looking at a carbon tax after it put the controversial Emissions Trading Scheme on hold.

As a result, plans by an international company to make $125 million forestry investment here have been shelved. And companies set up to deal with the ever growing carbon trading industry are in limbo….. Full Article: Source

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From Reuters: Oil prices were little changed above $54 a barrel on Wednesday ahead of data expected to show U.S. crude stocks rose last week, another sign that the global economic slump is clipping fuel demand.

American banking and car maker woes reverberated around the globe and the International Monetary Fund said it would need extra funding to help countries through the downturn….. Full Article: Source

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