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Commodities Briefing 19.Jan 2009

UBS commodities division sold
What's in store for 2009? gold, metals and other markets
Riding out the tides of inflation, deflation
OPEC mulls further oil output cuts
Oil falls on speculation slowing economies will use less fuel
Mergers in pipeline as oil industry's fairytale era ends
Iran bases budget on oil price of $37.5
Signs of shift away from WTI
US crude trades sharply below Brent
Dubai to invest in Nigerian oil sector
America needs its energy frontier spirit
Russia eyes Ukraine's vast pipeline network
Gold to the rescue as financial forces overwhelm challenging fundamentals
Ten rules of silver investing
Outlook bright for gold in long term
Macquarie cuts price forecasts for metals, coal on demand slump
Nippon predicts global steel industry may need 2-3 years to recover from the current downturn
UAE: Steel prices likely to decline further
Iron, coal prices to halve as Chinese growth slumps
BHP Billiton close to shutting nickel mine
We have only four years left to act on climate change - America has to lead
Why should Finance Ministers worry about climate change?
Clearer skies in Europe added to warming
Dollar’s days as dominant currency numbered
Amid gloom, ETFs' future looks brighter
Abu Dhabi to develop market for ETFs in 2009
Commodity bourses see growing demand
Indiabulls commodity bourse to have six partners
CME group to offer ethanol swaps on CME clearPort
Surveyed Canadian investors most bullish on gold and oil
India’s sugar output may miss forecast, hit global market more
Copper up over 5% as sentiment lifts
Commodity prices mostly fall as demand concerns weigh
World oil prices near 35 dollars as IEA cuts demand forecast

Posted on 19 January 2009 by VRS |  Email |Print

From FT: UBS completed its exit from its non-core commodities trading activities with the sale to Barclays Capital of outstanding positions in its base metals, oil and US power and gas businesses. No price for the transaction, which the bank expects to complete by the end of the second quarter, was disclosed.

A precise value for the deal will depend partly on the profit or loss at closure of the positions being transferred….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Seekingalpha.com: Gold is liquid, compact, universally accepted, and cannot be created or diluted at will. As investors face 0% yield, uncertain economic times, and daunting deficits, it’s no surprise that gold came through 2008 unscathed.

Gold has fared very well while all other asset classes endured severe correction in 2008. Gold right now is near its historic high compared to oil and copper. It is an emotional investment, which makes the top and bottom difficult to call….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Investmentnews.com: Advisers often speak about the risks of inflationary or deflationary conditions and their effects on investment opportunities. While we know intuitively what inflation versus deflation means to our clients, how much do we really know about how they work and what they mean to clients’ portfolios?

At a basic level, inflation and deflation are two sides of the same coin that have divergent effects on consumer and corporate behavior. …. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Livemint.com: OPEC will consider further cuts to oil production if prices continue to fall, Algerian Energy and Mining minister Chakib Khelil said on Saturday.

The Organisation of the Petroleum Exporting Countries (OPEC) are set to meet in Vienna in March and Khelil said another reduction in output remained a possibility….. Full Article: Source

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From Bloomberg: Crude oil fell in New York on speculation recession in the world’s largest developed economies will cut demand for fuel and energy this year.

A report this week in the U.S., the world’s largest oil consumer, will probably show housing starts last month fell to the lowest annual rate since at least 1959, according to a Bloomberg News survey of economists. Global oil demand will shrink 0.6 percent to 85.3 million barrels a day this year, the first two-year decline since 1983, the International Energy Agency said Jan. 16. …. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Guardian.co.uk: A new wave of mergers is likely to sweep through the oil industry as cash-rich companies such as ExxonMobil eye up smaller rivals - possibly even Shell - after the collapse in the price of crude.

Analysts think many firms have made themselves vulnerable to takeover because they took on major new commitments when the oil price was rattling up to its summer high of $147 a barrel, compared with the current level of under $40….. Full Article: Source

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From AFP: The Iranian government has based its budget bill for 2009-10 on an oil price of 37.5 dollars per barrel, the semi-official news agency ILNA reported on Sunday.

“In the final version of the budget bill of the next (Iranian) year the oil price was envisaged at 37.5 dollars per barrel,” a presidential aide for planning, Mohammad Ghasem Hosseini, was quoted as saying….. Full Article: Source

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From FT: Oil traders are quietly pricing some of their deals away from the West Texas Intermediate contract, traditionally the world’s most important oil benchmark, as it is being distorted by record inventories at its landlocked delivery point.

The move is a setback for the benchmark that since the launch of the Nymex WTI futures in the early 1980s has dominated physical and financial oil markets….. Full Article: Source

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From Gulf-news.com: US crude oil could trade sharply below London Brent for months to come as a dramatic slowdown in energy demand in the world’s largest consumer nation causes inventories to swell.

West Texas Intermediate (WTI) changed hands on the New York Mercantile Exchange Thursday for as much as $10.40 (Dh38.2) a barrel less than Brent, a record discount that is particularly unusual because WTI is a lighter, sweeter grade that is easier to process into products like gasoline….. Full Article: Source

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From AP: Dubai says it has reached a deal with Nigeria to invest in the African nation’s conflict-ravaged oil industry and other sectors of the economy.

The deal appears to be the first for a company Dubai set up last year to invest in natural resources in the developing world….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Commodities-now.com: A New Year and new Presidential Administration may be just the right dynamic to renew America’s energy future. The energy problem has been sharply identified and also over- analyzed.

The time has come to deploy capital, revitalize American ingenuity and buckle down to old-fashioned hard work. …. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From AP: In the confrontation between Russia and Ukraine over natural gas shipments to Europe, the grand prize may yet be control of Ukraine’s sprawling pipeline network, Moscow’s main conduit for pumping the fuel to its most lucrative markets.

Although the dispute appeared close to an end after Sunday’s announcement of a deal, the terms of the accord could eventually put pressure on Ukraine and force it to cede some control over the labyrinthine network….. Full Article: Source

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From Mineweb.com: GFMS Ltd expects gold to help safeguard investors against government profligacy in 2009; prices to remain volatile and dips are possible, but followed by a strong bull run. The US jewellery industry has been hard hit.

The second interim update for the GFMS Ltd annual gold survey highlights gold’s highly individual nature, arguing that while recessionary conditions undermine the outlook for physical fabrication of the metal this year, the prospects for investment demand are robust and that an investor-led breach of the March 2008 high of $1,023.50 is quite feasible during the first half of this year. …. Full Article: Source

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From Resourceinvestor.com: Too many investors, upon deciding to beef up the metals portion of their portfolio, buy too much physical silver at once-and in the wrong forms.

Beginning metals investors should concentrate on pure bullion bars or coins in smaller sizes and shop around to pay a minimum premium over the actual metal value. Avoid commemorative coins, decorative items, jewelry and other collectibles, all of which carry large premiums and have limited resale markets….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Thehindubusinessline.com: Gold, after being in the grip of bears for the most part of the week, recovered during the weekend. On Friday, it gained three per cent to close at $847.2 an ounce but during late fixing, it slipped to $833.75, indicating the continuing volatility.

Even if one were to discard the late fixing, gold still ended in the negative compared to the previous week. What is keeping gold under leash is low physical demand and less money with investors to buy the yellow metal….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Bloomberg: Macquarie Group Ltd. analysts slashed price forecasts for copper, aluminum, coal and iron ore as last year’s slump in commodities is expected to extend into the first half of 2009.

Copper prices may average $1.55 a pound, a 9 percent decline from Macquarie’s November forecast of $1.70, and 55 percent lower than the average price in 2008, analysts led by London-based Jim Lennon said in an e-mailed report today. Iron ore contract prices may fall 30 percent for the year starting April 1, down from an estimate of a 20 percent decline, it said….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Steelmillsoftheworld.com: Japan’s Nippon Steel believes the global steel industry may need two to three years to recover from the current downturn, its chairman said.

The company does not expect an agreement with Toyota Motor Corp on cutting steel prices until iron ore import deals are completed, Akio Mimura also told reporters….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Gulf-news.com: The price of steel is expected to decline further in the first quarter of this year, according to industry officials.

A global slowdown in industrial activity, along with a stockpile in inventory, will put a downward pressure on prices, they said….. Full Article: Source

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From Theaustralian.news.com.au: Contract prices for Australia’s iron ore and coking coal exports are forecast to halve. The dour outlook comes from Access Economics, which expects the Australian economy to fall into recession as growth slumps in China.

The crisis and the effects on the domestic economy are expected to deepen as commodity prices fall because of reduced global demand….. Full Article: Source

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From Reuters: BHP Billiton Ltd’s Ravensthorpe nickel mine in Australia is on the brink of closure due to low metals prices, The Australian newspaper reported on Monday.

BHP spokeswoman Samantha Evans declined to comment on the unsourced report, saying only that “material changes” to any of the company’s operations would be disclosed to the market….. Full Article: Source

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From Buzzle.com: Along one wall of Jim Hansen’s wood-paneled office in upper Manhattan, the distinguished climatologist has pinned 10 A4-sized photographs of his three grandchildren: Sophie, Connor and Jake.

They are the only personal items on display in an office otherwise dominated by stacks of manila folders, bundles of papers and cardboard boxes filled with reports on climate variations and atmospheric measurements. The director of Nasa’s Goddard Institute for Space Studies in New York is clearly a doting grandfather as well as an internationally revered climate scientist….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Oecd.org: Why should Finance Ministers worry about climate change? The question seems all the more relevant as we are facing an unprecedented global financial and economic crisis that is requiring a lot of attention and resources.

In the absence of new policy, the OECD projects world greenhouse gas (GHG) emissions to roughly double by 2050 and continue to rise thereafter. This would result in an increase in world temperatures by 4°C, and possibly by 6°C, by 2100….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From AFP: Fog, mist and haze in Europe have declined over the last three decades, a trend that may have stoked regional warming and ironically could be linked to better air quality, a study published on Sunday says.

From 1978-2006, temperatures in parts of Europe rose above the global land average, with prominent increases in the north, centre and eastern parts of the continent….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Bdafrica.com: For the world monetary system, the financial crisis which erupted in the summer of 2007 is a cataclysmic shift that will prove every bit as significant as the outbreak of the First World War (which heralded the sterling’s demise as a reserve currency) and the suspension of gold convertibility in 1971 (which marked the end of bullion’s monetary role).

The crisis marks the passing of an era in which the US dollar has been the world’s undisputed reserve currency for making international payments and storing wealth….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Investmentnews.com: Actively managed equity mutual funds suffered record net outflows of $208.3 billion last year, while equity index funds enjoyed net inflows of $28 billion, according to estimates from Morningstar Inc.

Exchange traded funds posted $158 billion in net inflows in 2008, the Chicago-based company said….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Bloomberg: The Abu Dhabi Securities Exchange plans to develop markets for exchange traded funds, debt securities and derivatives this year after trading volumes declined in 2008 and foreigners reduced their investments.

Total traded volumes on the exchange fell 4 percent to 49.9 billion shares from the year-earlier period, while the percentage of stocks owned by foreigners dropped to 9 from 13 in 2007, the bourse said today in an e-mailed statement….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Livemint.com: Traders are increasingly buying commodities such as gold, silver and sugar from the top two national bourses Multi Commodity Exchange of India Ltd, or MCX, and National Commodity and Derivatives Exchange Ltd, or NCDEX, giving a fillip to the confidence of the nascent futures market.

Traders, who hedge their price risk in the futures contracts of bullion and agri-commodities, are slowly taking delivery from the exchanges….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Hindu.com: HDFC Bank and Yes Bank are joining as equity partners for the Indiabulls Financial Services-MMTC commodity exchange, which will start operations in the first quarter of the next fiscal.

The exchange, christened as International Multi-Commodity Exchange (IMX), will also have Indian Potash Ltd and a small trading firm among the total of six partners promoting the country’s fourth national commodity bourse. …. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Commodities-now.com: CME Group, the diverse derivatives exchange, announced that legacy Chicago Board of Trade (CBOT) ethanol swaps contracts will be available on CME ClearPort, the electronic system that extends the benefits of centralized clearing to over-the-counter (OTC) products, scheduled to begin on January 25 for trade date January 26.

The legacy CBOT calendar and basis ethanol swaps are the first of dozens of new cleared-only OTC contracts expected to be introduced on CME ClearPort this year that will benefit from the safety and security of CME Clearing. …. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Seekingalpha.com: Advisor confidence in gold and oil remains high for the first quarter of 2009, according to a new survey released by BetaPro Management Inc. The survey asked 400 Canadian investment advisors on how the market would perform for the quarter.

69% said they were bullish on global gold companies, which is consistent with the last eight consecutive quarters of the survey….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Livemint.com: India, the world’s second biggest sugar maker, may produce 1.2 million tonnes (mt) less this year than forecast last month because of lower yields in Maharashtra, the main cane growing state. This is likely to tighten global supplies.

Production in the year ending 30 September may total 18mt, compared with 19.2mt forecast in December, S.L. Jain, director general of the Indian Sugar Mills Association, said in an interview on Friday….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Theage.com: Copper surged more than five per cent on Friday as sentiment improved after news of a US government bailout of Bank of America, but demand worries persisted and poor US data pointed to weak demand.

World stocks rallied from the previous day’s one-month low as Bank of America will receive another $20 billion in US government cash and a guarantee against almost $100 billion of potential losses on toxic assets after its acquisition of Merrill Lynch….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Zawya.com: Commodity prices mainly slid this week, with oil dropping below 35 dollars per barrel in New York amid continuing global economic gloom, analysts said.

“Prices (of oil) fell sharply… as once again a gloomy global economic outlook raised demand concerns,” said Barclays Capital analyst Kevin Norrish. Towards the end of 2008, crude prices slumped to just above 33 dollars, which was the lowest point in four and a half years….. Full Article: Source

Posted on 19 January 2009 by VRS |  Email |Print

From Zawya.com: Oil prices neared 35 dollars per barrel in New York on Friday after the International Energy Agency slashed its crude demand forecasts due to a much sharper-than-expected global economic slowdown.

New York’s main contract, light sweet crude for delivery in February, eased three cents to 35.37 dollars a barrel on the New York Mercantile Exchange (NYMEX)….. Full Article: Source

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