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Commodities Briefing 29.Jan 2009

Global economy: 2009 just like World War II
Oil Prices to average $60 in 2009 - Markaz Study
UAE: SCA seeks information on foreign exposure
FMC allows hedging of refinery margins
Currencies: Playing a rebound in the Pound
What will happen to the Chinese currency?
Kazakhstan seen preparing to devalue currency
Scientists invent GBP2 energy saving lightbulb that last for 60 years
Believe it or not - Natural gas producers can still show profits at $5 gas
Europe seeks global carbon trading market
EU calls on America to create transatlantic carbon trading scheme
NSW pushes for carbon trading funds
Oil speculator debate resurfaces
Crude oil prices decline
What companies are profiting from China’s commodities crusade?
Rising oil price trend supports agri-food bull market during 2009
Philippines: Govt control on prices of commodities urged
NZ: Forecast slash costs farmers $3.3bln
Hedge funds offers to price in gold
All that glisters is not gold
Gold resumes long-term uptrend
Greenlight founder takes grandfather’s advice on gold
Quartararo: The bottom has arrived in steel
Rio mulls rights issue to pay down USD10bln debt
ICAP expands into base metals options
Short & leveraged investments
Players flock to commodity ETF calls
ETFs emerge as alternative amid ongoing bear market
Investors pump cash into ETFs
Rubber futures rise to six-day high on U.S. stimulus measures
Nickel up as base metals are mixed
Most markets settle higher though off peaks
Oil falls towards $42 as demand jitters weigh

Posted on 29 January 2009 by VRS |  Email |Print

From CNNMoney.com: With overall global economic growth slowing to a near standstill this year, 2009 will be the most challenging year for economies across the globe since World War II, according to an International Monetary Fund report released Wednesday.

The IMF, a global economic organization of 185 countries, said economic growth across the world will fall to just 0.5% in 2009 from 3.4% in 2008. Financial markets are expected to remain under stress - despite a cornucopia of credit-easing actions - until investors and consumers gain confidence that policy actions can help improve market conditions….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

Kuwait Financial Centre “Markaz” in its recently released research note has analyzed the role of oil for GCC economies, estimated oil price scenarios for 2009, and explored the relationship between oil and GCC stock markets.

M.R.Raghu, Rajiv Bishnoi and Layla Al-Ammar, the authors of the report, note that every successive oil price spike actually goes to negate the feeble attempts by oil producing and exporting countries, especially the GCC, to diversify their economies and reduce the dependence and inherent volatility. …. Full Press Release: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Khaleejtimes.com: The Securities and Commodities Authority (SCA) has instructed the listed firms to submit detailed information on their exposure to real estate, derivatives and structured products to ascertain the extent of the financial losses the nation’s companies have suffered from these investments in to recession-hit western economies.

The SCA circular comes as a follow-up to the UAE Central Bank’s instructions to banks and financial institutions on the same topic, issued on January 27, asking them to submit detailed information on their investment activities. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Business-standard.com: Oil marketing companies will be able to hedge their refinery margins (difference in crude oil and finished product prices) and end-products from crude oil as Forward Markets Commission (FMC), the regulatory authority for forwards and futures markets in India, allowed it.

After getting the go-ahead from the FMC Multi-Commodity Exchange (MCX) has launched heating oil futures. This will open a window of opportunity for oil companies to hedge refinery margins and end products on MCX. So far, MCX had been providing a platform to oil exploration and marketing companies only to hedge volumes for crude oil….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Businessweek.com: Is it time to buy sterling? That depends on what you make of the dangers facing the struggling British economy. “The pound is sinking,” sang Paul McCartney in 1982. Unfortunately, the ex-Beatle’s ditty would sound perfectly current on a 2009 playlist.

The near-nationalization of the Royal Bank of Scotland on Jan. 19—in which the British government boosted its stake in the ailing banking giant to 70%—sparked fears for the health of the British banking system and forced the British pound down 6.6% for the week ended Jan. 23….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Epochtimes.com: It becomes increasing clear that the Chinese yuan will depreciate as many economists expect. However, we have to recognize that this depreciation also has drawbacks.

First, many commodity prices in China are still total far less than similar products made overseas. So China’s shrinking export business is not because prices aren’t low enough….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Rferl.org: It’s become a familiar story. An oil-fueled boom now rapidly running out of steam as commodity prices plummet. Billions of dollars’ worth of government help for banks struggling in a liquidity crisis.

Foreign loans that were cheap to get in the good times, now increasingly hard to refinance….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Telegraph: A £2 energy-saving lightbulb that lasts for 60 years has been developed by scientists at Cambridge University. The researchers have designed a bulb that is three times more energy efficient than today’s best offer and can cut lighting bills by 75 per cent.

The bulbs are made using Gallium Nitride (GaN), a man-made substance used in LEDs (light emitting diodes). It is routinely used in bike lights, mobile phones and camera flashes….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Resourceinvestor.com: Two new related technologies in the oil and gas industry are about to forever change the economics for its investors, producers, and consumers.

Horizontal Drilling (HD) and sister technology Multi-Stage Fracing (MSF) are lowering production costs, improving economics on current oil and gas fields and opening up massive new fields that were previously not profitable. …. Full Article: Source

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From Telegraph: The European Commission has called for a global emissions trading market, even as its own scheme comes under fire following a slump in the price of carbon. Analysts suggest companies are flooding the market by cashing in their emissions allowances to raise money, rather than for any environmental benefit.

The EU Emissions Trading Scheme (EU ETS) was set up as a market mechanism to help companies reduce carbon emissions. Polluters are granted a certain number of emissions allowances that can be traded. So a heavy polluter can buy carbon allowances from a company that has succeeded in reducing its emissions. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Guardian: The Obama administration should join Europe in an ambitious new transatlantic pact to combat climate change, Brussels proposed.

Seeking to seize on the excitement generated by the election of the new US president and hoping to co-opt Barack Obama’s green agenda for a powerful alliance to tackle global warming, the European commission called on the Americans to establish a joint carbon trading scheme with Europe modelled on the system operating in the EU since 2005….. Full Article: Source

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From Abc.net.au: The New South Wales Government says Sydney’s success in the new carbon trading market will depend on Commonwealth support.

The State Government’s new task force of financial experts and academics is meeting for the first time today to recommend ways of promoting Sydney as a centre for carbon trading.The team has two months to come up with a set of recommendations. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From FT Alphaville: It was the hot topic of last summer (when oil prices were racing to record highs), but the debate over whether speculators are really to blame for oil’s volatily has somewhat fallen off the agenda since the price of crude came crashing down.

Opec, of course, have always maintained it was indeed the speculators’ fault (not theirs). Unsurprisingly, perhaps, it is Opec secretary general, Abdalla el-Badri, who is planning to revive the debate at Davos this week. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Webindia123.com: Crude oil prices fell sharply on the New York Mercantile Exchange Wednesday as slower demand continued to undermine price support. The American Petroleum Institute said this month that U.S. demand had fallen to the lowest levels since 2003, down to 19.4 million barrels a day.

On Wednesday, crude oil prices fell 58 cents to $41.82 per barrel. Heating oil prices gained 0.0255 cents to $1.40 per gallon. Reformulated blendstock gasoline rose 0.0091 cents to $1.1176 per gallon. Natural gas prices rose 0.087 cents to $4.59 per million British thermal units….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Moneymorning.com: While the rest of the world is grappling with the global slowdown, China is figuring out ways to exploit it. Over the past few months, China has capitalized on the financial turmoil that has paralyzed the world’s “developed” economies by stocking up on cheap commodities, weeding out competition to its largest state-run companies, and acquiring even more foreign assets.

Indeed, with China’s economic growth projected at an enviable 8% for this year, that country’s government has been able to spend less time promoting immediate growth and liquidity, and more time preparing for the economic renaissance that almost certainly seems to be the Asian giant’s destiny….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Marketoracle.co.uk:A perhaps amazing characteristic of trends is that they do not continue indefinitely. One can not help also noticing the inability of journalists to correctly describe trends as they are developing.

While they, and we suspect their editors, spend considerable time on grammar, they still seem to have problems with the proper tense for verbs. The difference between falling and has fallen may seem trivial to journalists, but to the analysts they are considerably different….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Gmanews.tv: Militants want the government to set up price-control mechanism for basic commodities to protect workers and consumers amid mounting unemployment and underemployment.

The Bagong Alyansang Makabayan (Bayan) said the measure should be coupled with the removal of “unjust and burdensome” tax measures such as value-added tax (VAT) on oil and power….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Nzherald.co.nz: Plummeting global dairy prices costing farmers billions are bottoming out, dairy giant Fonterra says, but don’t hold your breath for relief this year.

The world’s biggest dairy exporter yesterday dropped its forecast payout to farmers this season by 90c to $5.10 per kg of milksolids….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From FT: A hedge fund has begun offering investors the chance to have their investment denominated in gold, as worries grow over governments debasing their currencies by printing money.

Osmium Capital Management, a $178m hedge fund manager based in Bermuda, is launching a new share class allowing investors to hold shares measured as troy ounces of the fund, rather than US dollars, sterling or euros….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Hemscott.com: Gold enjoys a good financial crisis, on that analysts agree, but there is little consensus over the direction of future prices.

Last year, while most commodities prices were hurriedly undoing five-years of gains, gold closed the year up 4% at $869.75 per ounce—not an outstanding performance in its own right but against the backdrop of a global economic downturn the only metal to have gained over the year surely deserves a little applause. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Forbes: The shiny metal has rallied 30% since November and could be setting up for another run at $1,000 and beyond. There have been many head-scratching moments in the investing world over the past year. Frustrated investors have been burned by everything from failing banks to record volatility.

Media headlines constantly present and reinforce a “sky-is-falling” scenario. But are things really that bad? …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Bloomberg: Greenlight Capital Inc. founder David Einhorn is finally taking his grandfather’s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending.

Since Einhorn was 10 years old, his grandfather has warned him that investing in bullion and gold-mining stocks was the only “sensible” thing to do given the threat of inflation and the risks of so-called fiat currencies, New York-based Greenlight said in a Jan. 20 letter to clients. The firm had never before considered buying bullion or mining-company shares. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: After doubling in price, steel has come down sharply – in fact retracing all of its gains over the past few years in very short order. Last time we met, prices were around $580 a metric tonne. In the peak, in the summertime, probably in July, the price of steel went to $1,200 a metric tonne for hot coil rolled steel.

Since that time, the prices have completely contracted, and now we’re back at levels below that $580 a tonne….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Independent.co.uk: Rio Tinto admitted for the first time yesterday that it could be forced to resort to a rights issue if it is to pay down $10bn (£7bn) of debt this year as planned.

After a spate of rumours about the London and Sydney-listed mining giant’s financial plans, the company was forced to issue a statement to the Australian Stock Exchange yesterday….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Commodities-now.com: ICAP plc, the world’s premier interdealer broker, has expanded its new base metals broking business with the recent hire of Keith Wildie and Gareth Hughes, spearheading ICAP’s expansion into base metal options.

ICAP hired Robert Rees and Steve Bingley to build and lead the firm’s London Metal Exchange (LME) base metals business in September 2008 and began broking in January 2009, with a Category Two membership of the LME. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Morningstar.co.uk: Have you ever thought about going short, or even leveraging up your exposure to Live Cattle? No? Neither have we, but with the introduction of 33 short and 33 leveraged Exchange Traded Commodities (ETCs) you now have such an option.

The funds come courtesy of ETF Securities (ETFS), adding to their existing range of 51 ETCs….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Reuters: Volume in the PowerShares DB Commodity Index DBC.P ran 40 times the normal level with about 38,000 calls and 1,256 puts traded, according to Trade Alert. The exchange-traded fund tracks the price action of crude oil, heating oil, aluminum, gold, corn and wheat and was up 2.18 percent to $20.58 in afternoon trade.

In the March $21 call strike, 34,180 contracts traded vs 4 contracts of existing open positions. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Joongangdaily.joins.com: Hong Min-ki, 36, lost 30 million won ($21,786) in the stock market last year. The stocks he handpicked all plunged. The mutual funds in his portfolio also ended up betraying his trust.

“The situation is that I need to do something to regain some of the losses, but now I am afraid that I’ve lost a sense of which stocks or funds I should pick,” Hong said….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Investordaily.com: Exchange traded fund (ETF) inflows accelerated in 2008 as their appeal of increased diversification, liquidity and lower fees attracted investors from traditional managed funds.

American investors pumped nearly $200 billion into ETFs in the first 11 months of 2008 and pulled $193 billion out of managed equity managed funds, according to the Investment Company Institute of Washington….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Bloomberg: Natural rubber futures advanced to a six-day high in Tokyo, on optimism that U.S. stimulus measures will help ease the global economic recession and boost demand for the raw material used to make car tires.

The commodity rebounded from yesterday’s 1.6 percent slide, gaining as much as 2.7 percent to the highest price since Jan. 21. The gain followed equity market surges in Asia and U.S. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Metalmarkets.org.uk: The price of three-month nickel was up $300 to $11,700 per tonne in late afternoon trade in London Wednesday on the possibility that production cuts will tighten supplies.

Copper prices were also higher as March copper added 1 cent to $1.50 per pound in New York and three-month copper gained $60 to $3,370 per tonne on the London Metal Exchange….. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Guardian: Commodity prices were mostly up on Wednesday as weary investors let down their guard a bit and assumed a bit more risk which allowed energy, grains and metals contracts to recover from the previous session’s sell-off.

Gold was the odd one out with the benchmark futures contract ending New York trade 1 percent down — as it did on Tuesday — to stay below the $900 per ounce level critical to bullish confidence. …. Full Article: Source

Posted on 29 January 2009 by VRS |  Email |Print

From Guardian: Oil edged down towards $42 a barrel on Thursday, as fears over faltering demand in the global economy outweighed U.S. data showing lower gasoline and distillate stocks in the world’s top energy consumer.

Traders will watch for U.S. weekly jobless claims and December durable goods orders later on Thursday, as well as advance fourth-quarter gross domestic product data on Friday, for further clues on the health of the U.S. economy….. Full Article: Source

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