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Commodities Briefing 10.Feb 2009

Credit crunch will exacerbate the commodity super-cycle
Rush for ships feeds hope of revival in commodities
January losses slow early momentum in commodities space
Barclays Capital sees commodity market bottoming out
European ETF market hits Euro91bln
Oils ain’t grains – The outlook for commodities
Nomura sees growth in Japan commodities business
Green energy tipped as next big idea for investors
How you can invest in the weather
Plunging price of carbon may threaten investment
Oil steady below $40, eyes U.S. economic stimulus
UAE oil minister says oil price too low
OPEC output cut less likely with oil at $40: Khelil
Bullion sales hit record in rush to safety
Dubai gold trade up 53% to US$29bln
Gold poised. Experts predict $1000 plus
Gold extends falls, ETF at record
Gold futures upside potential
Walker cautions on gold as long-term investment
Steel prices continue upward march
Platinum and commodities bubble, deflationary crash
Barclays cuts base metals '09,'10 price forecasts
U.S. mining metals and materials produced $1.8 trillion in products in 2007
Base metals, industrial metals, platinum are good value--UBS
U.K. Pound advances against dollar before BOE inflation report
Russia shores up the ruble
Commodity exchanges' turnover jumps by 34 pc
Encouraging start to 2009 for DGCX
New norms on the cards for electricity futures
Rio Tinto boss quits over US$5bln fundraising row
BG’s bid turns up heat with rival Shell
Rain Commodities arm signs carbon credit pact with IFC
Crude advances as gold heads lower

Posted on 10 February 2009 by VRS |  Email |Print

From FT: Is leverage a problem for the world economy? Is the global “savings glut” at the root of the current credit crisis? In our view, the answer is no. Saving is good - provided it is well directed - and leverage per se is not a hindrance to economic growth.

If capital can be efficiently allocated to the most productive sectors in the global economy, a high savings rate can enable a high investment rate….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Timesonline.co.uk: A surge in shipping rates for bulk carriers, used to transport cargoes of wheat, coal and iron ore, has created a frisson of excitement about signs of recovery in trade with China.

The Baltic Dry Index, a measure of freight rates for dry bulk vessels, gained 10 per cent in value yesterday after a 50 per cent increase last week as mining companies scrambled to hire ships to deliver iron ore to China. …. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

Despite the positive momentum that began in early January, the continued lack of clarity on global economic initiatives drove commodities prices back to mid-December levels last month. Despite January losses (the Dow Jones AIG Commodity Index finished down 5.38%), many believe the reversion of commodities prices to stable levels could signal an early sign of recovery.

Andrew Karsh, Co-Lead Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, said, “At this point, with many potential inflationary factors lingering on the horizon, price stability could represent the initial recovery phase of what could become an extraordinary year for the commodities markets.”…. Full Press Release: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Miningweekly.com: UK-based financial institution Barclays Capital anticipates that, while the commodity outlook for 2009 was inauspicious, there were signs that the market had began to bottom out.

Addressing delegates at the 2009 Mining Indaba in Cape Town on Monday, Barclays capital director of commodities research Kevin Norrish stated that the last five months had been exceptionally tough for the mining industry in terms of decreased demand for commodities, which had depressed prices….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Globalpensions.com: The European exchange traded fund (ETF) market grew by over 6% in 2008 to reach a total assets under management (AuM) in excess of €91bn (US$118bn), according to Lyxor Asset Management.

Lyxor, the wholly owned subsidiary of Société Générale, said the European ETF market grew by 6.49% during 2008, while its own ETF platform increased by 7.56% to end the year with an AuM of €23.6bn….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Rgemonitor.com: Commodities posted their worst performance on record in 2008. Commentary on commodity markets reflects Mark Twain’s remark that: “I am not one of those who in expressing opinions confine themselves to facts”.

Unlike financial assets, commodities, for the most part, are subject to the laws of economic gravity – supply and demand. Individual commodities are also highly idiosyncratic – you can’t drink oil, nor can you run your car on gold though they seem to go quite well on corn tortillas!…. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Reuters: Nomura Securities Co. sees opportunity in the travails of its foreign rivals as it looks to double its commodity business in Japan this year.

The country’s top brokerage hopes to step up its commodities business as global rivals such as Goldman Sachs and Morgan Stanley scale back in response to global financial turmoil….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Reuters: Renewable energy could be the next big theme for stock market investors, fund manager Jonathan Day at Morgan Stanley Investment Management said on Friday.

“Investors are thinking very much about what is the next big move … (and) which sectors,” Day said. “Maybe we’ll see a resurgence of interest in green energy stocks….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Smartmoney.com: Just like beans and bonds, everybody has an opinion about the weather. And even with the financial markets reeling, both tree huggers and trailblazers might find a sunny sky in weather futures.

Yes, you can trade the weather — rather easily, in fact. But weather is difficult to model like stocks or sugar because, unlike those more conventional assets, “cash” weather cannot be bought or sold or stored at a known cost of carry. Weather does not generate returns like interest or dividends and its impact is anything but identical across time or location. It is not a fungible commodity. …. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Independent: The price of carbon has lost almost two-thirds of its value in the past six months, threatening future investments in the energy sector and undermining confidence in the second phase of Europe’s Emissions Trading Scheme (ETS).

An EU permit to emit one tonne of CO2 cost €10.15 (£8.86) at the end of last week, down from €28.50 in mid-2008 and a far cry from forecasts of up to €40….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Reuters: Oil was little changed below $40 a barrel on Tuesday, pausing after an overnight decline, as investors adopted a wait-and-see attitude ahead of a U.S. economic stimulus package expected to be approved this week.

But a gloomy demand outlook on fears of a prolonged economic recession in the United States, the world’s largest energy consumer, kept oil prices below $40, analysts said….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Reuters: Crude oil prices at current levels around $40 a barrel are too low to attract enough investment in new supplies, the oil minister for the United Arab Emirates said on Monday.

Oil Minister Mohammed al-Hamli, speaking at a conference in London, also said he saw no sign yet of an upturn in the world economy….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Reuters: OPEC will be under less pressure to cut oil production at its next meeting in mid-March if the U.S. crude oil price stabilizes near the current $40-a-barrel level, Algeria’s energy minister said on Monday.

Algeria’s Chakib Khelil said U.S. oil at $40 a barrel “is a good price for the moment.” Speaking to reporters at the John Hopkins School of Advanced International Studies, Khelil said a steep fall in oil prices below $40 will make an OPEC production cut more likely….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From FT: Investors are buying record amounts of gold bars and coins, shunning risky assets for the relative safety of bullion amid renewed fears about the health of the global financial system.

The US Mint sold 92,000 ounces of its popular American Eagle coin last month, almost four times that which it sold a year ago and more than it shipped during the whole of the first half of 2007….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Business24-7.ae: Gold trade through Dubai rose 53 per cent to $29 billion (Dh106bn) in 2008 against $19bn in the previous year with India and Switzerland topping the list of the emirate’s export partners.

Gold exports from Dubai reached 371 tonnes in 2008, an increase of 29 per cent compared to 287 tonnes in the previous year, according to statistics released by Dubai Multi Commodities Centre (DMCC)….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Mineweb.com: Gold prices are set to jump towards $1,000 an ounce and probably beyond to new records as droves of investors fearing financial instability and surging inflation pile into the precious metal.

Expectations of a weaker dollar, which makes gold priced in the U.S. currency cheaper for holders of other currencies, will also help boost prices of the precious metal seen as a store of value during uncertain times….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Reuters: Gold eased on Tuesday, extending the previous day’s fall of almost 2 percent, while holdings held by SPDR Gold Trust GLD hit a record as recent price falls lured investors.

Gold was trading at $894.40 an ounce at 0024 GMT, down $0.60 from New York’s notional close on Monday. oldings in SPDR Gold Trust GLD, which issues securities backed by physical stocks of gold, hit a record 881.87 tonnes on Feb. 9, up 1.7 percent from the previous day. SPDR is the world’s largest gold-backed exchange-traded fund….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Resourceinvestor.com: April Comex gold futures have been trending higher since the October 2008 low of $689.70 an ounce. The 3.5-month-old uptrend on the daily bar chart produced a 3.5-month high of $931.30 on January 30.

A close above that price level would be another bullish upside technical clue to suggest a quick move to the October 2008 high of $938.20, basis April gold futures. Above that lies strong psychological resistance at $1,000.00 an ounce and then more strong chart resistance at the contract high of $1,005.30, scored in July of 2008….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Mineweb.com: Well known gold expert Paul Walker of GFMS says things look very positive for gold in the short term, but the longer-term outlook for the yellow metal that has performed drastically better than others over the past few crisis month, is now more worrying than a year ago.

Speaking at the Mining Indaba in Cape Town, as the gold price fell back below $900, Walker said that the anticipated strong performance of gold in the short-term would plant the seed for imbalance to occur over time and for a correction in the price going forward….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Chinadaily.com.cn: Domestic steel prices have increased for 12 consecutive weeks since mid-November 2008, according to statistics from steel consultancy website mysteel.com.

“Prices of steel products have increased continuously since November backed by the resilient demand from downstream industries,” said Zhang Tieshan, an analyst with mysteel.com. Prices of around 30 categories of steel products have staged a rebound from November onwards after bottoming out….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Marketoracle.co.uk: As for the ‘roll premium’ in the Platinum market, that’s not a big issue at the moment. If you look at the ratio here of PGM against near month Platinum futures you will notice that the trend has been for the price of PGM to keep up pretty well with the near month price of the futures market.

The volality of the ratio probably has more to do with the illiquidity of the Platinum market and PGM than anything else….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Reuters: Barclays has cut its 2009 and 2010 price forecasts for some base metals including aluminium and copper due to weaker consumption outlook, the bank said on Monday.

Forecasts for 2009 copper prices were downgraded to $3,900 per tonne from a previous $4,400 per tonne while aluminium estimates were cut by 26 percent and 41 percent to $1,500 a tonne and $1,900 a tonne for 2009 and 2010 respectively….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Yourminingnews.com: A report distributed by the National Mining Association found that U.S. mining transformed metals and minerals into $98.4 billion of finished mineral, metal and fuel resources, which were used to produced $1.8 trillion of value-added products in 2007.

The Economic Contributions of U.S. Mining in 2007, by Moore Economics found U.S. mining payroll totaled more than $22 billion in 2007, generating total payroll of $64.6 billion and $21.6 billion in personal income and payroll taxes through the economy….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Mineweb.com: UBS suggest that “value is beginning to appear in the base metals, particularly aluminum and zinc.”

In a recently published report, UBS analysts David Brebner and Simon Kendall said, “Our analysis suggests that, while it may still be early given the continued pressures evident in physical commodities market, value is beginning to appear.”…. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Bloomberg: The pound gained for a fifth day against the dollar amid speculation this week’s Bank of England quarterly inflation report will show consumer-price growth picked up, making an interest-rate cut less likely.

The pound climbed to the highest level in three weeks after Barclays Plc said today earnings rose in the second half by more than analysts. The Bank of England is scheduled Feb. 11 to release its inflation report containing forecasts for economic growth. Futures traders reduced bets the currency will drop against the dollar, data from the Washington-based Commodity Futures Trading Commission showed last week. …. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Forbes.com: The Russian central bank raised rates it charges banks on Monday as it vouches to support the currency through starving the banking sector that was responsible for its decline.

The Russian currency enjoyed a small rally on Monday, at 40.70 against the euro-dollar basket against which it’s measured, marking a 10 kopek gain from last Friday. This follows the central bank’s decision to raise the repurchase rate on loans for banks by 100 basis points to 12.0%, the second hike since late January. Last week, the currency lost value, edging closer to the 41.00 ceiling at which the central bank had pledged to defend it. …. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Hindu.com: The turnover of commodity exchanges in the country has surged by almost 34 per cent till January 15 in the current financial year against a year ago.

During January 1-15 period, the total turnover of three national level commodity exchanges and 19 regional bourses stood up by 11.78 per cent over the year-ago period, the commodity market regulator Forward Markets Commission (FMC) said in a statement. …. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Albawaba.com: Dubai Gold & Commodities Exchange (DGCX) today said volumes for the first month of this year had started on an encouraging note despite the challenging global economic environment, with overall volumes in January growing 33% on the previous month.

Gold and currency futures emerged as the key drivers of volume for the month, taking volumes to 38,366 contracts in January 2009 compared with 28,772 contracts in December 2008. Average Daily Volume in January was 1,827 contracts, 21% above the previous month. …. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Business-standard.com: MCX electricity futures are likely to be regulated by the Central Electricity Regulatory Commission and the existing regulator, Forward Markets Commission, according to a senior power ministry official.

The commodity exchange launched weekly and monthly electricity futures a month ago, after getting FMC approval. However, newly launched Power Exchange India Ltd had objected to the jurisdiction of FMC for the purpose of regulation of the contract, demanding that CERC alone should regulate the contract….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Guardian: The new chairman of Rio Tinto has quit following a boardroom row over a multibillion-dollar fundraising likely to involve one of its main customers, Chinese firm Chinalco. The plan, to raise about $5bn (£3.4bn), could be announced this week.

Jim Leng, who took up the post four weeks ago, said he had resigned because of a “difference of opinion” over how to reduce the mining group’s $39bn debt….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From FT: BG Group aims to compete against Royal Dutch Shell by deepening its presence in Australia’s fledgling coal seam gas industry, after launching a A$796m (£363m) takeover bid for Pure Energy Resources.

The cash bid trumps a rival offer for Pure Energy from Australia’s Arrow Energy. …. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From Business-standard.com: Rain CII Carbon India (RCCIL), a wholly-owned subsidiary of Hyderabad-based cement manufacturer Rain Commodities, has entered into an agreement with the International Finance Corporation (IFC) of the World Bank for sale of about 850,000 carbon emission reductions (CERs).

The transaction will cover 100 per cent CERs generated by RCCIL for the period between July 12, 2007 and July 15, 2012….. Full Article: Source

Posted on 10 February 2009 by VRS |  Email |Print

From FT: Crude oil prices rose while base metals were mixed and gold slipped below the $900 level as dealers awaited news of progress for President Obama’s $827bn stimulus package for the US economy.

ICE March Brent rose $1 to $47.21 a barrel while Nymex March West Texas Intermediate rose 77 cents to $40.94 a barrel. …. Full Article: Source

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