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Commodities Briefing 11.Mar 2009

The global economy: Strong headwinds for Europe and Asia
US to get tough on trading rules
Use managed futures to hedge against more pain
Economy to slow US nuclear power growth: NRC head
Recession has taken toll on alternative energy
For alternative energy 2009 will be a year to 'get through'
IEA convenes new Energy Business Council
Green firms eye Pentagon, world's biggest oil buyer
Australia faces opposition to carbon trade law
NMA says carbon technology is key to climate change, economic growth
Oil consolidates gains on signs of Opec progress
Canadian oil drilling to hit 10-year low
Gold bullish, silver volatile, ‘as no quick fix' to global financial crisis is likely
Gold: 'Inflation will beat deflation and gold will hit $3,000'
UBS bullish on gold price nearing $2,500
Haven-sent gains for gold
Gold drops for a third day as equity rally cuts haven appeal
Investors rush in for gold exchange-traded funds
Comparing and evaluating gold indexes
Copper in sharp base metals rally as stockpiles fall
India base metals futures plunge
Mickey Fulp: “Things are looking up in the junior sector”
Demand for steel to rise by year-end
Lithuanian PM says currency to remain stable
Dollar mixed as roaring markets foil 'safe' choice
Fine wine market flattens but still has fizz
FMC asks bourses to step up volume in non-performing futures
China-focused commodities exchange adds legal certainty
RWE opens Europe's largest energy trading floor
Fast-growing Western U.S. cities face water crisis
Why commodities prices may rise, even in deflation
Falling commodity prices could slow inflation

Posted on 11 March 2009 by VRS |  Email |Print

From Businessweek.com: The report is looking at how major countries are faring amid the global downturn, what they’re doing to combat the weakness, and when they might recover.
Although the U.S. entered recession first, Britain and Japan—and to a lesser extent Europe—now face even larger hurdles. We expect both the British and Japanese economies to contract at a larger rate than that of the U.S. in 2009, while we expect the European recession to be more in line with that of the U.S….. Full Article: Source

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From BBC: Ron Kirk, the man poised to become the US’s top trade official, has said the Obama administration’s priority will be ensuring countries obey trade rules. This marks a significant departure from the Bush presidency, when more emphasis was put on negotiating trade deals.

Mr Kirk was answering questions at a Senate Finance Committee hearing on his nomination for US Trade Representative….. Full Article: Source

Posted on 11 March 2009 by VRS |  Email |Print

From Financialpost.com: With seemingly no end in sight for the current bear market that has cut North American equities by more than half over the past eight months, Canadian investors may want to consider managed futures, an alternative asset class that has proven an almost-perfect hedge in what has been one of the worst periods of stock performance in a century.

But market timers beware: these funds, which thrive during adversity, tend to turn quickly downward when equity markets rebound. They are also harder to come by in Canada than the United States and are prone to manager risk….. Full Article: Source

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From Reuters: An ‘excessive exuberance’ for expansion in the U.S. nuclear power industry has calmed because of the global credit and economic crisis, the head of the U.S. Nuclear Regulatory Commission said on Tuesday.

Separately, a GE Hitachi Nuclear Energy official warned that the lack of credit will slow the pace of U.S. nuclear power development….. Full Article: Source

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From Sfgate.com: Worldwide sales of solar cells, biofuels and wind turbines soared 53 percent last year to hit $115.9 billion before the global recession started sapping their strength, according to an annual report issued today.

The report, by the Clean Edge research firm, shows the alternative energy industry at a turning point in 2008. After years of rapid growth fueled by rising oil prices and fears of global warming, the industry was finally making serious cash….. Full Article: Source

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From Canadian Press: The alternative energy sector will consolidate and retrench in 2009, but because of new government policies, spending and regulation, it will “get through” the year better than most, according to a report released Tuesday by an industry research firm.

Clean tech enjoyed a banner 2008, with global revenues for solar photovoltaics, wind power and biofuels expanding by more than 50 per cent to US$115.9-billion in 2008, according to a new report from Clean Edge….. Full Article: Source

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From Commodities-now.com: To overcome the pressing global economic and energy challenges we face, business and government must work together.

For 35 years, the International Energy Agency (IEA) has provided a forum for governments to cooperate to find solutions, but we have not previously had a CEO-level group that focuses on both demand and supply side energy challenges and will provide feedback to IEA Ministers….. Full Article: Source

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From Guardian: Alternative energy companies hope to get a big boost from the U.S. military, a massive new customer that will soon be spending billions of dollars in economic stimulus aimed at greening the federal government.

Melding military might and environmental awareness will bring savings for the Pentagon, a major fuel user. Green technology producers also hope ramping up production to fill government contracts could help them achieve economies of scale, making their products more affordable for others….. Full Article: Source

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From FT: Australia’s government faced new objections to its pioneering carbon trading scheme from both ends of the political opposition on Tuesday, just as it unveiled the legislation it hopes to pass by the middle of this year.

The draft laws contained few changes to what could be the most sweeping cap-and-trade system in the world, including a commitment to cut emissions by 5 per cent of 2000 levels by 2020….. Full Article: Source

A SQUARE’s recent webinar on carbon-led investing - with voice-over (which non-A SQUARE subscribers can purchase individually) can be accessed here:
http://www.opalesque.com/asquare/509/Webinar_Carbon_Led_Investing.html

Posted on 11 March 2009 by VRS |  Email |Print

From Commodities-now.com: Swift development and deployment of new technology capable of capturing and storing carbon dioxide (CO2) from the world’s coal-based power plants is essential for addressing climate change in an economically sustainable way, said a U.S. mining industry spokesman today.

“Our current economic crisis reminds us all the more of the importance of structuring any actions responsibly so we can meet both our environmental and our economic goals,” said National Mining Association (NMA) president and CEO Hal Quinn….. Full Article: Source

A SQUARE’s recent webinar on carbon-led investing - with voice-over (which non-A SQUARE subscribers can purchase individually) can be accessed here:
http://www.opalesque.com/asquare/509/Webinar_Carbon_Led_Investing.html

Posted on 11 March 2009 by VRS |  Email |Print

From FT: Oil prices consolidated their gains above $45 a barrel on Tuesday, helped by a rebound in global markets and signs that the Opec oil cartel is winning its battle to narrow the gap between falling demand and production.

The challenge that Opec faces was highlighted by a fresh report from the US government forecasting that global oil demand will drop this year by 1.4m barrels a day, 200,000 b/d more than it forecast a month ago….. Full Article: Source

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From Theglobeandmail.com: Add a new low to an economy filled with all sorts of lows: western Canadian oil and gas drilling is expected to fall to levels not seen since 1999.

In a forecast that implies industry consolidation is coming, Peters & Co. published a report on oil field services companies Tuesday that projects a 31 per cent drop in drilling activity from 2008 levels, and a 40 per cent decline from five-year averages….. Full Article: Source

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From Mineweb.com: In a recently published analysis, ScotiaMocatta said the medium outlook for gold remains bullish “as no quick fix to the global problems is likely.” “However, we feel gold will remain highly sought after regardless of whether we see deflation or inflation, as people seem to be turning to gold as a hedge against money and economic disorder,” ScotiaMocatta noted.

Silver enjoyed a strong run last month which saw the metal’s price rise 16% compared to gold’s 11% rise. ScotiaMocatta found that since the lows in October 2008, silver has climbed 71% compared to gold’s 48%….. Full Article: Source

Posted on 11 March 2009 by VRS |  Email |Print

From Telegraph: Gold looks set to move substantially higher as governments all around the world embark on a programme of “quantitative easing”. Gold looks set to move substantially higher as governments all around the world embark on a programme of “quantitative easing” – or printing money, as it could be more simply defined.

In the US for example the US monetary base, the most narrow measure of US money supply, has increased more in the past six months than the aggregate total of the past 20 years….. Full Article: Source

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From FT: Gold could surge to $2,500 a troy ounce in the next five years because the prospects of either deflation or inflation were “becoming more extreme”, UBS said on Tuesday. The Swiss bank told investors to overweight gold in their portfolios.

The Swiss bank’s warning is the most radical among mainstream institutions and comes as some hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks….. Full Article: Source

Posted on 11 March 2009 by VRS |  Email |Print

From FT: Gold broke briefly back over the $1,000 per troy ounce last month – driven by an explosion of interest from embattled investors. As the credit crunch continues to evolve from a global financial crisis into a worldwide economic recession, will this momentum increase, or might gold become vulnerable to profit taking?

Record demand for gold coins has kept national mints under intense pressure and exchange traded funds are gathering physical holdings of gold of record weight….. Full Article: Source

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From Bloomberg: Gold dropped for a third day in Asia, trading near a one-month low below $900 an ounce, after global equities rallied and bond yields rose, eroding the precious metal’s appeal as an investment haven.

Asian shares gained for a second day on optimism a turnaround at Citibank Inc. could signal that the worst of the global banking crisis is over….. Full Article: Source

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From Indiatimes.com: More and more investors are flocking to gold funds, with a meltdown in other financial instruments and lack of profitable investment options making them rediscover the traditional safety offered by the yellow metal.

Specialist gold exchange traded funds (ETF), which allow investors to invest in gold without taking physical delivery of the commodity, have reported a surge in investment flows, their popularity gaining on the back of the recent steep rise in prices of the underlying physical commodity….. Full Article: Source

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From Resourceinvestor.com: Gold and other precious metals indexes are often cited in market analysis. However, the prognosticators often don’t offer the real story.

Market analysts, investment newsletter writers and financial planners are always commenting on how well, or poorly, the precious metals (read gold) mining sector is doing based on how a particular gold/silver mining index is trending, but they are not telling you the whole story….. Full Article: Source

Posted on 11 March 2009 by VRS |  Email |Print

From Theaustralian.news.com.au: The appetite for risk drove a sharp rally in base metals overnight. At the same time, another large decline in copper-warehouse stocks delivered a further boost to the complex.

But analysts said metal bound for China was probably destined for stockpiling and not yet for consumption….. Full Article: Source

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From Commodityonline.com: Base metals, led by tin, recorded further loss in futures trade on Tuesday as speculators preferred to book profits at prevailing higher levels after gaining in the past week in tandem with the global trend.

However, lower inventories on the LME-monitored warehouses and rising cancelled warrants capped losses to some extent, pushing up prices of copper. On the Multi Commodity Exchange, tin prices for March contract hit a lower circuit by losing four per cent….. Full Article: Source

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From Theaureport.com: The piece deals with junior resource companies, metal commodities and flagship projects. The gist is that certain metal commodities are conducive to success for a junior resource company, and some metal commodities are not.

Carrying that a bit further and bringing in the geology aspect, certain deposit types within these specific commodities are good, bad or ugly for juniors to have as flagship projects….. Full Article: Source

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From Zawya.com: Global demand for steel is down 20 per cent at present but is expected to recover by the end of the year. With destocking nearing an end, the industry is likely to see signs of recovery by the end of the year, said a report by Reuters quoting a top industry official.

“I would be very surprised if there were not green shoots out there by the end of the year,” Ian Christmas, Director General of the World Steel Association said at the Reuters Global Mining and Steel Summit….. Full Article: Source

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From Forbes: Lithuania’s prime minister rejected again on Tuesday any idea that the country’s currency, the litas, will be devalued, but said his nation faced sharp cuts in the state budget.

Like neighbouring Latvia, Lithuania is facing a sharp contraction in its economy this year. Fears over the economy sparked a wave of buying of foreign currency at the weekend in a devaluation panic….. Full Article: Source

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From IHT: The dollar traded mixed against the major currencies Tuesday as stock markets worldwide mostly shot higher during a day light on economic data.

A memo from Citigroup Inc. Chief Executive Vikram Pandit saying the beleaguered bank was running an operating profit of $8.3 billion revved up U.S. equities, sending all the major indexes soaring more than 5 percent….. Full Article: Source

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From Cbc.ca: If you ever dreamed of tippling some of the oldest plonk in the world, well, you’re running out of time. During the second weekend in March, a group of wine experts gathering in Epernay, France, popped one of the three oldest bottles of vino on the planet — a bottle of Perrier Jouët’s Sillery 1825.

The tasters, essentially prominent wine writers, reported that sipping something this old was akin to drinking gold….. Full Article: Source

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From Indiatimes.com: Concerned at thin volumes in a few commodities, Indian market regulator FMC has asked the exchanges - MCX, NCDEX and NMCE - to take steps to improve liquidity in those.

“We are aware of illiquid futures contracts in commodity exchanges like MCX. We have asked them to improve (liquidity) by encouraging participation,” Rajeev Aggarwal, a member of Forward Markets Commission (FMC), said from Mumbai….. Full Article: Source

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From Legalbusinessonline.com: On the back of China’s growing appetite for energy and resources, the Hong Kong Mercantile Exchange (HKMEx) has been established to bridge the gap between the international commodities markets and China.

It provides an efficient and transparent pricing platform for end-users and the global trading community to trade tailor-made contracts, hedge pricing risks in China and across the region, lower transactions costs and increase participation by Chinese and international commodities traders….. Full Article: Source

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From Commodities-now.com: Ten years after the founding of the energy trading company within the RWE Group, RWE Supply & Trading is moving into its new corporate headquarters in Essen.

About 800 employees from RWE Supply & Trading, RWE Key Account, Portfolio Management as well as Load Dispatching will have moved from Huyssenallee to Altenessener Strasse in Essen by the end of the month. The traders and employees from the Back Office, Risk Control and Structuring who are connected to trading activities will form the vanguard….. Full Article: Source

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From Reuters: Desert golf course superintendent Bill Rohret is doing something that 20 years ago would have seemed unthinkable — ripping up bright, green turf by the acre and replacing it with rocks.

Back then “they came in with bulldozers and dynamite, and they took the desert and turned it into a green oasis,” Rohret said, surveying a rock-lined fairway within sight of the Las Vegas strip. “Now … it’s just the reverse.”…. Full Article: Source

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From Prisonplanet.com: As people like Mish point out, we’re currently in a highly deflationary environment. As such, commodities would seem to be a poor investment. But Jim Rogers says that agriculture will go through the roof. A lot of people say gold will soar. And peak oil advocates say that oil will skyrocket.

So who’s right? Well, it isn’t a big secret that China is going all over the world buying up commodities….. Full Article: Source

Posted on 11 March 2009 by VRS |  Email |Print

From Bdafrica.com: Falling international commodity prices could present a soft landing for Kenya’s fragile economy this year, the outcome of which will be a lower import bill and an easing in the cost of living.

Economists say that barring high food prices and a weak currency, Kenya, which imports more than it exports, is likely to find some respite as the prices of key import commodities such as petroleum products and raw materials used in agriculture fall further….. Full Article: Source

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