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Commodities Briefing 16.Mar 2009

Global mining M&A drops 40% to $127 bln
Commodities bubble? or credit bubble?
Commodities will lead the recovery
China urges development of second-hand commodity markets
Will commodity ETFs really go up?
Making the case for futures trading
Commodity bets queer bank pitch
Wary Opec decides against deeper cuts
Non-Opec nations to increase supply; renewed pressure on oil prices likely
US energy secretary 'pleased' about OPEC decision
Russian deputy PM urges OPEC to revamp oil market
Saudis push for Opec compliance
OPEC pumping more than market can take: Iraq
Oil drops 4 percent after OPEC keeps output steady
Kuwait to scrap $14 bln refinery project
EDF’s nuclear plan
Few winners emerge from sapped energy funds
Recession cools climate ?
Opposition grows to Australia's CO2 trade scheme
Comex gold trading is a paper game: Jim Rogers
Investing in gold?
Gold dehedging decelerates - but may pick up again on investor appetite for gold upside
Joe Foster: Chemistry looks good for gold
Is copper poised to take gold’s throne?
Strong copper, steel and iron ore data from China - are they sustainable?
Rising equity markets push copper higher
ETFs have advantages over other fund types
Asian currencies climb, led by Won
NZ dollar creeping upwards again
Euro declines on concern region will fail to counter turmoil
Goldman unit to pare NCDEX stake by 2%
FTIL may rope in global partners in stock exchange
Riddhi bullion, NCDEX to start precious metal bourse
Price battles looming for food makers
Speculation, market reaction responsible for high food prices
Campaigners vow to disrupt world water forum
US exports top $1.3 trillion
IMF predicts a global recession

Posted on 16 March 2009 by VRS |  Email |Print

From Bloomberg: Global mining mergers and acquisitions slumped 40 percent to $127 billion last year and the value of transactions will drop further in 2009 amid a commodity price rout, according to Ernst & Young LLP.

A total of 919 transactions took place in 2008, compared with 903 deals valued at $211 billion in 2007, Ernst & Young said in an e-mailed report today….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Kitco.com: In the spring of 2008 oil tumbled from a high of $148 per barrel to $36 a barrel in December, and the commodities bubble was deemed popped. Gold dropped, silver fell roughly 58% from its high and palladium fell a remarkable 72% etc.

But was this the result of a commodities bubble popping or could it possibly have been a credit bubble burst which happened to dramatically affect the price of commodities? This is important to understand in order for investors to determine where value is for future growth….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Hardassetsinvestor.com: Over the past few days, we’ve seen the market moving upwards because of what the CEOs of a few financial companies are saying. But if we listened to those same CEOs a year ago, we would have bought Citigroup at $30/share. What’s to say we can trust them now?

I think the turning point will be more technical than fundamental. I don’t think we’ll see a big blow-off capitulation at the bottom, but a slow capitulation that just kind of gives up on the market. That’s what I’ll be looking for….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Chinadaily.com.cn: China’s Ministry of Commerce (MOC) has urged local governments to promote development of second-hand commodity markets to stimulate economic growth and increase employment.
The ministry said in a recent circular that local governments should strive to build a batch of big second-hand commodity markets in large and medium-size cities….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Seekingalpha.com: Are commodities ETFs going to eventually see a rise ? No prediction of the timing was advanced – frankly speaking, this would be quite impossible, given the current volatility of the markets.

There are indeed some strong arguments behind this potential trend. First of all, the history of 2008 shows that there was a huge rise in raw materials (commodities prices). …. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Investmentnews.com: While commodity-trading advisers gained an average of 14% last year, the sometimes free-wheeling use of leverage across a few dozen commodities can lead to some wild price swings. Even those fully participating in the market typically recommend limiting CTA exposure to no more than 20% of an overall portfolio.

espite regulatory oversight from the Commodity Futures Trading Commission in Chicago, CTA fund investors face the same high-net-worth requirements as investors in hedge funds and private-equity funds….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Indiatimes.com: Losses on commodity price hedging are turning out to be the latest bone of contention between banks and corporates. There were at least two instances where mid-sized companies have refused to pay a large British bank after they suffered huge hedging losses on contracts entered into with the bank.

Federation of Indian Export Organizations director general Ajay Sahai said several such instances had been reported to the organisation. “There are several contracts, both forex and commodity price hedges, that are in violation of RBI norms. As banks are the authorised dealers in these transactions, it is their responsibility to educate the customers on the risks in such transactions. We have taken up the matter with the RBI,” he said….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From FT: Opec decided on Sunday against more supply cuts, signalling that it would delay its goal of boosting oil prices to $75 a barrel at least until next year.

The decision marks a significant shift in the policy of the oil cartel, which supplies about 40 per cent of the world’s oil and had given the impression that it wanted to push up prices as quickly as possible….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Financialexpress.com: The Organisation of Petroleum Exporting Countries’ (Opec) preliminary figures indicate that supply from non-Opec nations is expected to average 50.70 mb/d in 2009, an increase of 0.37 mb/d over the previous year and a downward revision of around 190 tb/d from the previous assessment.

India’s supply is anticipated to grow by 10 tb/d supported by the Mangala project. On a quarterly basis, supply from non-Opec countries is forecasted to stand at 50.78 mb/d, 50.58 mb/d, 50.48 mb/d, and 50.97 mb/d respectively. …. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Reuters: U.S. Energy Secretary Steven Chu said on Sunday he was “pleased” that OPEC had decided against further cuts in oil production but believed the United States should keep trying to become energy independent.

“While OPEC’s actions are just one factor among many that go into the market price of oil, I’m pleased that there won’t be further production cuts — which could help to avoid oil price volatility,” Chu said in a statement released by the Department of Energy….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Moscowtimes.ru: Deputy Prime Minister Igor Sechin sought to assure OPEC on Sunday that Russia was doing its part in reducing global crude supply and proposed an overhaul of the market to rid it of financial speculators.

OPEC said Sunday that it would keep existing output levels unchanged but would seek to eliminate overproduction by some members. The decision comes after global crude prices stabilized from their free fall to just above $40 a barrel in the wake of the cartel’s steep production curbs that started in January….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Gulfnews.com: Opec’s biggest oil producer is pushing other members to comply with production cuts decided last year as the group met yesterday to confront prices below $50 (Dh83.64) a barrel and sagging demand.

“We would like to see compliance as high as possible,” Ali Al Nuaimi, the oil minister for Saudi Arabia, told reporters as he arrived at his hotel in Vienna. “It is over 80 per cent now, it can be better.”…. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Aawsat.com: OPEC is pumping more oil than the market can absorb, Iraqi Oil Minister Hussain al-Shahristani said on Saturday. With demand falling OPEC will have little option but to cut further, he told reporters, but did not make clear whether OPEC’s meeting on Sunday should set new output targets or just improve compliance with existing curbs.

“There is a decline in demand. OPEC cannot keep over-producing,” Shahristani told reporters….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Reuters: Oil slumped 4 percent to $44 a barrel on Monday as traders questioned whether OPEC’s decision to enforce better compliance with previous curbs rather than make new production cuts was enough to offset eroding global demand.

While top producer Saudi Arabia had signaled a week ago that it wanted stricter adherence to the cartel’s previous 4.2 million barrel per day (bpd) cuts rather than additional formal restraints, other members had campaigned for explicit action now to avert a further rise in already swollen oil inventories….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Aawsat.com: Kuwait is scrapping a $14 billion project to build a fourth refinery in the oil-rich country, the prime minister said in remarks published Sunday. The announcement was the second cancellation of a major oil project since December amid government corruption allegations.

Sheik Nasser Al Mohammed Al Sabah told Al-Watan newspaper the decision, which the Cabinet will formally take Monday, was in compliance with results from an investigation by Kuwait’s financial watchdog, the Audit Bureau….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Commodities-now.com: Electricite de France’s 49 percent acquisition of Constellation Energy’s nuclear assets signifies its belief that nuclear energy will gain traction in the United States. As a first step, it will join forces with a company in which it already has relations and which is an established entity.

While a full nuclear resurgence may be more than a decade away, the fundamentals are in place for it to occur. The country is inexorably headed toward carbon constraints….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Theglobeandmail.com: A global economic slowdown, and falling commodity prices have zapped energy stocks. The Paris-based International Energy Agency yesterday added more pessimism, forecasting a drop in global oil demand in 2009 for a second consecutive year - the first time since 1982-83.

Crude oil prices, which have plunged from a peak of $147 (U.S.) a barrel last summer, lurched between $42 and $47 this week amid uncertainty as to whether OPEC leaders would cut oil output this weekend….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Examiner.com: UK researchers at the Hadley Centre are reporting a correlation between reduced prosperity and reduced greenhouse gas emissions associated with global warming. They report that since 2000 global greenhouse gases have risen by 2 to 3 percent each year, which is consistent with the global rise in world gross domestic product (GDP).

Since then, they conclude that the ½ percent reduction in GDP has led to a comparable ½ percent reduction in greenhouse gases….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Reuters: Major political opponents to Australia’s carbon trading plans hardened their stance on Monday, adding pressure on the government to make radical changes to get the scheme passed by parliament.

The ruling Labor party needs either the support of two independent and five Greens senators or the main opposition Liberal party to pass the emissions trading laws in the Senate….. 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 16 March 2009 by VRS |  Email |Print

From Commodityonline.com: Even as gold spot and futures prices surge globally and bullion analysts continue to predict that the yellow metal prices will zoom to astronomical levels ranging from $1,000 to $5,000, there is more opposition coming to the paper gold at Comex.

Renowned global commodities investor and analyst Jim Rogers says gold trading at Comex, a division of Nymex, is a paper game and not a physical game….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Business-standard.com: The decline in jewellery demand is likely to make investments in this safe haven a risky proposition. Investing during this period of global financial turmoil is a challenge. Stock markets around the world are at record lows. Commodities (except for gold) have corrected sharply.

Oil is a prime example, having corrected to $45 per barrel from its peak of $147 a barrel in 2008. Real estate values continue to plummet. The global financial sector, i.e. banking and insurance, is in turmoil. And, the global economy is expected to contract sharply during 2009….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Mineweb.com: The delivery profile for the gold miners’ hedge book at end-December calls for deliveries of 60 tonnes this year and 70 tpa through to 2012. Investor appetite for upside price exposure, however, means that the actual rate is likely to be higher.

The latest Société Générale global gold mine hedge book, compiled independently for the bank by GFMS Ltd., records that net producer de-hedging has continued to decelerate….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Theaureport.com: Geologist Joseph M. Foster—a Van Eck Associates portfolio manager who also leads its International Investors Gold Fund—sees nothing but good news for gold in the months and years to come. Joe isn’t holding his breath for mania to set in, but he does see a mix blending that will get gold “firing on all cylinders.”

Once a declining dollar, increasing inflation and an improving economy fill the combustion chamber, all it will take is a sustained spark of optimism for gold to forge ahead….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Copperinvestingnews.com: As economic malaise spread around the globe; silver and gold stocks became top performers. Worried investors flocked to both metals as a means to safe guard their investments as stocks, bonds and currencies became increasingly volatile.

Copper investments were not appealing. Copper, fundamental to the transfer of electricity for buildings, machinery, transportation and construction is often used to signal changes in economic activity; copper is a mirror of economic growth. With the global economy in shambles, copper shed its value to investors….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Mineweb.com: The world’s metals producers are still looking to China as the panacea for all ills with the often expressed hope that the country’s need to support the domestic metals smelting, refining and steel industries will be the saviour of this sector and supply sufficient demand to support prices in the West.

Consequently Chinese data are followed intensely and the latest information suggests that copper, iron ore and steel demand are holding up well - indeed increasing substantially - while aluminium is flat and zinc and lead suffering….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Alibaba.com: Copper climbed around 3 percent on Friday, with sentiment boosted by higher U.S. and European stock markets, while a fall in both London and Shanghai inventories underpinned prices.

Copper for three months delivery on the London Metal Exchange rose as high as $3,720 a tonne and was at $3,690 a tonne in the official rings, versus Thursday’s close of $3,580….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Dnaindia.com: Exchange Traded funds (ETFs) are a major class of mutual funds. Though not as popular among retail investors, they have numerous advantages over the straitjacket mutual fund.

The genesis of this category dates back to 1989 when the first index type ETF was traded on the American Stock Exchange….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Bloomberg: Asian currencies advanced, led by the South Korean won, after the Group of 20 nations pledged over the weekend to restore the financial system to health, spurring a rally in regional stocks.

The Korean currency extended its biggest weekly advance in three months on speculation the U.S. will expand a currency-swap agreement….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Nzherald.co.nz: The New Zealand dollar stepped up to new multi-week highs, with investors prompted to take on more risk as United States stocks closed the week in positive territory.

By 8am today the kiwi was buying US52.41c from US52c at 5pm on Friday. It reached a month-high around US52.70c on Friday night and remained above about the US52.15c level after that….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Bloomberg: The euro fell versus the dollar, ending four days of gains, on speculation European nations’ reluctance to boost spending will extend the region’s recession.

The 16-nation currency declined against 10 of the 16 major currencies after European officials, speaking as the Group of 20 finance ministers met on the weekend, said they had spent enough money to combat the financial crisis and don’t want to blow out their budgets….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Livemint.com: A unit of Goldman Sachs will have to dilute its stake by 2% in the National Commodity and Derivatives Exchange Ltd (NCDEX) to bring its holding to 5% by 30 June to meet India’s foreign investment requirements.
NCDEX is the country’s second biggest commodity bourse by trade turnover. …. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Thehindubusinessline.com: Financial Technologies (India) Limited (FTIL), promoter of the country’s largest commodity exchange MCX, on Sunday said it will look at bringing in foreign partners in its stock exchange, but the bourse would have an India-focussed model.

FTIL, whose group entity Multi-Commodity Exchange (MCX) is biggest commodity bourse here with about 90 per cent market share, has also set up a stock exchange MCX-SX. …. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Business-standard.com: Riddhi Siddhi Bullion (RSBL), one of the leading bullion trading firms in the country, has entered into an agreement with the National Commodity and Derivatives Exchange (NCDEX) to start a spot exchange for precious metals.

The exchange would be known as NCDEX Bullion and is likely to be launched within a month….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Reuters: What a difference a year — and a recession — makes for the food industry. This time last year, food manufacturers were struggling to raise prices fast enough to keep pace with the soaring cost of ingredients such as wheat and corn.

Now, as companies like Campbell Soup Co, Sara Lee Corp and Unilever Plc prepare discuss their strategies at next week’s Reuters Food and Agriculture Summit in Chicago, food makers are fighting to hold onto those price increases as stressed consumers tighten household budgets….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Business-standard.com: Holding speculative investments in food and the market overreaction largely responsible for the recent phase of high food prices, a global food policy think tank has mooted a two-pronged strategy to avert recurrence of such situations in future.

The proposed strategy involves creation of a small physical stock of food and putting in place a mechanism for market intelligence-based intervention in food markets to discourage speculation….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Guardian: Political leaders, specialists and activists will today attend a vast gathering in Istanbul officially aimed at averting an impending world water shortage but denounced by critics as a front for multinational companies seeking profits and promoting privatisation.

An estimated 20,000 delegates are expected at the world water forum, taking place on the banks of the Golden Horn and appropriately within sight of the Bosphorus, one of the world’s most famous waterways….. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Worldcityweb.com: U.S. exports topped $1.3 trillion in 2008, a record and a 11.84 percent increase over the 2007 total. The growth rate exceeded that for imports as well as total trade.

The commodity Oil, not crude finished No. 1 among all U.S. exports in 2008, at $51.82 billion, a change of 93.10% over the 2007 total. …. Full Article: Source

Posted on 16 March 2009 by VRS |  Email |Print

From Pamdemocrat.org: The world economy is likely to shrink for the first time in decades this year, the head of the International Monetary Fund (IMF) has warned. Dominique Strauss-Kahn’’s prediction is gloomier than that the IMF’’s current official forecast of 0.5% growth.

He added that trade was falling at an alarming rate and business and consumer confidence had collapsed. He was speaking at a conference in Dar-es-Salaam, Tanzania, to discuss how Africa should respond to the crisis. The IMF expects global growth to slow below zero this year, which will be the worst performance in most of our lifetimes. …. Full Article: Source

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