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Commodities Briefing 24.Jan 2013

Posted on 24 January 2013 by VRS |  Email |Print

Commodity markets are picking up. If you want to diversity your investment portfolio, you’d better turn to commodities. But when you do that, take an informed decision after having a thorough knowledge on commodities, experts advised investors.
They were giving a bird’s eye view of the commodities market, with a focus on agriculture commodities and gold, at a stakeholder awareness and education seminar on the subject………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

It might seem churlish to complain about the mediocre returns delivered by commodities during 2012 given the consistently strong performance of this asset class over the past decade. Still, this is not what we were told to expect by bulls who sold investors the idea of the commodities “super cycle” - they promised us it would last a great deal longer.
Commodities investors would benefit from a unique confluence of positive factors, those bulls predicted, with huge demand from the industrialisation and urbanisation of the BRIC (Brazil, Russia, India and China) economies combined with two decades of under-investment holding back supply………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

It is possible to invest directly in commodities, trading raw materials through specialist brokers or through the derivatives markets. Many investors, however, feel uncomfortable with the volatility associated with direct investment - and the minimum deal sizes that are often required.
Instead, says Philip Challinor, of independent financial adviser Chatfield Private Clients, “the most straightforward way to capture returns from commodities is via an exchange traded product (ETP), which is simple, low cost and liquid should you wish to sell.” BlackRock-owned iShares, Deutsche Bank-owned db-x and ETF Securities are the three biggest ETP providers in the UK………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

OPEC is probably the single most powerful organisation in the oil industry, able to influence the price of oil to help its member states; however a review by Bassam Fattouh and Lavan Mahadeva of the Oxford Institute for Energy Studies suggests that whilst OPEC is able to influence prices in the short term, it has less success over the long term.
That leaves the question as to whether OPEC will be able to maintain oil prices of around $110 a barrel for the coming decade or so? The answer … unlikely. Fattouh and Mahadeva suggest that OPEC only works effectively to “avoid oil prices falling below some level deemed acceptable by its members, rather than to prevent oil prices from rising above certain levels or to set a price ceiling.” In other words it has less power to maintain high oil prices, as it does to prevent low oil prices………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

OPEC’s influence on oil prices is very visible in the short run, but it is less certain that its pricing power can be maintained in the long term, according to a thoughtful review published by Bassam Fattouh and Lavan Mahadeva of the Oxford Institute for Energy Studies.
Fattouh and Mahadeva examine how the cartel’s strategy and power over oil prices have varied over time depending on market conditions and the interaction among OPEC members. It is a superb review of the cartel’s history and operations since it was founded in 1960 with the aim of securing “fair and stable prices” for petroleum producers………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

During recent weeks the price of oil has rallied. One of the reasons many investors attribute to the recent rise in oil prices is the tensions in Algeria. The colder than anticipated weather in Europe and the U.S. is also another factor for the rise in demand for heating oil. Is the oil market heating up again? Will oil prices pass the $100 mark and maintain that mark for a long time? Let’s analyze the recent changes in the oil market.
During January (up to date), the price of oil increased by 4.1%; United States Oil, by 4.2%. The recent rise in the price of oil coincided with the rise in other energy commodity prices such as natural gas and stock markets such as the S&P500 index………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

The International Energy Agency, or IEA, is predicting a growth in global oil demand in 2013, a growth led by a resurgent Chinese economy. The Paris-based intergovernmental agency predicts that average world oil demand this year will shoot up by 930,000 barrels per day from 2012 levels.
The market’s immediate response wasn’t surprising. As expected, global crude oil prices inched higher, and the West Texas Intermediate futures hit a 17-week high. The IEA now forecasts global demand to average 90.8 million barrels per day in 2013………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

According to a recent report from the International Energy Agency (IEA), demand for energy has been increasing steadily since 2000, and coal supplies account for nearly half of the incremental primary energy supply globally. Coal demand grew 4.3 percent in 2011 alone and is unlikely to decrease in the foreseeable future.
“Coal’s share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch oil within a decade,” Maria van der Hoeven, IEA executive director, said………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Low interest rates and quantitative easing will boost investor purchases of gold and buoy prices this year, Morgan Stanley said, even as it lowered its forecast for the precious metal. Platinum may advance as supplies tighten.
“We remain bullish on the gold price outlook in 2013 despite recent selling pressure triggered by market concerns of an earlier-than-previously-anticipated tightening in U.S. monetary policy,” analysts Peter Richardson and Joel Crane wrote in a report today. The bank expects gold to average $1,773 an ounce this year, 4 percent less than an earlier forecast. Prices may gain to $1,845 in 2014………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Households in Japan, the world’s third largest economy, continued to sell rather than Buy Gold in 2012, according to results from the country’s biggest bullion retailer. Tanaka Kikinzoku Kogyo, founded in 1885 and part of the Tanaka Holdings Group, says that its purchases of gold bullion from the public outweighed its sales for the eighth year running in 2012.
The news contradicts many late-2012 claims that Japanese gold demand was surging as a result of weak monetary policy. This week’s new 30-year highs in the Yen gold price has also seen more selling than buying, according to Japanese retailers. ……………………………………….Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

HSBC has quietly moved into acquiring large amounts of silver bullion. The bank has secured another deal to buy silver bars from KGHM, which brings their total purchases of silver from KGHM alone in the last 12 months to $876 million or PLN 3.65 billion.
KGHM is one of the largest producers of silver in the world and is the second-largest producer of refined silver in the world. They produce silver bars registered under the brand KGHM HG that are attested to by “Good Delivery” certificates issued by the London Bullion Market Association and the Dubai Multi Commodities Centre………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Actual shipments of rare earths in 2012 by China reached only 16,265 metric tonnes, declining by 3.5 per cent versus a year ago, official data released by the China Customs Statistics Information Center on Tuesday showed.
It was likewise a far cry to the 2012 export guidance that the country set at 30,966 tonnes. Moreover, the center said the total export value in 2012 also dropped by 66 per cent year-on-year to $906 million. In December 2012, China set its first batch of rare-earth export quotas for 2013 at 15,501 tonnes. The amount would already account as its half-year quota………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

The year 2012 turned out to be a record year for global crude steel production, according to World Steel Association (worldsteel).The growth came mainly from Asia and North America while crude steel production in the EU (27) and South America decreased in 2012 compared to 2011.
Annual production for Asia was 1,012.7 Mt of crude steel in 2012, an increase of 2.6% compared to 2011. The region’s share of world steel production increased slightly from 64.5% in 2011 to 65.4% in 2012. China’s crude steel production in 2012 reached 716.5 Mt, an increase of 3.1% on 2011………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Commodity prices are rebounding, but don’t hold your breath for megadeals in mining as a new crop of CEOs takes over.
At least 20 mining chief executive officers have stepped down in the past year, many under pressure from investors and boards. Tom Albanese, CEO at Rio Tinto PLC, was the latest to leave the corner office, agreeing to step down last week as the mining giant said it would write off roughly $14 billion in the value of various assets………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Gold exchange traded funds have remained relatively flat so far this year, but S&P Capital IQ analysts expect the precious metal to strengthen this year as loose monetary policies debase global currencies and low gold supply support prices.
“S&P Capital IQ Equity Research remains positive on the outlook for gold and gold-related investments for 2013,” Leo Larkin, S&P Capital IQ Equity Analyst, writes in a research note. “We expect gold to rise 15% in 2013 and finish the year at about the $1,930 level.”……………………………………….Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Commodity ETFs give investors the chance to play the natural resources market like they were never able to before, as now even part-time investors are able to get a piece of these quickly evolving markets.
For some this access was not diverse enough, resulting in the demand for leveraged products, where the fund will work to double or some times even triple the performance of an index. These funds are not recommended for the part-time or risk-adverse investor, but as one of the largest growing areas in commodity investing it seems clear that many are ready to take on some risk ……………………………………….Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

After making its debut on the SIX Swiss Exchange four months ago, ETF Securities has followed up with the launch of 28 Swiss franc currency-hedged exchange-traded commodities (ETCs) based on Dow Jones-UBS Commodity Indices.
ETF Securities’ initial offering on the exchange in September last year included eight thematic exchange-traded funds delivering access to various investment themes such as agribusiness, coal mining and shipping………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Noted investor and author Jim Rogers says index-based commodity ETFs will be an easy-to-use strategy for investors to profit from supply shortages in natural resources combined with easy monetary policies from central banks around the world. Rogers pointed out that world governments have gotten to the habit of printing money in the wake of the financial crisis.
Rogers noted that the new Japanese Prime Minister, Shinzo Abe, won his election on promises to increase quantitative easing to jumpstart the stagnating economy. Consequently, the Japanese yen has been depreciating and Japanese equities have been rallying on the optimistic outlook………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Is the sale of Credit Suisse’s physical ETF business to Blackrock the death knell for the derivatives-based model? There was a moment last year when it seemed that derivatives-backed exchange-traded funds (ETFs) had won the battle against physically backed ETFs in Europe, but it now looks like that moment was merely a watershed for the demise of the derivatives-backed version of the investments.
In a turnaround that has taken place over the past nine months, culminating in Credit Suisse’s agreement in January to sell its ETF business to Blackrock, the parent company of ETF provider iShares, those in Europe that espouse physical ETFs are scenting victory………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

Industry bodies have raised concern against the government’s anticipated move to levy commodity transaction tax (CTT) in Budget 2013-14, scheduled to be announced on February 28.
In a pre-Budget recommendation, the Confederation of Indian Industry ( CII) said exchange-traded commodity transactions continued to be exempted from CTT. It argued the imposition of CTT would not only increase transaction costs, add to the cost of risk management and dissuade genuine hedgers, but also shift commodity derivatives trading to unofficial and illegal ‘dabba’ trading. It added globally, imposition /increase in transaction taxes had led to migration of trade………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

The South African rand tumbled to a four-year low versus the U.S. dollar Wednesday, as negative sentiment over the country’s economic prospects triggered a selloff ahead of an interest-rate announcement.
On Wednesday, speculative investors prepared for the South African Reserve Bank’s policy announcement Thursday by testing–and breaking–the dollar’s market-implied ceiling against the rand at around ZAR9.0. The central bank is expected to cut key rates by 0.25 percentage point to boost the country’s flagging economy………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

The collapse of Europe’s controversial market for carbon emissions rights is “an extremely serious” matter and an EU Comission proposal to freeze a related auction for 2013-2015 is simply a “patch” for the problem, a French economist warned lawmakers on Wednesday.
“We are in an extremely serious situation regarding the development of the European quotas market,” Christian de Pertuis told the French Senate’s finance commission in a hearing………………………………………..Full Article: Source

Posted on 24 January 2013 by VRS |  Email |Print

2013 is set to be a pivotal year for the world economy. Seismic changes are taking place across the globe, transforming major economies as they try to recover from the global economic crisis of 2008.
In this white paper we will examine the 5 key global economic trends shaping the world in 2013: 1. US Economic Recovery Continues: The US economy is undergoing a slow, structural recovery from the debt-fueled expansion at the start of this century. In 2012 the US economy grew at approximately 2% - far more than the Euro Zone or UK. Recently the US has easily been the best performing “rich world” economy………………………………………..Full Article: Source

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