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Commodities Briefing 15.Feb 2013

Posted on 15 February 2013 by VRS |  Email |Print

Revenue from commodities trading at global investment banks fell by a quarter last year from 2011, making the asset class the worst performer in the fixed-income business of banks, an industry survey showed on Thursday.
Low market volatility and shrinking client activity were reasons for the drop, and the effect was particularly evident in energy and precious metals businesses, according to the survey by the London-based Coalition, a financial services analytics company………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

The commodities super-cycle is not over, but the growth of the century’s first decade is unlikely to be seen in the years ahead, while the balance of profitability could switch back to steelmakers from miners in the next 15 years, the chief metals analyst at investment bank Renaissance Capital said Thursday.
“The exponential growth witnessed in commodities is over… we now need to analyze each project company [on a case-by-case basis],” Boris Krasnojenov, the director of metals and mining research at the bank, said at the Adam Smith Summit in Moscow………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Investment professionals across Europe are planning to increase their average allocation to commodities in 2013, particularly into industrial metals such as copper, a survey run on 350 professionals by ETF Securities has found.
Across Europe, the results show that over 40% of investors plan to allocate between 8-10% of their portfolios to commodities in the year ahead. In addition, just under a third of those surveyed in the UK and Switzerland were most concerned about the European Sovereign debt crisis, whereas the US fiscal and budget ceiling issues were deemed a greater concern by Italian and German investors………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Here’s another example of the weakening of previously strong “risk” asset correlations. Even with a recently strong oil price, the Thomson Reuters/Jefferies CRB index, a basket of 19 commodities, has dramatically lagged behind the stock market rally since its November trough. Energy makes up 39 per cent of the CRB, gold just 6 per cent.
But this dislocation can be considered a positive development for many investors. First it increases choice, because they can again treat commodities as a way of diversifying portfolios, rather than simply a geared risk-on/risk off bet………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

OPEC’s role as master of the oil market has been called into question in the last year, but the outlook for the group of oil producers may be rosier than many believe.
It’s little wonder that OPEC is feeling insecure; a remarkable resurgence in U.S. oil production from shale rock poses a challenge to the producer group’s historic dominance. The potential challenge to the historic dominance of the producer group is certainly a real one that could have serious consequences for their economies………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will cut crude shipments by 0.9 percent this month amid lower production by Saudi Arabia, according to tanker tracker Oil Movements.
The group that supplies about 40 percent of the world’s oil will export 23.51 million barrels a day in the four weeks to March 2, down 220,000 a day from 23.73 million in the previous period, the researcher said today in an e-mailed report. Those figures exclude Angola and Ecuador………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

The International Energy Agency says it will change its method of calculating China’s oil demand. Previously, IEA calculated apparent demand as the sum of Chinese refinery output and net product imports but this measure didn’t account for changes in product inventories for China, the world’s second largest consumer of oil. The Chinese government doesn’t publish actual consumption data.
Citing China’s rapidly expanding refining capacity which can result in significant swings in inventory volumes, IEA, in its monthly report on the oil market released Wednesday said there is a need to account for changes in oil stocks held by Chinese companies………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Fu Chengyu has global ambitions. In 2005 he led CNOOC, a state-run Chinese energy giant, to make an audacious takeover bid for Unocal, an American oil-and-gas firm. That provoked a protectionist backlash, and CNOOC retreated. (It has since won approval to buy Nexen, a Canadian energy firm.)
In 2011 Mr Fu took over as boss of China Petroleum & Chemical Corp (Sinopec), another state-run outfit. He has tried to transform the domestically focused firm into an international oil giant………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Norway’s central bank governor warned that the country, one of the richest in the world, needs to prepare more for its post-oil future.
Øystein Olsen, head of Norges Bank, used his annual speech to underline that the two factors affecting the country’s growth potential – hours worked and productivity growth – were both falling………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Central banks added the most gold to reserves in almost a half century last year as prices averaged a record, the World Gold Council said. The banks bought 145 metric tons in the fourth quarter, an eighth successive quarter of net buying, the London-based industry group said today in a report. They added 534.6 tons to reserves last year, 17 percent more than in 2011 and the most since 1964, it estimates.
Nations from Brazil to Russia are adding the metal to reserves at a time when investors are holding a near-record amount through gold-backed exchange-traded products. Bullion gained for a 12th straight year in 2012, the best run in at least nine decades, averaging $1,669 an ounce through the 12 months………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

World gold demand from October through December was the second strongest of any quarter on record and 2012 was the second-highest ever for a full year behind 2011, the World Gold Council said Thursday in its quarterly report on demand trends.
Fourth-quarter demand was rose 4% year-on-year to 1,195.9 metric tons, while the value of the gold demand rose 6% to a near-record $66.2 billion, the Gold Council said. Growth in jewelry and central-bank demand exceeded declines in the investment and technology sectors, the report said………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

The global supply of gold in 2012 declined by 1.4% to 4,453.3 metric tons, said the World Gold Council Thursday in its quarterly trends report. The decline was mainly due to a drop in recycling, with global mine output nearly flat, the WGC said.
“We still have the conundrum that gold has seen the least growth in mine production of most major metals in the last decade,” said Marcus Grubb, managing director of investment for the Gold Council. For most other major base and precious metals, global mine output over the decade is anywhere from 10% to 80%, Grubb said. “For gold, it’s 2%,” he said………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Gold traders are the most bearish in more than a year on mounting speculation that improving economic growth from the U.S. to China will curb demand for this year’s worst-performing precious metal.
Twenty analysts surveyed by Bloomberg this week expect prices to fall next week, while 11 were bullish and three were neutral, making the proportion of bears the highest since Dec. 30, 2011. Hedge funds cut bets on higher prices by 56 percent since October and are approaching their least bullish stance on gold since August, government data show………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Investment experts keep telling us two things. One, you must diversify your savings. Nothing works for ever. Two, your annual returns are set to be miserable, because there’s no return to the out-sized gains of the 1980s and ’90s. The last 10 years prove that.
Now, we don’t doubt point one. Not even people buying gold in 2001 could in fact see the future (though we might tell you different tomorrow). That second claim needs a closer look, however………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by gold last quarter as futures dropped the most in more than eight years. John Paulson maintained his holding.
Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, 55 percent to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed……………………………………….Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Platinum climbed for a third day, widening its spread over gold to the biggest since August 2011, on concerns that global supply will drop this year just as a recovery boosts industrial demand.
Platinum gained 0.4 per cent to $1,727 an ounce, while gold was little changed at $1,642.79 an ounce. The spread between the two metals widened to $88.85 today, the biggest since August 2011. Silver also advanced 0.1 per cent to $30.80 an ounce………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Gold mining stocks and exchange traded funds have consistently lagged the run-up in gold prices. Although the two seem they would be in agreement tracking the price of gold, there are a number of reasons why they tend to diverge. “Gold miners do not perfectly track the price of the physical commodity. Most of these companies have significant operating leverage, which can magnify the effects of fluctuating gold prices on their profitability.
They also add a layer of political and operational risks that investors in the physical commodity do not face. For example, in recent years, several of the fund’s mining operators misallocated resources by running low-return mines that did not cover their cost of capital,” Alex Bryan wrote for Morningstar………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Gold mining stocks and exchange traded funds have consistently lagged the run-up in gold prices. Although the two seem they would be in agreement tracking the price of gold, there are a number of reasons why they tend to diverge. “Gold miners do not perfectly track the price of the physical commodity. Most of these companies have significant operating leverage, which can magnify the effects of fluctuating gold prices on their profitability.
They also add a layer of political and operational risks that investors in the physical commodity do not face. For example, in recent years, several of the fund’s mining operators misallocated resources by running low-return mines that did not cover their cost of capital,” Alex Bryan wrote for Morningstar………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Aluminium was once more costly than gold. Napoleon III, emperor of France, reserved cutlery made from it for his most favoured guests, and the Washington monument, in America’s capital, was capped with it not because the builders were cheapskates but because they wanted to show off. How times change.
And in aluminium’s case they changed because, in the late 1880s, Charles Hall and Paul Héroult worked out how to separate the stuff from its oxide using electricity rather than chemical reducing agents. Now, the founders of Metalysis, a small British firm, hope to do much the same with tantalum, titanium and a host of other recherché and expensive metallic elements including neodymium, tungsten and vanadium………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

The securities transaction tax (STT) has resulted in a shift in volumes from domestic to foreign markets. Nifty futures listed on the Singapore-based SGX rose multi-fold, while these fell on the National Stock Exchange (NSE).
For the government, reportedly considering a commodities transaction tax (CTT), this might well be a signal. Effective 2005-06, the government had introduced 0.125 per cent STT on delivery and 0.025 per cent on intra-day equities trade………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Russia fueled the G-20 currency war debate on Thursday, when the Russian finance minister criticized countries that are trying to stimulate their economies through currency devaluation.
“We believe countries should not be competing through their currency policies. They should be competing based on their economic activity,” Finance Minister Anton Siluanov told CNBC at the G-20 meeting of major economic powers in Moscow………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

The Group of 7 industrialized countries appeared to tamp down talk of a currency war in a statement this week that said markets should determine exchange rates and that countries should use fiscal and monetary policies to achieve faster growth.
It may help curb fears that stagnant economies will devalue their currencies to make their exports more affordable relative to competitors………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Prices in food commodities such as corn, wheat and soybeans rose sharply in 2012 due to extreme weather events, Baring Asset Management said. The investment firm believes that these high prices will remain for the next six months, which will also enhance the investment appeal of companies providing goods and services to farmers.
Companies providing for instance seeds, herbicides and fertilisers to farmers, enabling them to maximise their crop output, are expected to outperform this year………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

On Frbruary 19th Europe’s emissions-trading system (ETS) faces a potentially fatal vote. It could not only determine whether the world’s biggest carbon-trading market survives but delay the emergence of a worldwide market, damage Europe’s environmental policies across the board and affect the prospects for a future treaty to limit greenhouse-gas emissions. Quite a lot for a decision which—as is the way of things European—sounds numbingly technical.
The vote is due to take place in the environment committee of the European Parliament. If the committee approves the proposal before it (and the parliament in full session as well as a majority of national governments agree with the decision), this would give the European Commission, the European Union’s executive arm, the power to rearrange the ETS’s schedule of auctions………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

Europe’s carbon trading scheme should be the biggest action on climate change on the continent, but lobbying threatens to kill much-needed reform. What is the most important climate change policy issue in Europe right now? By a wide margin it is the broken emissions trading scheme, because it should the biggest and best way of cutting carbon emissions.
The idea of a cap-and-trade scheme is that the cap shrinks, requiring a progressive reduction in carbon emissions. Meanwhile the trade means that the cuts in emissions take place where they are cheapest, meaning the maximum benefit for the least cost………………………………………..Full Article: Source

Posted on 15 February 2013 by VRS |  Email |Print

President Obama laid out his vision for a vibrant America, one with jobs as bountiful as clean energy and a society that relies less on fearmongering and more on rational thinking. While creating jobs remains a top priority for the White House, there are plenty of hurdles that remain to garnering enough votes from both parties.
What if the political gridlock in Washington could end with both major parties emerging victorious while simultaneously reducing the deficit? What if the solution could also reduce the country’s emissions in 2050 to levels last seen in 1984?……………………………………….Full Article: Source

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