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Commodities Briefing 20.Feb 2013

Posted on 20 February 2013 by VRS |  Email |Print

OPEC may be extending the longest stretch of production cuts since the 2009 global recession as fewer oil tankers are booked to ship Middle East crude to Asia, according to Morgan Stanley.
Hiring of supertankers from the world’s largest export region slumped 33 percent from a year ago, Fotis Giannakoulis, a New York-based analyst at the investment bank, said in an e- mailed report today. The 12 members of the Organization of Petroleum Exporting Countries already cut output for five months, most recently by 1.7 percent to 30.5 million barrels a day in January, estimates compiled by Bloomberg show……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

China is on track to produce enough crude oil outside its borders to rival Opec members such as Kuwait and the United Arab Emirates, after its state-owned oil companies spent a record $35-billion (U.S.) buying foreign rivals last year.
In the first tally of the impact of China’s recent overseas oil investments, the International Energy Agency calculates China’s national oil companies will produce 3 million barrels a day abroad in 2015, double their 2011 overseas output of 1.5m b/d and equivalent to Kuwait’s annual output……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

The International Energy Agency remains largely in the dark over the real pace of China’s surging oil demand despite long-running attempts to persuade the county to publish official data on consumption and oil stocks, the IEA’s top energy security official said Tuesday.
China continues to turn down requests for information on its oil demand and stock levels in particular, as the country believes it is in its best interest to keep data on sales and releases from its growing strategic petroleum reserves a secret, Keisuke Sadamori told an oil conference in London……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

The uncertainty over monetary policy has been the largest factor preventing the next break out in gold prices. Precious metal spot prices and exchange traded instruments that track them like GLD and SLV have been under immense pressure for months, following years of relatively steady inclines.
That is not to say hiccups or stagnation like the present situation are unparalleled in recent history. In fact much steeper negative volatility has plagued the metal markets over the last decade’s bull run, but declines and stagnation have always been temporary as the credit markets wrestle with the conviction of monetary policy until it distinctly settles……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Gold’s steady decline from early October to a six-month low has many analysts wondering aloud if the long bull market is over. We don’t think so.
There has been a cascade of factors over the past five months driving gold down from what was arguably an exaggerated high, culminating in a series of news this past week. Improving U.S. economic reports along with a strong global stock market, has led to a sense that gold was no longer so necessary…………………………………..Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

The World Gold Council released its Gold demand analysis for the 4th quarter of 2012. In 2012 total demand reached an all-time high of $236.4 billion; although on a tonnage basis it declined by 4per cent to 4405.5 tones. Global ETF demand increased by 51% compared to 2011.
One important trend to be noted worldwide is that this annual demand for gold was coming from central banks and institutional investors. Central Banks added 534.6 tons to their reserves. In the fourth quarter of 2012, gold demand in tonnage terms declined by 4% wherein demand from the above mentioned parties had offset the consumer demand……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Investors could do well to invest in silver in 2013, according to ETF Securities. “Silver is a hybrid metal and is likely to receive strong support in 2013, as industrial demand rebounds at the same time as we are seeing strong investor appetite for precious metals to hedge economic uncertainty,” explains Martin Arnold, research director at ETF Securities.
The precious metal’s spot price could rise from its current $31 per troy ounce to nearer $40 through the course of the year, according to a Bloomberg survey of 49 market insiders. And some commentators believe it could even reach $50 per troy ounce……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

The mining and metals industry is suffering from a “capital strike” with funds raised by a former favourite of investors over the past decade falling 25 per cent last year amid falling commodity prices.
Mining and metals companies raised $249bn in 2012, down from $340bn in 2011 because of a sharp drop in proceeds from initial public offerings and bank loans, according to consultants Ernst & Young. “The capital strike by many mining and metals companies in the face of rising costs and softer prices in 2012 will continue until commodity prices recover sufficiently to encourage new investment,” Lee Downham of Ernst & Young said……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Aluminium prices are likely to trade close to the $2,000/tonne mark this year on the back of a 1.8 million tone surplus, Barclays says.
But, it says, while the above fundamental narrative is a simple one, it belies a number of significant distortions that mean the metal is “generally viewed in far more uncertain terms by market participants in 2013″ than it would be otherwise……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Until more constraint is seen in Indonesian export levels or the Chinese market re-tightens enough to support a rebound in import levels, the market is likely to remain in surplus, stated a recent market outlook by London based Barclays.
In Indonesia, January exports increased 70% y/y, to 9.2Kt, 1Kt above the 2012 monthly export average. This was achieved despite PT Timah reporting disruptions to production from monsoon conditions at the turn of the year. It is still unclear what the volumetric impact of new minimum-purity tin ingot export rules will have on exports when they are applied from July this year. This is likely to be a key risk to a significant lightening in H2……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

There has been much talk of a shift from bonds to commodities under way since the middle of 2012, and indeed Authers produced a review on the topic with Barclays’ head of research just this week.
Yields on bonds and even debt have become so low that investors are said to be switching into equities for better returns. Of course, the move would not take place without an improvement in sentiment. Twelve months ago, only the very brave would have invested in European equities, but today sentiment is more confident and the risks perceived to be lower……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Exchange-Traded Funds (ETFs) have taken the investment world by storm. First introduced in 1993, by the end of 2012 ETFs had attracted some $1.3 trillion in assets. As a follow-up, investment banks have launched a slew of other exchange-traded products (ETPs) that are substantially more risky that the standard ETFs, but whose downside is seldom made clear to retail investors.
One big source of potential confusion is ETNs (Exchange-Traded Notes). Introduced in 2008, these vehicles have already amassed some $500 billion in assets. But they are a far cry from ETFs. Below, we take a closer look at ETFs and ETNs, so you know what you’re getting into……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Oil and gas services exchange traded funds have soared 30% or more the past three months and a recent bullish note from Goldman Sachs is helping to drive the rally. Companies are simply flush with cash, which is raising prospects for higher dividend payouts.
“Following four quarters of sequential declines in North American drilling activity and oil service profitability, January is marking a turnaround in activity,” Goldman’s equity analysts wrote in a report. “Revenues/margins for North American service companies either bottomed in fourth-quarter 2012 or are expected to bottom in first-quarter 2013, marking a major inflection for the group.”…………………………………..Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

The value of commodity holdings by the California Public Employees’ Retirement System, the largest U.S. pension fund, fell 0.7 percent in December from the previous month, according to the most-recent data available.
The fund held $1.577 billion in commodities as of Dec. 31, or 0.6 percent of the total assets listed at $248.775 billion, according to a monthly report on today’s agenda for the fund’s investment committee meeting……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Cleartrade Exchange, the Asian Regulated Futures Exchange, today launched its new Data Centre web portal. The CLTX Data Centre is the only free-to-market portal which consolidates market information for freight and commodity derivatives contracts.
The Data Centre combines daily data from major clearing houses, providing users with the ability to see daily traded lots and open interest figures for the whole market, on all delivery periods. In addition to this users are able to use a customisable charting and data export function to compare historical daily figures for individual or multiple delivery periods……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

A windfall from the sale of shares in the London Metal Exchange, acquired from collapsed broker MF Global, has helped swing the European arm of one of the world’s largest commodities brokerages into a profit.
INTL FCStone Europe Ltd, the London-based arm of commodities broker INTL FCStone, had been on track to post an operating loss of just over $7m for the 12 months ended December 31, according to accounts filed with Companies House last week……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Anyone hoping the return of China to the trading fold after the week-long lunar new year holiday would invigorate the commodity sector will be disappointed by the price action of recent days. On Tuesday, copper led the industrial metals lower, sliding to a three-week trough near $3.67 a pound.
Trading Post last week highlighted how commodities had lagged behind the recent equity market rally. Again there is talk of the end of the resources supercycle. A hotly debated point……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

The Turkish lira fell to its weakest level against the dollar in more than a month Tuesday after Turkey’s central bank cut interest rates. While Turkey’s central bank was widely expected to ease monetary policy, its moves Tuesday were seen as being slightly more aggressive than expected.
The central bank cut its overnight borrowing rate to 4.50% from 4.75%, and its overnight lending rate to 8.50% from 8.75%, while keeping its one-week benchmark interest rate steady at 5.50%……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

The options market is signaling the threat of a breakup in the 17-nation euro bloc is disappearing as the price of insurance against wild swings in the region’s single currency fall to a five-year low.
Butterfly options that protect against both gains and declines slid to the lowest since March 2008 on Feb. 4. Implied volatility on three-month options on the euro-dollar exchange rate has risen about half as much as a broader gauge of currency volatility this year……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Europe’s emissions-trading system, the world’s largest carbon cap-and-trade scheme, survived a near-death experience on February 19th. The environment committee of the European Parliament voted to support a plan proposed by the European Commission, the European Union’s executive arm, to take 900m tonnes of carbon allowances off the market for up to five years. Had it rejected the plan, the market might have collapsed.
The proposal would reduce some of the massive overcapacity in the ETS, which has driven the price of carbon down from almost €30 a tonne in 2008 to about €5 this year……………………………………Full Article: Source

Posted on 20 February 2013 by VRS |  Email |Print

Lawmakers in Brussels moved on Tuesday to shore up the sagging market for carbon emissions permits, a central component of the European Union’s efforts to reduce air pollution.
Prices of carbon allowances, which let companies emit greenhouse gases, fell last month to as low as 2.80 euros, or about $3.75, a metric ton, compared with 9 euros a ton a year ago and 30 euros a ton in 2008. To reduce the supply of permits and drive up the price, the environmental committee of the European Parliament voted to allow the European Commission to reduce the number of allowances to be auctioned over the next three years……………………………………Full Article: Source

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