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Commodities Briefing 27.Feb 2013

Posted on 27 February 2013 by VRS |  Email |Print

A downturn in China’s investment cycle could push down global prices for some commodities, such as iron ore, by up to 12 percent, according to a new study by Standard & Poor’s Ratings Services.
The study, titled The Investment Overhang: If China’s Investments Dip, Commodity Prices May Slip, found a strong correlation between movements in China’s investment-to-GDP ratio and prices for commodities such as iron ore and coal. Under our downside scenario for China, prices for a range of commodities could decline by between 5 percent and 12 percent, averaging a fall of 9 percent, S&P said………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

The oil & gas industry has experienced a good start to 2013 as improvements in the global economy has seen both the US Energy Information Administration (EIA) and OPEC raise their forecasts for global oil demand in 2013. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has gained over 6 percent year-to-date.
The EIA has raised its 2013 growth forecasts by 110,000 barrels per day (bpd) to 1.05 million bpd in 2013. Global oil demand is now expected to total 90.2 million bpd this year. The increase follows a report from OPEC earlier in the week projecting oil demand to increase by 840,000 bpd, 80,000 bpd higher than its previous estimate. Prices for Brent crude have gained approximately 10 percent year-to-date hitting a 10-month high of over $118 a barrel………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Singapore is the most likely hub for trading liquefied natural gas and reducing the government interference that keeps Asia’s prices higher than anywhere else in the world, according to the International Energy Agency.
A new LNG terminal in Singapore, set to receive its initial cargo from Qatar in the first quarter, will serve a wide array of tankers and boost import capacity “far beyond” domestic consumption, the IEA said today in a report. The city-state, Asia’s oil-trading center, is also creating an example for Asia by unbundling transmission from other gas and power infrastructure and taking a “hands off” approach, according the IEA, an energy adviser to 28 nations………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Asia is on course to become the world’s second largest gas market, after North America, by 2015, a new report from the International Energy Agency says. Yet the future role of gas in Asia “will depend considerably on how the pricing of natural gas is tied to the fundamentals of supply and demand in the region,” said IEA Executive Director Maria van der Hoeven Tuesday as she released the “Developing a Natural Gas Trading Hub in Asia” report in Tokyo.
Natural gas trading in the region predominately relies on long-term contracts in which the price of gas is linked, or indexed, to that of oil………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Noting that Gold’s correlation with traditional drivers has weakened, Barclays has projected Q1 2013 gold prices at $1710/oz and annual average at $1778/oz in a report.
As alternative yield-bearing assets have outperformed, gold’s safe-haven appeal has lessened. Gold’s correlation with equity markets was stronger last year, but the negative relationship with US 10y Treasuries has strengthened, the report noted………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

After drifting 4.7 percent, Chinese platinum bar turned out to be the biggest mover on the weekly Global Precious Metals MMI. The price of US platinum bar decreased 4.3 percent from the previous week. Japanese platinum bar dropped 4.2 percent.
The price of Japanese palladium bar increased 2.5 percent this week, closing out the fourth consecutive week of rising prices. Following a 0.3 percent increase in the week prior, the price of US palladium bar fell 2.3 percent last week. Chinese palladium bar fell 2.2 percent over the past week………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

The price of silver futures contracts have been regularly flirting with a state of backwardation ever since the 2008 Financial Crisis, which is a sign of a growing physical silver shortage. A state of backwardation occurs when the front month silver futures contract commands a price premium to the subsequent months’ contracts.
On one hand, this situation could actually provide larger traders who own the physical silver with an opportunity to simultaneously sell it and purchase futures contracts to recover their metal holdings for a net profit………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

With the volatility in commodity pricing, labour unrest, community opposition to projects, and reduced shareholder value. Few people could say that 2012 has not been a tumultuous year for mining with continued pressure on the world’s consumer markets.
The industry has had to deal with a variety of issues, including: volatile commodity pricing, depressed shareholder value, aggressive stakeholders evicting management (most conspicuously in South Africa and Canada), violent labour unrest (most conspicuously in South Africa and Australia), continuing consolidation in the sector through mergers and acquisitions and high profile community opposition to advanced projects across the globe, most recently in South Africa around ‘fracking’ and in Malaysia around supposed radiation poisoning………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

State Street Global Advisors (SSgA) has received regulatory approval to allow Hong Kong MPF scheme providers to invest in its gold exchange-traded fund, coinciding with a tumble in bullion prices.
Workers contributing to the city’s Mandatory Provident Fund (MPF) can now gain exposure to the world’s largest gold bullion-backed ETF (and second largest ETF globally), which had $72 billion in AUM as at December………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

The last few months have been terrible for gold ETFs. Prices have plummeted for precious metals as investors have been much more willing to take on risk, while outflows out of these products have been enormous as well.
By some estimates, the ultra-popular GLD has seen more than $4 billion in outflows during the year-to-date period, including $2.55 billion in the past week alone. While this might not seem like a huge number, investors should note that this is nearly five times greater than the 2nd biggest outflow for the time period (FXI), and that it is in sharp contrast to broad stock ETFs in the same time frame……………………………………….Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Horizons Exchange Traded Funds Inc. (Horizons ETFs) and its affiliate AlphaPro Management Inc. (AlphaPro) are pleased to announce the launch of the Horizons Auspice Broad Commodity Index ETF (HBR), an innovative alternative strategy ETF that offers investors diversified, tactical long exposure to up to 12 different commodity futures in the energy, metals and agricultural sectors.
HBR is designed to track, before fees and expenses, the Auspice Broad Commodity Excess Return Index (the Auspice Index), hedged to the Canadian dollar. The Auspice Index is a commodity futures based index developed by Calgary-based Auspice Capital Advisors Ltd. (Auspice). Auspice is a leader in the design and execution of systematic commodity trading strategies in Canada, and a seasoned manager of commodity risk.(Press Release)

Posted on 27 February 2013 by VRS |  Email |Print

Gold ETFs have rebounded somewhat early this week with the precious metal testing $1,600 an ounce following two weeks of declines. SPDR Gold Shares (GLD) is down 9% over the last three months.
Gold futures have been under pressure recently on lower safe-haven demand as the global economy recovers, reports Debarati Roy for Bloomberg. Gold dipped below $1,600 on speculation the Federal Reserve will wind down its quantitative easing earlier than anticipated………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Bloomberg news just reported that Hedge Funds cuts their bets on Gold ($GLD) , and became the most bearish on agricultural commodities since 2007 such as sugar and coffee. Hedge Funds are spooked that the Federal Reserve will slow the U.S. stimulus programs that have artificially raised prices for raw materials.
Please don’t get caught up trying to buy a dip in Gold ($GLD) or any other commodities, countless Academic research has proven that hedge funds inflows and outflows into commodities tracked by the Commitment of Traders Report have predicted major price moves. Money flows are very important and the “smart money is all out dumping Gold ($GLD) Silver ($SLV) and agricultural commodities ($DBA)………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Bovespa stock-index futures fell as commodities declined on concern Italy’s elections may reignite Europe’s debt crisis, curbing global growth and demand for Brazil’s exports.
State-controlled oil company Petroleo Brasileiro SA (PETR4) retreated in Frankfurt trading as oil reached a seven-week low in New York. Water utility Cia. de Saneamento de Minas Gerais may be active after reporting profit that beat estimates………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Asset manager Threadneedle Investments has launched the Columbia Threadneedle SICAV-SIF Absolute Commodities Fund that aims to target a 10%-15% return on an annualized basis, net of fees, on a long term investment horizon.
Threadneedle launched its first commodities strategy in 2010 and currently manages in excess of US$1 billion.The Columbia Threadneedle SICAV-SIF Absolute Commodities Fund will be managed by Nicolas Robin, who joined Threadneedle in 2010 and has over 12 years’ experience in long/short commodities and index trading. He co-manages the US$1 billion Threadneedle (Lux) Enhanced Commodities Fund with David Donora. Since launch, the Threadneedle (Lux) Enhanced Commodities Fund returned 33.2% compared to the index return of 10.8%………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

More than 75 environmental organizations on Monday urged the European Parliament to end the European Union’s Emissions Trading Scheme, launched seven years ago as a market-oriented way of reducing pollution and greenhouse gases.
The parliament is due to vote Tuesday on a plan by the European Commission to overhaul the ETS with the aim of reversing the trend that has seen the price of carbon permits plummet 75 percent in the last five years. Instead of reducing discharges of CO2, the ETS has “diverted attention from the need to transform the system’s dependency on fossil fuels and growing consumption, resulting in increased emissions,” according to Joanna Cabello of Carbon Trade Watch………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Dismal prices in the European Union Emissions Trading System are causing interest in the world’s largest emissions market to wither away. While the European Commission has come up with a plan to put it on life support, analysts say there is a 50:50 chance it could be blocked – a decision that would ultimately lead to the scheme’s demise.
To many observers, the European Union Emissions Trading System (EU ETS) is a shining example of bold collective action by national governments aimed at achieving a noble common cause – the reduction of harmful greenhouse gas emissions and the slowing of climate change. To others, the EU ETS serves as a cautionary tale of the various pitfalls and banana skins that crafting a traded emissions market can bring………………………………………..Full Article: Source

Posted on 27 February 2013 by VRS |  Email |Print

Ecuador will introduce plans for a small carbon tax on oil at the May meeting of the Organisation of Petroleum Exporting Countries (OPEC). The initiative would see a 3-5% tax levied on every barrel of oil exported to rich countries. Funds would be transferred directly to the Green Climate Fund (GCF), and Ecuador believes it could raise up to US$80bn a year.
Speaking to RTCC on a visit to London, Ecuador Ministerial Advisor Daniel Ortega said hopes were high it would be accepted by the world’s larger oil producers in May………………………………………..Full Article: Source

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