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Commodities Briefing 27.Mar 2013

Posted on 27 March 2013 by VRS |  Email |Print

After a slow and cautious 2012, mining M&A activity is expected to continue at a moderate and equally cautious pace in 2013 as metal prices stabilise and companies bet on a continued rise in commodity demand from countries such as China, according to the latest Mining Deals report by PwC.
It is also expected that this year, mega-mergers will be placed on the shelf while mining companies seek to prove that they are being prudent with shareholder dollars and are able to realise positive results on significant acquisitions made in the past few years………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Gold futures prices fell below $1,600 a troy ounce Tuesday for the first time since the Cyprus crisis erupted, as worries about the euro-zone member eased and as U.S. data pointed to economic recovery. A report showing increased gold purchases by the world’s central banks in February helped cushion the fall in futures prices.
The most actively traded contract, for April delivery, fell $8.80, or 0.6%, to settle at $1,595.70 a troy ounce on the Comex division of the New York Mercantile Exchange. The thinly traded March contract also ended 0.6% lower, at $1,595.80. This was gold’s first close below $1,600 since March 15, though futures prices had slipped below this psychologically important level in Monday’s trading………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Gold, trading little changed after dropping for three days, headed for the first back-to-back quarterly losses since 2001 as signs that the U.S. economy is recovering cut demand for the metal as a store of wealth.
Gold for immediate delivery was at $1,599.46 an ounce at 9:50 a.m. in Singapore from $1,600.05 yesterday. Prices have lost 4.5 percent this quarter as holdings in exchange-traded products fell 6.8 percent, the most on record. Bullion for June delivery gained 0.2 percent to $1,599.80 an ounce on the Comex………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

The average price of gold is expected to fall in 2013 for the first time in 11 years as fading fears of catastrophic market events prompt investors to scale back bullion purchases, commodities research and consultant CPM Group said. In its report released on Tuesday, the New York firm said it expects net buying by gold investors to drop for a second consecutive year and weigh on bullion prices, even though gold fabrication and central-bank demand will rise this year.
CPM Group did not put a figure on gold’s overall percentage price fall. In 2012, the price of gold rose 6 percent from 2011 to an average around $1,670 an ounce, it said………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

The average price of gold is expected to fall in 2013 for the first time in 11 years, as fears of catastrophic market events fade, prompting investors to scale back bullion purchases, commodities research and consultant CPM Group said.
In its report released today, the New York firm said it expects net buying by gold investors to drop for a second consecutive year and weigh on bullion prices, even though gold fabrication and central-bank demand will rise this year. CPM Group did not put a figure on gold’s overall percentage price fall. In 2012, the price of the yellow metal rose six per cent from 2011 to an average around $1,670 an ounce, it said………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Gold prices have fallen dramatically in recent months, and the industry as a whole could be in trouble. In fact, if the prices fall as low as $1,000 per ounce, half the industry could be worth absolutely nothing. Hedge funds have apparently lost their interest in gold, starting in the fourth quarter of last year.
Last year was the 12th consecutive year of increases for gold prices, although at this point, gold equities are at historically low valuations………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Gold prices are likely to stay within a range in the second quarter, given that the market has not reacted as expected to certain news events and that technical chart indicators are neutral, said a metals strategist at a French bank. The banking crisis in Cyprus and continued loose monetary policy by the Federal Reserve should have supported gold, but “instead the gold price only reacted mildly,” said Anne-Laure Tremblay, precious metals strategist at BNP Paribas.
“At face value, gold should have attracted safe-haven demand from greater risk aversion and the suggestion that Cyprus’ solution could be deployed in other eurozone member countries,” she said, but added that gold prices haven’t reflected this………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Given all the uncertainty in the global economy - debt issues, easing programs, unemployment, etc. - many investors have taken comfort in owning precious metals. Designed to protect against inflation and ambiguity in the markets, the asset class contains much appeal.
As such, gold, silver and even platinum and palladium have now become portfolio staples. While there is much debate over whether or not, investors should even own precious metals at all, there is a much bigger debate a-brewing. Just how should they get that exposure?……………………………………….Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

In the commodity world, lithium is a rising star as its use and prevalence has skyrocketed in recent years. Thanks to a wealth of new technologies, lithium is slowly becoming a staple metal for a number of products and industries.
As one of the lightest metals out there, lithium is used widely in pharmaceuticals, ceramics, aluminum, and a number of clean technology processes. Given its wide spread, it should be no surprise that the commodity has also grown as an investment in recent years………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

While the deal reached over the weekend to restructure the critical debt situation in Cyprus has been met with wildly disparate opinions from across the eurozone, it’s creating new standards that will affect both EU countries and the global economy.
As is so often the case when considering the global macroeconomic results of a situation like this one, the results are working to create competing forces within certain markets. Precious metals, including gold and silver, tend to be bolstered by weak economic conditions. Conversely, however, the turmoil in Europe is positive for the U.S. dollar — this is ultimately bearish for metals………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Copper rose in London on signs that manufacturing and housing are gaining in the U.S., the world’s second-biggest buyer of the metal used in wires and pipes.
Orders for U.S. durable goods climbed more than forecast in February on demand for automobiles and commercial aircraft, a Commerce Department report showed today. In January, the S&P/Case-Shiller index of property values in 20 cities climbed 8.1 percent, the most since June 2006. The increase exceeded the 7.9 percent median forecast in a Bloomberg survey………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Russia and South Africa, which together control about 80 percent of the world’s reserves of platinum group metals, plan to create a trading bloc similar to OPEC to control the flow of exports.
“Our goal is to coordinate our actions accordingly to expand the markets for realization of these metals,” Russian Natural Resources Minister Sergey Donskoy said yesterday in an interview at a summit of leaders from Brazil, Russia, India and South Africa in Durban. “The price depends on the structure of the market and we will form the structure of the market.”……………………………………….Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Economic benefits countered by environmental damage and fears over lopsided nature of trade relations with Beijing. Amazonian forest cleared in Ecuador, a mountain levelled in Peru, the Cerrado savannah converted to soy fields in Brazil and oil fields under development in Venezuela’s Orinoco belt.
These recent reports of environmental degradation in Latin America may be thousands of miles apart in different countries and for different products, but they have a common cause: growing Chinese demand for regional commodities………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

China will start a more flexible system for pricing domestic fuel from Wednesday - the first major revamp in four years - to help avoid shortages and tame consumption. The new scheme should reverse years of losses for China’s oil refiners, analysts said, by increasing the link with world crude prices and scrapping a rigid formula for altering prices for oil products, such as gasoline and diesel.
“This is a big milestone for the energy industry and big win for the refiners as the new scheme should lead to more market-driven prices, which will lead to improved profitability in the sector,” said Gordon Kwan, head of energy research at Mirae Aseet Securities in Hong Kong………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

China will adjust the prices of oil products every 10 working days to better reflect changes in the global oil market, the National Development and Reform Commission (NDRC) announced on Tuesday. Previously, domestic fuel prices were adjusted when prices for Brent, Dubai and Cinta crude changed by more than 4 percent over 22 working days.
The new pricing system also cancels the 4-percent floating band for oil price changes and adjusts the varieties of crude used to calculate the price changes for domestic oil products, the commission said at a press conference………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

As the broad markets are approaching their all-time highs, investors are gaining confidence over the riskier asset classes. As such, equities and equity ETFs are showing heavy inflows this year on the heels of improving global economic conditions.
In this backdrop, commodities like gold, agriculture and industrial metals have experienced some weakness due to a lack of investor interest and a strong dollar. The fears of a deepening euro zone crisis of late has also taken a toll on these commodities, hurting demand for raw materials, further adding to their woes………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Switzerland has sought to ­protect its central role in the commodities trading industry, rejecting calls for stringent regulation in the sector and opting instead to launch a consultation over a set of voluntary principles for the industry.
The Swiss government will publish on Wednesday a long-awaited report on the commodities industry, which includes groups such as Glencore, Vitol and Cargill with big offices in cities such as Geneva, Zug and Lugano. The report will stop short of calling for strict mandatory regulation, as campaigners have demanded, instead proposing a wide-ranging consultation about transparency and human rights, according to three people familiar with the discussions………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

Wall Street’s commodity trading revenues stand at just half of what they were in 2008. And the buying and selling of grains, metals, energy and other goods now accounts for a thin 6.5% slice of the overall trading revenue pie — down from 30% five years ago.
Banks used to rake in billions, not just from commissions but from their own trading book. Now, position limits and other regulations put in place by the Dodd-Frank Wall Street Reform Act have reined in those profits. Some companies have exited the business altogether. ……………………………………….Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

China and Brazil have signed a currency swap deal, designed to safeguard against future global financial crises. The pact, first announced last year, will allow their central banks to swap local currencies worth up to 190bn yuan or 60bn reais ($30bn; £20bn).
Officials said this will ensure smooth bilateral trade, regardless of global financial conditions. Along with being the world’s second-largest economy, China is also Brazil’s biggest trading partner………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

A thoughtful new paper from researchers at the University of Illinois marks a significant step forward in research on how commodity futures prices are formed. Until recently, the academic and policy debate about futures price formation has been locked in an acrimonious and polarized standoff between market fundamentalists, who insist all price moves reflect supply and demand fundamentals, and those writers who blame speculators for every rise in food and fuel prices.
Both views tend to be colored by the policy outcomes researchers favor. Anti-poverty campaigners focus on the role of speculation because they want governments to impose more controls on the cost of food and fuel. Free-market economists stress the role of fundamentals to deny governments any ammunition to meddle………………………………………..Full Article: Source

Posted on 27 March 2013 by VRS |  Email |Print

As the world watches China take the lead on a national carbon-pricing scheme, experts from Australia’s prestigious University of New South Wales (UNSW) will begin work with leading Chinese universities in a landmark collaboration to be announced in Sydney this week.
The collaboration will be announced at the Australia China Climate Change Forum at UNSW on March 27. It will be attended by senior Australian government officials and their Chinese counterparts. The forum will unite policy and technical experts in emissions reduction as well as representatives of major industries and businesses from both sides of a growing sphere of Sino-Australian cooperation………………………………………..Full Article: Source

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