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Commodities Briefing 23.Apr 2013

Posted on 23 April 2013 by VRS |  Email |Print

Over the past week, I’ve seen two sides to the commodities sector. In the central business district of Perth, Australia, there is little evidence that the boom is ending. Restaurants with prices high enough to scare off well-fed bankers were full, and service was woeful – reflecting a scarce pool of workers after the mining rush, and heady wage inflation even for low-skilled positions.
But I flew back into London just as commodity markets started tanking, led by a violent fall in gold prices, with bullion clocking up its sharpest one day drop since the 1980s (the price has since risen, but has not regained all its former ground)………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Morgan Stanley sounded a bullish note on commodities, even as, in agriculture, regulatory data showed hedge funds curbing negative positioning, with a large cut in bets on falling sugar prices.
Commodities “could see notable performance from here”, and “even outperform”, if sentiment towards the sector, and its fundamentals improve as expected, the bank said, following a sell-off in many raw materials to multi-month lows………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Canada emerged from the financial crisis with hardly a scratch, but it is going to find the global economic recovery a lot more difficult.
The stock market has been suggesting this for the past two years. The S&P/TSX composite index has fallen more than 13 per cent since April, 2011, while benchmark indexes in the United States and Japan have enjoyed double-digit increases and even German and U.K. indexes have shown slight gains………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

A sharp fall in commodity prices across segments in the past couple of months is expected to rescue India Inc from shrinking profitability in 2013-14.The fall is 15-20 per cent. Metal prices in India have fallen by seven to 10 per cent during the period.
Since mid-February, the commodities market has seen a reversal following the European debt crisis and fear of an early phasing out of the US Fed’s quantitative easing programme………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Crude can move either side of $100 a barrel with neither direction currently dominating, aside from a longer term bias for gradual gains, said the head of Vitol Group, the world’s largest privately held oil trader.
Brent crude futures sank below $100 on April 16 for the first time since July and have oscillated either side of that level in the days since, trading at $100.53 at 12:58 p.m. London time today on the ICE Futures Europe exchange………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Iran may seek OPEC’s top secretary-general position after Riyadh backed away from the position, Iranian Oil Minister Rostam Qassemi said.
Qassemi said he’s heard suggestions that Saudi Arabia may pull out of the race for the secretary-general post at the Organization of Petroleum Exporting Countries. Former Libyan Oil Minister Abdalla Salem el-Badri serves as OPEC secretary-general………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

A flurry of recent reports on the renewable energy sector suggest that, while global investments are down from 2011 records, most of the major economies continue to support a low-carbon economy.
China last year attracted more than $60 billion to its renewable energy sector, passing a U.S. market that saw a 37 percent decline during the same period. At the same time, carbon dioxide emissions have reached new highs, according to the International Energy Agency. Nevertheless, the renewable energy sector was able to weather the global economic storm by showing some resiliency………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Gold was up today after a long slide last week. The precious metal has decreased significantly in price since Goldman Sachs recommended investors short the asset. Today Goldman is out with a new report on bubbles.
While the report focuses on bonds, Goldman devotes a short section to gold. Goldman concludes that gold (at least the ETF) could possibly be classified as a bubble. Below is the excerpt on the commodity followed by the full document in scribd:The recent pronounced decline in gold prices clearly brings into question whether the gold market is a bubble in the midst of bursting………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

The violence of the fall in the gold price has taken investors by surprise and has understandably led to questions about whether this is a short-term correction driven by technical and hedge fund-led speculative activity or if it signals the end of the 12-year gold bull market.
In our view it was a classic case of speculative investors taking advantage of gold-negative fundamental news and technical break-points to drive a self-fulfilling downward cascade of the gold price………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Gold miners in Western Australia are calling on the State Government to provide the sector with royalty relief until prices improve.
The managing director of Pilbara miner Northern Star Resources, Bill Beament, says many of the state’s gold miners are high cost producers struggling to make money amidst wildly fluctuating values………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

The silver price took a beating last week, losing 17% of its value over a two-day period in the midst of a gold market collapse.
Continued US equities gains, a relatively strong dollar, major ETF sell-offs, Cyprus’ plan to sell gold reserves, and the breach of the $1,500 technical support level were all part of the gold meltdown story………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Silver prices may average $26/oz in 2013 and $24/oz in 2014 and find better support at lower levels as industrial demand recovers, stated London based Barclays in its recent market analysis.
However, the market is set to deliver yet another sizeable surplus in 2013. In turn, growth in investor demand will be, yet again, key in driving prices higher………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

The macro backdrop remains gold-supportive, and prices may average $1500/oz in the fourth quarter of 2013. Also, for 2013, prices are expected to average $1483/oz, stated London based Barclays in its recent market analysis.
Demand from India and China has responded strongly to lower gold prices but, according to Barclays, given the sizeable cash-negative ETP holdings at current price levels, the near term looks fragile and prices could be exposed to further downside risk………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

As if the past two month’s 13% decline in copper prices wasn’t enough to signal waning confidence in the metal, analysts have also started to scale back forecasts. The latest blow to copper came on Monday, when senior metals analyst at Goldman Sachs Max Layton cut the three-, six- and 12 -month forecasts, citing resurfacing Chinese growth concerns, technical factors turning bullish and a broader metals selloff that has added pressure on prices.
The forecasts were lowered to $7,500 per tonnes from $8,000 on a three-month basis, to $8,000 from $9,000 for six months and to $7,000 per tonnes from $8,000 for 12 months………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

World crude steel production for the 63 countries reporting to the World Steel Association (worldsteel) was 135 million tonnes (Mt) in March 2013, an increase of 1.0% compared to March 2012.
In the first three months of 2013, Asia produced 259.8 Mt of crude steel, an increase of 6.4% over the first quarter of 2012. The EU produced 41.5 Mt of crude steel in the first quarter of 2013, down by -5.4% compared to the same quarter of 2012. North America’s crude steel production in the first three months of 2013 was 29.7 Mt, a decrease of -5.7% compared to the first quarter of 2012………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Alternative strategies have been growing in popularity after the financial crisis but investors have been slower to adopt the ETF wrapper.
“At least two firms are looking for help to boost assets in their languishing alternative strategy ETFs,” Ignites.com reports………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

JPMorgan Chase & Co. (JPM) and Barclays Plc (BARC) were the top firms for providing over-the-counter commodity derivatives to companies hedging energy and metals exposure, while investors favored Goldman Sachs Group Inc. (GS), a Greenwich Associates survey found.
Barclays and JPMorgan, which tied for No. 1 position, had relationships with 39 percent of the global corporations surveyed about their OTC dealers to hedge energy exposure, ahead of Goldman Sachs and Morgan Stanley (MS), the survey found. JPMorgan also led in metals. Among investors, 59 percent said they had a relationship with Goldman Sachs, 54 percent named JPMorgan and 47 percent used Barclays………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

What goes up must come down: currencies of commodity exporting nations have taken a hit along with commodity prices on concerns that the commodities “supercycle” may be over.
Worries about slowing economic growth, especially in China, have sent raw material prices into decline over the past week. Gold suffered its worst two-day drop in 30 years, falling to the lowest level since January 2011, while Brent crude oil dipped below $100 for the first time in nine months………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Those pressing for a yes vote in next year’s referendum on Scottish independence need to convince voters that the country will prosper under a new currency and macro-economic regime. This will prove difficult, not because the current system is perfect but because all options have drawbacks.
A Treasury paper published puts the case for the status quo. Although some in Scotland might cavil at the claim that the UK is one of the most successful monetary, fiscal and political unions in history, first minister Alex Salmond understands the sensitivity of this issue………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Last week, Nomura International exited its long USD/INR position – betting on the dollar strengthening vis-a-vis the rupee – and initiated a $1 million USD put / INR call spread positions to capitalise on a potential near-term improvement in investor perception, leading to a rupee rally.
Global investors are getting increasingly positive on the rupee as the recent slide in commodity prices, coupled with improving domestic macros, has raised hopes of a resumption of foreign flows, which could benefit the local currency………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

On a showery afternoon last week in West London, a ripple of enthusiasm went through the trading floor of CF Partners, a privately owned financial company. The price of carbon allowances, shown in green lights on a board hanging from the ceiling, was creeping up towards three euros (S$4.85).
That is pretty small change - US$3.90, or only about 10 per cent of what the price was in 2008. But to the traders, it came as a relief after the market had gone into free fall to record lows two days earlier, after the European Parliament spurned an effort to shore up prices by shrinking the number of allowances………………………………………..Full Article: Source

Posted on 23 April 2013 by VRS |  Email |Print

Plummeting European Union carbon prices following a key EU vote seem to demonstrate in the clearest terms that cap and trade is doomed to fail. After all, “if carbon trading can’t make it in Europe, it can’t make it anywhere,” said Bryan Walsh of Time.
But declaring the death of carbon markets and cap and trade policy over Europe’s struggles is a knee-jerk reaction which overlooks significant developments for carbon trading around the world – ones which could ultimately rescue the EU and cement cap and trade as a global climate change solution………………………………………..Full Article: Source

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