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Commodities Briefing 29.Apr 2013

Posted on 29 April 2013 by VRS |  Email |Print

The US data has improved from last year, Guillaume Menuet of Citi believes that that underlying fundamentals in the US are recovering steadily. However, concerns relating to lack of fiscal deal remain.
“When you look at availability of credit, market matrix, unemployment, everything is pointing towards a recovery gaining momentum in the second half of the year,” he said………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Although the speed and scale of the fall has raised eyebrows, it may be that the world is simply entering a seasonal soft patch, as it did last year. And there are hardly any signs of a major investment shift away from risky assets.
If anything, the sell-off may work in favour of investors who like riskier assets, as cheaper raw materials could allow major central banks such as the Federal Reserve and the Bank of Japan to carry on pumping cash without stoking inflation………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Macquarie Research, a unit of Macquarie Group, said that despite China’s economic growth, apparent demand for metals remained weak, particularly in the US, Europe and South Korea.
“Certainly, industrial production is stuttering rather than accelerating and metal consumers are maintaining minimum working capital — this situation should improve as lead indicators rise. However this process does not seem aggressive enough to drive commodity prices,” it said.The bank cut its 2013 copper price forecast by 5.2 per cent compared with its January forecast, to $US7459 a tonne, and cut its 2014 copper price forecast by 14.7 per cent to $US6550 a tonne………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Just this month Saudi Aramco announced that production had begun at their Manifa oilfield, and by July would be supplying up to 500 kbd to the new refinery that is being built at Jamail with the collaboration of Total. The first oil from the refinery is expected to ship in August, and both projects are currently ahead of schedule.
Manifa will further increase in production next year, to 900 kbd, with the additional flow going to the Yanbu refinery being built with the collaboration of Sinopec. Both these refineries are designed to take heavy crude, and can also accept oil from the ongoing projects to expand production at Safaniya. Collectively this is said to ensure that the company will be able to achieve a maximum sustainable production of 12 mbd………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Indeed, Saudi Arabia and the UAE are among the countries most vulnerable to an oil price shock, the bank says.Brent crude prices have declined 12.5% this month alone, as traders worry about declining demand and rising output notably from the United States, the North Sea, Canada, Iraq and Libya.
Overall, Brent has lost 6.9% in 2013, ending the third week of April at USD 102.41 a barrel on the London-based ICE Futures Europe exchange………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

The spot gold price was holding onto its strong gains last week to hover around the $1,465 an ounce level in European trading on Monday.Gold suffered a $200-plus decline that began on Friday 13 April and accellerated into Monday when the metal dropped to multi-year lows of $1,326 an ounce.
Gold’s recent push higher breached important technical levels and the 50% recovery of recent losses is also a bullish signal for the gold market………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

HSBC lowered its gold forecast for this year and next on Friday, saying the recent tumble in prices for the yellow metal has dealt a severe blow to investor confidence, which may take many months to restore.The bank cut its 2013 gold price forecast to $1,542 per troy ounce from $1,700 and the 2014 price outlook to $1,600 per troy ounce from $1,720.
The bank, however, expects gold prices to stabilise after the recent rout as retail demand for gold lends support with rising jewellery and gold coin purchases from Asia………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Gold prices are up 6.8% from recent 26-month lows, but there is evidence that these gains are temporary, traders and analysts say.A rush to buy physical gold and jewelry in India and China helped prices bounce higher last week. But at the same time, financial investors were leaving the market.
Gold held at exchange-traded funds, which trade and store the metal on the investors’ behalf, continued to decline as investors sold their shares. In addition, Comex open interest, the number of futures contracts left open overnight without offsetting transactions, were dropping, a sign investors are moving to the sidelines………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Many parallels have been drawn between current moves in gold and the events of 1971 to 1980.But, the World Gold Council argues, this recurring comparison is, “a simplistic and flawed parallel”.In the latest edition of its Gold Investor publication, the WGC says the two periods are characterized by different price performance and remarkably dissimilar fundamental drivers.
During the 1970s, the advent of fiat currencies made gold a free-floating market while private gold ownership was once again permitted in the US. During that decade, oil prices spiked and tensions in the Middle East rose, leading to hyperinflation and instability………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

“The fundamentals for gold are unassailable, the long technical picture is excellent and gold remains very inexpensive when compared to almost every other alternative (most particularly, bonds, treasury bills and bank deposits). With currency debasement assured and some form of hyperinflation probable, gold should trade at several multiples of the current price before this bull market reaches its end.” John Embry, Chief Investment Strategist for Sprott Gold and Precious Minerals Fund.
Not according to my most recent interview with John Embry, (Sprott Asset Management, Chief Investment Strategist), “I am absolutely sure the gold and silver bull market has not ended. If you don’t like gold prices here, then you must like the value of paper money and you’re getting next to zero interest on it.”……………………………………….Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

After being stuck in a tight range following its plunge about 9 trading days ago, silver finally responded to gold’s creeping advance and ‘popped’ on Thursday, but it was not that impressive and was followed by a rather negative ’spinning top’ candlestick on Friday, meaning that it could have been a 1-day wonder especially given that gold’s relief rally looks to be about done.
We can see recent action in detail on the 8-month chart below. On this chart we see that once silver crashed key support at and above $26 it plunged on very heavy turnover, which was bearish. The current minor relief rally is serving to unwind the oversold condition and thus creating the conditions for renewed decline………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

What happened on Friday, April 12 and Monday, April 15 on gold and silver markets looked like a gigantic earthquake – a drop of about $200 (13%) for the yellow and almost $5 (18%) for the silver metal. There has been a lot of hyperbole going on. We even heard it said that a move of that scale would statistically only be expected “once every 4,776 years.”
Going even further, John Kemp of Reuters calculates that, based on a normal distribution (by the way, market returns are not normally distributed), movements like this can be expected once in every 500 million trading days, or two million years. Sounds far-fetched?……………………………………….Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Palladium prices may average $748/oz in 2013, and rise to an annual average of $795/oz in 2014, stated London based Barclays in its recent market analysis.
“We forecast the palladium market to remain in deficit for a second year, and we do not see this as a short term phenomena. We believe this will be the start of serial annual deficits for the market,” it added.From a deficit of over 1Moz in 2012, Barclays expects the palladium market to deliver a deficit of 700koz in 2013, followed by 639koz in 2014………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Futures contracts in most metals traded on the London Metals Exchange spiked on Friday, rebounding from falls earlier in the week following worries over Chinese growth. Copper futures smashed through an 18-month low on Tuesday, trading below $7,000 a tonne.
Manufacturing activity in China had dipped, prompting concerns that the major driver of global growth was about to stall. Indeed, China is responsible for 40pc of global refined copper demand, so any slowdown will hit demand for the metal particularly hard………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Over the next couple of weeks it appears likely that the base metals complex may see some short-covering as Chinese merchants/speculators square positions heading into holidays early next week (May Day), stated Frankfurt based Deutsche Bank (DB) in its recent market analysis.
Furthermore an exhaustion in selling by Western funds concerned about disappointing economic growth appears to have been reached.The magnitude of buying may depend partially on how CTAs respond and, of course, if there is an improvement in economic data after the recent disappointment – certainly the recent jobless claims data from the US is easing concerns………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

European ETP assets are set to exceed $900bn by 2017 as regulation, wider adoption of wraps and the increasing illiquidity of fixed income products makes them more attractive investment propositions, according to analysis by BlackRock iShares.Sector assets stood at around $387bn at the start of the year, and are set to more than double over the next five years as the market plays catch up with its US counterpart.
Mark Wiedman, global head of iShares, said: “The growth of the ETP industry has much further to go. Compared to the market size of other investment vehicles in segments such as securities, mutual funds and derivatives, ETPs have huge headroom for growth, even in the more mature markets of Europe and the US. It’s a very exciting time for investors and providers alike.”……………………………………….Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Barclays expect gold prices to recover to an average $1,500/oz in Q4 13 but given the weight of cash negative ETP holdings, they believe downside risk still exists in the near term, and expects prices to average $1350/oz.
The key question here will be whether physical demand can continue to offset ETP outflows, which have shown no sign of slowing down. Gold ETP outflows have continued, hitting 150 tonsso far in April, bringing year-to-date outflows to 310 tonnes. This compares to net inflows of 279 tons in 2012, and outflows represent 11% of the peak holdings at the start of the year of 2767 tons………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

Sweeping changes to financial advice rules, including the banning of commissions, will fuel Australia’s ETF sector, which grew 30 per cent last year to $6.5 billion and is forecast to grow to $17 billion over the next three years.
ETFs - which are traded on the stock exchange and are designed to track a particular share index, commodity or other type of asset - have only been available in Australia for 12 years. From just one ETF in 2001 that tracked the ASX 200 index, there are now more than 90 of them investing across shares, property, cash, bonds and commodities such as gold………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

The growth of commodity futures markets in India has helped farmers in dismantling powerful trading cartels in commodities like potato and mentha oil apart from helping them in taking more broad-based decision on production, storage and marketing of farm produce, a study conducted by Tata Institute of Social Sciences in association with MCX showed.
The study which analyzed the contribution of commodity exchange ecosystem on economic development showed that commodity futures exchanges have facilitated a number of brokers, traders and producers, who are first generation economic beneficiaries of commodity markets and they have expanded their business with growing opportunities………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

China’s central bank has been talking tough on currency reform while it has also intensified market intervention, highlighting the fine line it must walk in trying to liberalize the yuan.
Critics, including the United States, see the intervention as another sign that Beijing is dragging its feet in letting market forces determine the yuan’s exchange rate.But the wall of money being printed by China’s trading partners under their super-loose monetary policies is flooding emerging markets with speculative cash, which has put the yuan under strong upward pressure this year………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

The diplomatic communiqués that follow international summits are rarely noteworthy. They have to be acceptable to everyone, so tend toward the lowest common denominator. But the Group of 20’s most recent communiqué, following its meeting on the sidelines of the spring meetings of the International Monetary Fund and World Bank, contains one sentence of consequence. “Monetary policy,” it reads, “should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates of central banks”.
The significance of this addition should not be overlooked. It means that the Bank of Japan is to be applauded, not criticised, for the aggressive asset-purchase programme it has adopted in the effort to hit its 2 per cent inflation target………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

The president-elect of the Asian Development Bank, Takehiko Nakao, said a common currency isn’t desirable for Asia, drawing a clear distinction with the euro zone, to which some Asian countries have looked as a model for regional economic integration.In a press conference Friday after being elected head of the Manila-based regional development bank, former Japanese vice finance minister Nakao said Asia “is not yet at a stage to think about a currency union.”
He said he was “very skeptical” a common currency would emerge even in the future, as economic integration progresses, noting the region’s much greater internal economic, cultural and political differences than those of Europe………………………………………..Full Article: Source

Posted on 29 April 2013 by VRS |  Email |Print

The Climate Commission’s report examining escalating global action on climate change reveals emissions from electricity generation in 2012 dropped by 4.7 per cent on the previous year.
And emissions from electricity hit the lowest levels seen since 2001-02 in the last six months of last year.Coal-use is being scaled back as gas and green energy grows, with Australia nearly doubling its renewable energy capacity since 2001………………………………………..Full Article: Source

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