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Commodities Briefing 22.May 2013

Posted on 22 May 2013 by VRS |  Email |Print

The commodities supercycle is probably ending this year as China’s economic growth slows and the nation focuses less on infrastructure and urbanization, Citigroup Inc. said.
This year will probably signal “death bells” for the supercycle, or a longer-than-average period of rising prices, Citigroup said in a report dated yesterday, reiterating similar calls made last month and in 2011. The Standard & Poor’s GSCI gauge of 24 raw materials is down 2.1 percent this year, after an almost fourfold advance since the end of 2001……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

A slower-growing Chinese economy, lack of correlation between equities and commodities, and a stronger U.S. dollar are marking the “end of the commodities supercycle,” said Citi in a research note on Tuesday.
“Citi expects 2013 to be the year in which the death bells ring for the commodity supercycle after its duly noted sunset, ushering in a new decade of opportunities based on how individual commodities will perform against one another and against broader market indicators such as equities or currencies. It will be a period of focus on unique individual commodity cycles and new relations emerging between and among commodities and other asset classes from fixed income to foreign exchange to global equities,” they said……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

This probably isn’t a surprise coming from one of Wall Street’s most prominent bulls, but Deutsche Bank chief strategist Binky Chadha isn’t among those fretting that the stock market’s string of record highs has left markets overextended and due for an imminent pullback.
In a note published Tuesday, strategists led by Chadha urge clients to stay long equities and short commodities. They write: We stay the course in our asset allocation which remains long equities, credit and the dollar; short duration, cash and commodities. We do not expect a sustained pullback in risk assets in the face of reasonable negative catalysts until positioning gets much more extended. Moreover, large announced buyback programs suggest that corporates are likely to step up purchases in the face of a sell down, supporting equities……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Treasury secretary Martin Parkinson concedes his department has struggled to keep pace with a ‘‘tumultuous’’ decade for the Australian economy. Addressing an economists’ lunch in Sydney, Dr Parkinson said the difficulty Treasury and other economic forecasters had had was predicting the path of global commodity prices, the exchange rate and capital gains.
‘‘While our forecasts for the real economy have held up reasonably well, the same can’t be said of our price forecasts,’’ he told Australian Business Economists. Dr Parkinson said Treasury’s forecasts for employment and wages had been relatively accurate, which meant that for income tax, the largest source of government revenue, they had changed little since last year’s budget……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

The investigation into possible oil-price fixing gathered pace as trading houses from Glencore Xstrata Plc, the $70 billion mining firm, to Gunvor Group Ltd. were asked to provide information to European regulators.
Glencore Xstrata, Gunvor and Vitol Group, which aren’t under investigation, along with other firms with offices in Switzerland, are assisting the European Commission with the inquiry, said three people familiar with the situation, who asked not to be identified because the matter is private. The commission announced last week that it’s probing whether oil companies colluded to distort prices……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

The decline in the global gold price will be only temporary and will rebound on speculation that Italy and other countries in Europe may have to sell gold reserves for debt repayment, the head of the NESDB said on Tuesday. National Economic and Social Development Board (NESDB) secretary general Arkom Tempitayapaisit said he disagrees with an analyst at a foreign bank who forecast that the gold price is now on a five-year downward trend and will fall below US$1,000 per ounce. The gold price on Tuesday evening in New York was $1,380.16 per ounce.
It would be difficult for the gold price to continue downwar for five years, he said. Gold is held both as a reserve and as a speculative commodity……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Gold is continuing to lose its luster. Last fall, gold was trading at nearly $1,800 per ounce. Last week, its price dipped below $1,400 per ounce. And as prices fall, a number of high-profile investors have moved toward the exits.
Notably, in the first quarter of 2013, billionaire George Soros cut his position in the exchange-traded fund SPDR Gold Trust by 12 percent, according to government filings. Meanwhile, in a recent Credit Suisse investor survey, 60 percent of investors said gold bullion is the commodity about which they are the most pessimistic……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Gold’s recent slump could have much further to run, with a breach of its April low at $1,322 potentially setting up bigger losses towards levels not seen since mid-2010, chart analysts say.
Since posting its biggest two-day loss in 30 years last month, bullion has struggled to recover, and last week suffered its longest string of daily losses in four years. With April’s low again looming, a breach could spark a significant move lower, according to analysts who study past price moves to determine the future direction of trade……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Singapore government investment chief says it is difficult to justify the current value of the metal given its limited practical usage. While falling gold prices have sent a flood of Chinese housewives to Causeway Bay jewellery shops to hunt for bargains, Singapore’s top investment official has warned that the precious metal still looks overpriced.
Lim Chow Kiat, the chief investment officer of the Government of Singapore Investment Corp, told a forum yesterday that it was difficult to justify gold prices given its relatively limited practical use……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

The past week or three have been, to say the least, disappointing for precious metals investors. Gold and silver have continued to step downwards towards new interim lows as money continues to move from bullion (or at least from paper variations of it) to the general stock markets which have been continuing to perform well.
All this despite, so we hear, continuing high demand for physical gold and silver from Asian markets in particular. But this physical metal demand growth seems to be being more than countered by some strange precious metals sales patterns – the latest of which saw silver plunge 10% in 4 minutes on a big computer sell order – from a single client according to a major Japanese bank – at a light trading time……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

The price of both silver and gold slipped back in London on Tuesday morning, cutting into yesterday’s rapid gains from four-year and one-month lows respectively.World stock markets stalled after hitting a series of near and new all-time highs so far this month.
The British pound fell hard – supporting the gold price in Sterling above £910 per ounce – after new data showed a slowdown in consumer price inflation. “These stunning upside reversals off fresh lows [in gold and silver] were somewhat justified,” says a note from brokers INTL FC Stone, “given that both were quite oversold.”…………………………….Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

At a time when diminishing faith in gold is spurring investors to sell record amounts of the metal, demand for platinum and palladium is strengthening as mining companies curb supply.
Gold owned through exchange-traded products fell 17 percent this year as platinum holdings rose 31 percent and those in palladium 17 percent, data compiled by Bloomberg show. Platinum will end the year at $1,690 an ounce, or 16 percent more than now, while palladium will gain 7.5 percent to $800 an ounce, according to the medians of 15 analyst estimates compiled by Bloomberg. The majority of 38 analysts surveyed last month said gold would post an annual drop, ending a 12-year winning streak……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Investors in platinum stocks have dumped their shares in a panic over the last six weeks, fearing that the platinum sector is in terminal decline. Since April the sector has fallen by 20%, bringing the cumulative decline for the year to 30%.
But since April contrarian asset manager RE:CM has increased its holdings in Implats and Lonmin, while retaining sizeable investment in Amplats. All four of its equity funds are exposed to the platinum sector in degrees ranging from 3% of the fund up to 15% in the case of its SA-focused Flexible Equity Fund……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Weak global demand will constrain Latin American metals and mining sector’s performance this year, Standard & Poor’s advised Monday. “Sluggish demand and oversupply remain key risks for most metal commodities,” said S&P Credit Analysts Rafaela Vitoria and Diego Ocampo. “We expect metal prices to continue to drop in 2013, as a result of oversupply and slowing demand, which will pressure credit metrics.”
In their analysis, S&P observed that the outlook on the Asia Pacific region is critical to the metals and mining sectors. “Our base-case outlook expects growth in the region to hold steady or pick up slightly in 2013 and 2014. China’s real GDP could expand 7.9% in 2013, and 8% in 2014,” said the analysts……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

World crude steel production of the 63 countries reporting to the World Steel Association (worldsteel) rose to 132 mn tons in April 2013, an increase of 1.2% compared to April 2012.
China’s crude steel production for April 2013 was 65.7 mn tons, up by 6.8% compared to April 2012. Elsewhere in Asia, Japan produced 9.2 mn tons of crude steel in April 2013, up by 1.0% over April 2012. South Korea’s crude steel production was 5.5 mn tons in April 2013, down by -6.3% compared to the same month last year……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Silver has been performing quite poorly over the past few weeks due to the broad commodity weakness and a shift to more risky asset class like equities. This is especially true with the backdrop of the strengthening dollar and continued bullishness in the equity space that are tempering the demand for lower risk assets across the board.
In fact, the white metal has plunged 30% in the year-to-date time frame and more than 50% since its peak at the end of April 2011, making it one of the worst performing metals this year. Currently, the metal is trading below $23 per ounce with some forecasting a bigger drop in the days ahead as well……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Ghana is ready to restructure its capital market to spur economic growth, Finance Minister Seth Terkper said. The restructuring is necessary for the Ghana to meet international standards in its securities market regulations, Seth Terkper told Ghana’s first-ever capital market conference.
Ghana’s Securities and Exchange Commission (SEC) will review the legislation that impedes a well-functioning securities market, Terkper said……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Former top commodities traders from Deutsche Bank are in talks with U.S. private equity group Riverstone to set up a $0.5-1.0 billion venture that will both invest and trade in commodities.
The venture, which will put money into assets ranging from energy producers to pipelines and refineries, is a rare foray by a private equity firm into commodities at a time when banks are curbing exposure due to tighter regulations and stagnant prices……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Fiat currencies are paper monies issued andcirculated by government legislation and decreed as a country’s legal tender tofunction as a medium of exchange for all transactions of goods and serviceswithin its economy. Only the federalgovernment has the power and the authority to issue currency notes fordistribution throughout the nation.
Fiatcurrencies, such as those currently in circulation within the world’s majoreconomies, such as the United States (Dollar), the United Kingdom (Pound),Japan (Yen), China (Yuan/Renminbi) and the European Union (Euro) are ‘promises to pay’, backed solely by ‘the full faith and credit’ of theissuing country, or countries……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Currency strength due to stimulus measures in the developed world is currently Latin America’s Achilles’ heel, though the region’s macroeconomic management is a bright spot, the head of the United Nations’ body for the region said on Monday.
“I think the factor that most worries Latin America is the strength of its currencies,” said Alicia Barcena, the Economic Commission for Latin America and the Caribbean’s (ECLAC) executive secretary, said……………………………..Full Article: Source

Posted on 22 May 2013 by VRS |  Email |Print

Operating details of China’s first pilot carbon-trading scheme, in Shenzhen, have been released as it gets ready to launch next month, and as the country prepares to roll out seven pilot schemes by 2014.
The world’s biggest carbon emitter, China is planning to experiment with carbon trading schemes during the next three years as it seeks to cut emissions. Beijing is targeting a 40 per cent reduction in emissions relative to economic output by 2020, from 2005 levels, but hasn’t identified what means it will use to reach that goal……………………………..Full Article: Source

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