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Commodities Briefing 29.May 2013

Posted on 29 May 2013 by VRS |  Email |Print

Chinese steelmakers, the world’s biggest iron ore buyers, are questioning the reliability of the main industry price index for the raw material provided by Platts, citing concerns about transparency and trading volume.
“We are skeptical because we don’t know the size of the deal samples and how they work out the indexed prices,” Wang Liqun, deputy general secretary of the China Iron & Steel Association, said in a phone interview. “If the daily price is based only on one deal a day, can you trust it?”…………………………………..Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

The start of the week was generally “risk-on”, so industrial commodities fared quite well. But concerns about waning demand out of China still linger over the sector. A useful sentiment gauge is prices for steel reinforcement bar (rebar) – a product that clearly tracks construction expectations.
On Monday the October rebar futures contract in Shanghai slid to a six-month low of Rmb3,491 ($570) a metric ton, according to Bloomberg data……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Silver prices have slumped to their lowest level since September 2010 and gold prices are down 18% year-to-date leading many market observers to declare that the super-rally in commodities is over.
Jim Rogers, the legendary investor and Chairman of Rogers Holdings, says the commodities bull market continues. He calls the latest slump in prices a correction. “I still don’t see massive new supply coming into the market which will keep prices down,” he said. Rogers correctly called the commodities bull market that began in 1999 and the housing slump of 2007-2008 well before either occurred……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

OPEC’s best adherence to its production ceiling in 18 months is failing to buoy the outlook for crude oil prices, raising pressure on the group to pare supplies amid burgeoning U.S. output. While all but one of 20 analysts in a Bloomberg survey predict the 12-member organization will maintain its target of 30 million barrels a day at its May 31 meeting in Vienna, most say OPEC needs to conform better with the limit to keep supply from overwhelming demand.
Societe Generale SA says the necessary reduction could be “substantial.” The Centre for Global Energy Studies says prices may tumble without output curbs……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

The price of oil rose to $95 a barrel Tuesday, supported by gains on global stock markets. Benchmark oil for July delivery rose 86 cents to close at $95.01 a barrel in New York. It was the first gain for oil in five trading sessions.
Positive signs for the U.S. economy helped. U.S. home prices rose the most in seven years and consumer confidence reached a five-year high. U.S. stock markets were showing strong gains by mid-afternoon. European and Asian markets closed higher earlier……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Gulf economies are buoyant. Despite regional trouble spots from Bahrain to Egypt to Syria, Gulf executives remain confident. But there’s one cloud peeking over the horizon that analysts and economists are starting to take note of: the rapidly rising “break-even” points of the oil producers whose revenues are driving the regional economy, including its burgeoning non-oil component.
Break even is the oil price point at which revenues from oil sales cover the cost of imports in the various Gulf countries. During the lean 1990s, when oil prices fell well below $50 per barrel, Gulf countries whittled their government budgets down to a nub and tightened their belts. An oil price between $45-$60 a barrel, depending on the country, was enough to break even……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Oil-price manipulation may have wrought “huge” damage to consumers, the European Union’s antitrust chief said today, as he drew comparisons with EU investigations into rigging of bank rates including Libor.
While it’s too soon to draw conclusions from the May 14 raids on Royal Dutch Shell Plc (RDSA), BP Plc (BP/), Statoil ASA (STL) and Platts, EU Competition Commissioner Joaquin Almunia said both sets of probe target price manipulation through a reporting system……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

A shale boom in the United States makes a winning oil trade available closer to home, Dennis Gartman of The Gartman Letter said Tuesday. “You’re going to continue to see continued expansion,” he said on CNBC’s “Fast Money.”
Gartman added that the best plays would involve railroads and refiners as the domestic energy boom, and he said that OPEC would feel a squeeze.vv”If there were a way to sell OPEC short, I would try to find a way to sell OPEC short. I’m not sure how one does that,” he said……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

It’s time for all the guru’s, pundits, experts, Glen Beck and all the other teller of tales to stand up and face the music. All the bluster, all the endless diatribes telling the unwary public that unless they buy gold NOW, their financial future is about as stable as a Jaguar dealer in North Korea.
It’s so silly, until you get to substance of the issue-where you find that people have actually taken their advice and invested their hard earned dollars in their windbaggery……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

A lack of bullish macroeconomic drivers are weighing on gold and silver, prompting analysts at Bank of America Merrill Lynch Global Research to lower their 2013 average prices for gold and silver to $1,478 an ounce and $24.40 an ounce, respectively.
In a report, the analysts say a stronger U.S. dollar and no inflation are “headwinds” for gold and silver. Still, they add, there are pockets of demand which are preventing a “complete meltdown.” Even though gold prices are weaker, they say the gold bull market is just pausing……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Christian Baha, the head of Austrian fund firm Superfund and representative of the hedge fund industry in Oliver Stone movie Wall Street 2: Money Never Sleeps, is predicting that the gold price could rise to between $3,000 and $5,000 over the next five to 10 years.
Baha, who says he has more than half his personal wealth in gold and silver, either physically or in units in Superfund funds denominated in the precious metals, believes that an unprecedented phase of quantitative easing by central banks is driving a bubble in government bonds, but that gold offers real value……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Western central banks have got themselves horribly wrong-footed as a result of not adjusting their anti-gold policies to allow for the realities of Asian gold demand. Though their dealings are shrouded in secrecy, there is compelling evidence that much — if not most — of Western central bank gold has been quietly sold over the last three decades.
More recently all members of the Shanghai Cooperation Organization, a common security and trading bloc led by Russia and China and incorporating the bulk of Asia’s land mass, have been accumulating gold……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Gold slipped on Tuesday, having failed to hurdle $1,400 per ounce, with physical demand overshadowed by hesitancy from investors in bullion-backed funds (ETFs) who were discouraged by a rising dollar and firmer stock markets.
Dealers also noted U.S. 10-year treasury yields above 2 percent and tame inflation expectations as other negative factors for the market as bullion has no interest rate……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Precious metals and their related mining stocks continue to underperform the broad market. This year’s heavy volume breakdown below key support has many investors and trader’s spooked leading to a steady stream of selling pressure for gold and silver bullion and mining stocks.
While the technical charts are telling me prices are trying to bottom, we must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Analysts at J.P. Morgan Cazenove on Tuesday lowered the price forecasts for most metals, including cutting the outlook for gold in 2013 to $1,595 an ounce from $1,745 expected previously. In the short term, the analysts slashed the gold outlook 18% to $1,450 in the second quarter, while lowering the 2015 forecast by 5% to $1,650 an ounce.
The copper outlook for 2013 was cut 4% to $3.50 a pound, or $7,707 per tonne from $8,032 per tonne expected previously. For silver, the 2013 forecast was cut to $27.89 an ounce from $30.01……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Trading precious metals against each other based on purchases and sales through exchange-traded products would have returned an annual profit of about 30 percent since 2007, according to JPMorgan Chase & Co.
The bank rates investment in the products on a weekly basis, buying the metal with the highest current holding relative to the past six months and selling the one with the lowest relative holding. The strategy, which was first calculated this month, would have been successful about 56 percent of the time since 2007, according to JPMorgan……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Despite growing uncertainty over Fed easing and declining gold exchange traded funds, gold traders are now the most bullish in a month, arguing that the stimulus must flow until the economy recovers.
According to a Bloomberg survey, twelve analysts predict gold prices to rise next week, with nine bearish and eight neutral, the highest proportion of bulls since the end of April, reports Nicholas Larkin for Bloomberg……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Investors still keen on precious metals turned their attention to platinum, palladium and silver in the past month as uncertainty around the gold price continued.
At the end of April investors withdrew $157 million (£101 million) from gold exchange traded products (ETPs), according to ETF Securities. The total outflow from the yellow metal for the month was $419 million. Figures from BlackRock tell a similar story; it says global outflows from gold ETPs now total $17.9 billion for the year to date, with $8.7 billion of that in April alone……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Known for being non-agri, the Multi Commodity Exchange (MCX) has gradually stepped up efforts to attract participation in agri commodities also. Though contributing insignificantly to the exchange’s overall turnover, agri commodities like mentha oil, sugar, potato and cardamom are preferred by traders on the MCX.
With around 90 per cent of the market share in overall commodity futures trade, the MCX continued its leadership in almost all non-agri commodities, including base metals, precious metals and energy……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Germany’s DZ Bank and its asset management subsidiary Union Investment this week confirmed they are pulling out of investments into agricultural commodities. The move follows wider criticism that the market for producers is being distorted as a result of investment into agricultural commodity markets and indices.
Whilst the decision by DZ Bank was made in January, the debate has been reignited in Germany as member of the board, Lars Hille, explained the extent to which the funds’ strategies would change……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

The received wisdom is dollar strength = weaker emerging market currencies. See here for my colleague Mike Dolan’s take on this. But as Mike’s article does point out, all emerging markets are not equal. It follows therefore that any waves of dollar strength and higher U.S. yields will hit them to varying degrees.
ING Bank says in a note sent to clients on Tuesday that emerging currency gains in recent years have been closely tied to foreign investments into domestic bond markets. Recent years have seen a torrent of inflows into local debt, driving down yields on the main GBI-EM index and significantly boosting its market value……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

The crackdown on money-transfer service Liberty Reserve highlights the growing challenges virtual currencies face as they gain wider use among businesses and consumers.
Such alternative payment methods have the potential to drive down or eliminate the processing costs businesses pay when they accept credit and debit cards. But, recently, some virtual-money firms have been mired in controversy over their lack of compliance with U.S. financial laws and allegations some are involved in illegal activities, such as buying and selling drugs……………………………………Full Article: Source

Posted on 29 May 2013 by VRS |  Email |Print

Scaling up CCS in China requires climate policy to climb the political agenda, so that carbon reduction is considered equal to energy conservation and security of supply.
China’s estimated total carbon dioxide emissions reached 25% of global emissions in 2011 and they continue to grow rapidly – so rapidly, in fact, that the increase in China’s emissions over an eight-month period is about the same as the UK’s total emissions in 2011……………………………………Full Article: Source

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