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Commodities Briefing 06.Jun 2013

Posted on 06 June 2013 by VRS |  Email |Print

With many commodity prices in retreat over the past six months, the newly elevated production cost base will prevent further substantial falls in prices for most industrial commodities, Credit Suisse said in a report.
But, in near term, however, the price fall would continue due to falling demand from consumer industries. Over the past couple of weeks financial markets have become increasingly nervous about the possibility that the Fed would begin to taper its program of asset purchases in coming months………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Chinese commodities firms importing everything from gold and rubber to base metals are struggling to get trade loans as banks scrutinise their activities and hold back credit following Beijing’s orders to rein in currency speculation.
China is the world’s top consumer of base metals and rubber, and the second-largest gold buyer after India. A crimp in imports as financing becomes harder will be bearish for the international benchmark prices of these commodities, but could mean their domestic prices will be supported………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Current energy trends could threaten the Western way of life by 2040 when oil prices could reach as high as $500 a barrel, according to a recent report from the United Kingdom’s Ministry of Defence. The continued rise of China and South Asian economies will increase the cost and reduce the availability of energy supplies.
It’s all doom and gloom for the UK’s Ministry of Defence! Unlike the conservative and relatively optimistic reports published by the government, a recent report released by the MoD warns that current energy trends could threaten the Western way of life by 2040………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Things are getting interesting vis a vis OPEC and the U.S. shale industry. The once-omnipotent oil cartel is taking serious notice of the impact of the shale boom on global oil prices and markets.
As well it should. Increased shale oil production domestically is pushing the U.S. toward potential energy self-sufficiency by 2018, analysts predict. Boosts in shale oil production in this country already are cutting deeply into OPEC’s share of the U.S. oil market………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

U.S. domestic crude-oil production exceeded imports last week for the first time in 16 years, a government report showed today.
Output was 32,000 barrels a day higher than imports in the seven days ended May 31, according to weekly data from the Energy Information Administration, the Energy Department’s statistical arm. Production had been lower than international purchases since January 1997………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Gold prices have been plunging this year and redemptions have been soaring, but not all analysts are convinced this is the start of a rush out of gold.
Prices for the precious metal are down 17% year-to-date. The big driver behind the move has been speculation that the U.S. Federal Reserve may soon move to ease its bond buying program, depriving gold of the liquidity and inflation fears that have helped propel its stellar rise in the past few years………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

A prediction was made recently by Nouriel Roubini: gold will likely move much lower, towards $1,000 by 2015. There are a number of problems with this argument. First, commercial investors covered their bearish bet in a big way.
Hedge positions from producers are at a record low, at 37,571 contracts. Second, inflation could still become a problem if energy prices rise. Even though inflation was below the Fed target in April 2013, it was helped by low oil prices………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

The appetite for U.S. American Eagle gold and silver bullion coins is still at unprecedentedly high levels almost two months after a historic sell-off in gold unleashed years of pent-up demand from retail investors, the head of the U.S. Mint said on Wednesday.
His comments are likely to allay concerns among some traders that frenzied buying by mom-and-pop investors since mid-April - after prices plunged to two-year lows - had started to fade………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

How much can one believe in the various pronouncements on official gold purchases from China? We have reports of key party officials pointing out that the country’s gold holdings are vastly underweight in comparison to those of most of the major Western nations and that China should be building its reserve base accordingly (and many analysts believe it is indeed so doing).
On the other hand, we have had a recent categorical statement from Yi Gang, Vice Governor of the People’s bank of China, that the nation’s official gold holdings remain at 1,054 tonnes – the stated level last time the country restated its gold reserve back in April 2009………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Taurus Funds Management Pty Ltd. shut its precious metals fund because of investor redemptions after gold slumped, according to an executive, who said that the product once held as much as A$250 million ($240 million).
Assets in Taurus Precious Metals peaked last year before the closure in May, Gordon Galt, a principal at the Sydney-based fund manager, said in an interview today, declining to comment on the level last month. As of February, the fund had invested mostly in physical gold, according to a report to investors for that month, which was confirmed by Galt………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Mining for gold and other precious metals is far from easy and gets harder every year. Miners are having to go deeper and deeper into the ground in the attempt to extract the precious metal from the bowels of the earth. Ore grades are declining globally and peak gold has been reached in South Africa and may have been reached globally.
The poor miners in South Africa who are wielding machetes today will testify as to just how very hard it is to mine for the earth’s precious metals – despite the huge advancement in technology seen in recent years………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Leasing is an integral part of the precious metals market. Why is it necessary? For a diverse number of reasons, the first is the need for industry to borrow instead of buying outright the metal. This enables them to avoid owning the metal at a fixed price if they have not yet contracted to sell their product.
Other companies want to borrow rather than buy gold or silver, to keep their cash consumption down. Leasing gives their business greater flexibility in money management. Still others choose to borrow to free up cash. Finally, there are those in a bridge lease, commonly used in the oil refining and pharmaceutical fields………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Rare earth metal prices have been falling steadily for the last couple of years, in spite of China reducing export volumes. Usually a reduction of supply results in a rise in prices, but the falls are indicative of the size of the REE bubble that had formed around the turn of the decade.
Chuin-Weip noted in the WSJ last week that Chinese exports had plummeted 71% in 2012 from 2011; however, this year has seen a remarkable change – exports have been picking up, with April’s figure of 2,196 metric tons almost six times larger by tonnage from a year earlier and a 28% rise from March, according to China customs data quoted in the article………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

There has been much doom and gloom surrounding the mining and resources sector over the last couple of years. Depressed global economic conditions, and in particular concerns over slowing growth in China, have led to widespread falls in commodity prices. To compound matters, mining companies have been their own worst enemy over recent years, misallocating capital to high risk projects.
Costs have spiraled out of control and a number of mining projects have been abandoned leading to multibillion-dollar writedowns. It’s no surprise investors are deserting the sector in their droves………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

The global mining industry is facing a market confidence crisis, a PricewaterhouseCoopers (PwC) report has found. “While 2012 saw mining stocks fall slightly, they fell nearly 20 percent in the first four months of 2013,” PwC said in a statement on Wednesday.
“According to [the]…report, the industry faces a confidence crisis. Confidence over whether costs can be controlled, return on capital will improve and commodity prices will not collapse, among others.” The report analysed 40 of the largest listed mining companies in major economies, including the United Kingdom, the United States, Canada, Australia, China, Russia, India, Brazil, Poland, Mexico and South Africa………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

It’s no secret that the worst performing commodity exchange-traded products (ETPs) so far this year, as of Tuesday’s close, is the SPDR Gold Trust , given that the outflows from that exchange-traded fund were partly to blame for gold’s price plunge in April.
But it’s interesting to see that exchange-traded products linked to the master limited partnership (MLP) asset class were among the top performers, according to data from IndexUniverse………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Commodities are facing a choppy 2013, with the volatility intensifying in recent weeks. Products in a variety of segments have seen rough sessions due to a strong dollar and uncertain demand in many key markets. This is especially true given some of the fundamental factors surrounding the global economy, and the outlook going forward.
While the U.S. economy is improving, China is seeing sluggish economic growth, and Europe is still in recession. Still, we are seeing an increased appetite for equities over commodities, and this trend could continue should these broad economic trends hold………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Canadian ETF assets reached $60 billion in May 2013, finds Pat Chiefalo, director of derivatives and structured products at National Bank Financial.
Along with research associates Daniel Strauss and Ling Zhang, he recently released a report on ETF activity. It reveals $1.5 billion of net inflows came in last month, with equity and fixed income products topping the list of most popular funds………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

China plans to build more regional commodity trading centers in order to boost domestic consumption, according to a government plan released Wednesday. The State Council, or China’s cabinet, said more trading centers should be planned in regional transportation hubs and large cities to boost regional commerce.
Relevant departments and enterprises are encouraged to develop e-commerce through telephone and TV promotions, the plan says. Local authorities should build more low-price community grocery stores and farm produce wholesale markets to meet demand, the plan says………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Latvia is set to become the 18th country to adopt the euro as its currency, following an EU decision that the country now satisfies the conditions for joining the Eurozone.
Latvia will adopt the euro from January 1st 2014, and as a full euro member, Latvia will be able to take part in all the key decisions in the eurogroup of ministers and the board of the European Central Bank………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

The South African rand led a broad-based slide among emerging-market currencies Wednesday as investors grew increasingly jittery ahead of a critical U.S. jobs report. Investors are gearing up for the prospect of Federal Reserve tapering its bond-buying stimulus program.
Expansive Fed monetary policy has been associated with a weaker U.S. dollar and excess market liquidity that has driven investors to seek higher yields in emerging markets. A strong nonfarm payrolls report on Friday would likely affirm expectations of the Fed unwinding such stimulus some time this year, which would remove a pillar of support for emerging-market currencies………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

Carbon prices in international markets are at their lowest in a decade. Projects, especially in India and China, two major suppliers of carbon credits, are writing off expected revenues. Carbon trade, touted as the emission trading scheme that’d cheaply reduce emissions bringing green technologies within the financial reach of poorer countries, is at a near-collapse.
Worse, the logic of carbon-credit trading — that it’s a cheap way emission reduction — is under scrutiny. Many claim it has resulted in private players gaining funds, doing little………………………………………..Full Article: Source

Posted on 06 June 2013 by VRS |  Email |Print

We can’t stop fossil fuels being burned: but we can easily act now to capture and store carbon with CCS technology. How often have you read that we have a once-in-a-generation opportunity to solve the problem of climate change – shortly followed by frustration and disappointment?
People might expect me, as a climate scientist, to be disappointed by the failure of the attempt by the MP Tim Yeo to set an ambitious decarbonisation target in Tuesday’s debate on the energy bill. But I’m not………………………………………..Full Article: Source

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