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Commodities Briefing 18.Jul 2013

Posted on 18 July 2013 by VRS |  Email |Print

The credit bubble in China is “world-class” and is getting “worse and worse and worse,” hedge fund manager Jim Chanos said. The deteriorating credit situation “has worked its way through things like steel, cement, [and] commodities globally,” the founder of Kynikos Associates said.
Chanos, who first raised concern about China in 2009, added that he’s “seeing arguably the end of the commodities supercycle,” the boost for raw materials fueled by the rise of the economies of China and other emerging markets………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Fitch Ratings says in a new report that a significant price fall in commodities will have varying impact across Asia Pacific economies, depending on their economic structures and policy response.
The report assumes a shock price fall in the range of 30%-40% within a period of six to 12 months, as balancing forces, such as policy response, are likely to counteract the shock in the medium- to long-term. The analysis covers seven APAC countries, including six that have a higher than median dependence on commodities………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

There is no official category labelled ‘commodities’ within the S&P’s list of ten economic sectors, but commodities are incredibly important to the market. Commodities have the potential to influence almost every industry to some degree, and therefore investors who look to move tactically among the various groupings should have at least a working understanding of commodities and a view as to what their general direction may be.
The ways that commodity prices can influence companies are too numerous to list in the limited space we have here, so we will focus on the two sectors that have the potential to feel a greater impact than others………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

June’s wash-out in commodity markets – sparked by fears of that the Federal Reserve may scale back stimulus earlier than thought – has largely ran its course and the eventual withdrawal of bond purchases may ultimately be bullish for commodities, Societe Generale (SG) said this week.
According to the French bank, the wind-down of asset purchases implies a durable economy creating “eventual strength in total U.S. aggregate demand.”……………………………………….Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

A U.S. Senate committee will hold a hearing next week on whether banks should control physical storage of commodities, the HuffingtonPost reported, a signal that lawmakers may toughen their stance on this controversial but lucrative business for Wall Street firms.
Goldman Sachs Group Inc, JP Morgan Chase & Co and Morgan Stanley all have business units involved in the storage of physical commodities such as metals and oil, as well as being involved in commodities trading………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Australia’s massive mineral exports allowed it to weather the global recession, which began in 2008, quite nicely. The U.S. government’s Energy Information Administration noted in its country’s analysis for Australia, “Australia, rich in hydrocarbons and uranium, was the world’s second largest coal exporter in 2011 and the third largest liquefied natural gas (LNG) exporter in 2012.
Australia is rich in commodities, including fossil fuel and uranium reserves, and is one of the few countries belonging to the Organization for Economic Cooperation and Development (OECD) that is a significant net hydrocarbon exporter, exporting over 70 percent of its total energy production according to government sources. Australia was the world’s second largest coal exporter based on weight in 2011 and the third largest exporter of liquefied natural gas (LNG) in 2012.”……………………………………….Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

U.S. crude oil prices surged 23 percent over the last three months due to the unrest in Egypt and fear over regional supply oil disruptions as well as easier accessibility to a glut of U.S. crude oil sitting in a vast array of Oklahoma tank farms, according to an energy economist.
West Texas Intermediate, or WTI, the benchmark U.S. crude, soared to $106.10 per barrel Wednesday, from about $86 in mid-April………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Russian energy company Gazprom said this week it was considering sending a delegation to Algeria to review the prospects for more energy work. The Russian energy giant said it was interested in exploiting the estimated 160 trillion cubic feet of natural gas there.
A report published in May warned that Algerian natural gas production was in decline, however, because aging fields were no longer giving up resources. A lack of foreign investments is hurting the situation even further. Though Gazprom is reviewing its options, a warning from the U.N. Security Council suggests it may be awhile before the region’s state of affairs are in order enough to support any major foreign interest………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Members of the Organization of Petroleum Exporting Countries are mulling production levels in light of North American oil gains, an analyst said. OPEC in its monthly market report for July said it expected demand for crude oil from its members for 2014 would be at 29.6 million barrels per day, 2.6 percent less than existing production levels.
The cartel said it expected oil production from non-member states to increase by 1.1 million bpd next year, with the bulk of that coming from the United States and Canada………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Sooner or later OPEC members will have to reduce output to reflect their reduced share of the global oil market. The organisation’s members must come to terms with diminished demand for their crude as a result of booming shale oil production in North America and strong production growth in several other regions.
The only real questions are how much of the burden of cutting production will fall on Saudi Arabia and whether they will be implemented through the framework of OPEC or unilaterally………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Benchmarks underpinning markets from oil to currencies face tougher oversight under plans by global regulators to prevent any repeat of Libor-style fraud.
Rates should be based as much as possible on real transaction data, rather than estimates, and banks should tackle conflicts of interest, the International Organization of Securities Commissions, a Madrid-based group that harmonizes global market rules, said………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

The International Energy Agency (IEA) came out in favor of the spot gas market Wednesday over contracts that link gas to oil prices, citing Turkey as an example of a successful renegotiation.
Russian gas export monopoly Gazprom clinched a long-term deal last November to export gas to private companies in Turkey, breaking a previous impasse in gas trade following its price dispute with state gas company Botas………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Saudi Arabia aims to become the world’s foremost market for renewable energy with an aggressive investment budget of $109 billion. By 2032, the country strives to generate as much as a third of the Kingdom’s energy demands using renewable energy (54 GW).
Following the publicity surrounding the country’s major investment drive, King Abdullah City for Atomic and Renewable Energy (KACARE) released a series of documents detailing the revised National Energy Plan. In addition to the 41 GW of solar power, 25 GW of CSP and 16 GW of PV, the Kingdom is aiming to generate 18 GW of nuclear energy, 3 GW of waste to energy, 1 GW of geothermal and an additional 9 GW of wind power, specifically for water desalination plants………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

In late June, the price of gold has fallen below 1,200 U.S. dollars per ounce; however, it rebounded slightly recently. At present, financial market fluctuates by the influence of domestic and international economic situation. Under this circumstance, the price of gold, stocks and currencies goes up and down and thus, the risk of financial product is worth more attention.
Here is a series of reports covering the ways and skills of personal wealth management. Through professional suggestions and analysis, we hope it can enlighten a large number of investors………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

In his most recent analysis of what has been happening in the gold market, New York based long term precious metals analyst, Jeff Nichols, sees the end nigh for institutional selling which he feels has been one of the key contributing factors to the slump in the gold price over the past few months.
While definitely in the pro-gold camp, Nichols has always warned that the bull market in gold, which he feels is still basically intact and has many years yet to run, was always likely to see major corrections. However, the depth of the recent one may have taken him by surprise. Indeed he calls the fall since gold peaked in September 2011 of over 35% as astonishing’………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Think gold has been a bad investment this year? Try gold miners. The FTSE Gold Mines index of gold equities has tumbled 46 per cent since the start of the year. Some shares have fallen even more: London-listed African Barrick Gold is down 76 per cent.
“The sentiment is terrible – worse even than the sentiment towards gold,” says Patrick Chidley, analyst at HSBC………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Last week, Silver Investing News took a look at commentary from John Whitefoot, author and editor at Daily Gains Letter, and Sprott’s Thoughts’ David Franklin and David Baker, identifying two reasons that silver prices could be set to rise.
Now, as silver prices slowly creep up the charts, market participants are wondering whether the white metal is rebounding after hitting bottom or simply enjoying a short-term boost………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

The world’s biggest primary silver producer, Fresnillo of Mexico, said it will miss a gold production target of 490,000 ounces, downgrading it to 465,000 ounces, according to Reuters – although its silver production will still remain on track.
“The company said attributable silver production came in at 10.9 million ounces in the second quarter, 6.3 percent higher than the same period last year, and putting it on track to meet full-year guidance of 41 million ounces,” the article stated. On MetalMiner’s daily precious metals price index, Indian silver fell 0.8 percent………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Lithium may store the power that drives out modern mobile world, but it’s copper that delivers it. This malleable metal is a vital component in modern homes, electronics and agriculture. But our reliance on copper comes at a steep price, both economically and environmentally.
Copper is quite the miracle metal. It readily conducts electricity (second in ability only to silver), strongly resists corrosion, and can easily take on a variety of shapes and tasks — everything from your home’s plumbing and the circuitry of your car’s stereo to utility-scale power transmission lines and industrial fertilisers and pesticides………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Commodity exchange traded funds have experienced a rough first half of the year as traders anticipated an eventual end to Fed easing that has helped support commodity prices.
The PowerShares DB Commodity Index Tracking Fund lost 0.8% over the past month and fell 6.1% year-to-date. Hedge fund investors posted significant losses in June, and now, many commodity funds are now in negative territory for the first half of the year, reports Stephen Taub for Institutional Investor’s Alpha………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Gold equities and related exchange-traded funds listed on the TSX finally came alive on Tuesday when gold equity indexes on both sides of the border recorded positive technical signals near the beginning of a period of seasonal strength.
Seasonal influences for gold stocks and their related ETFs have started slightly earlier than usual this year. Thackray’s 2013 Investor’s Guide notes that the period of seasonal strength for the gold equity sector is from July 27 to September 25. The trade has been profitable in 12 of the past 16 periods for an average return per period of 8.1 per cent………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

The government retained the 49 percent foreign equity cap in commodity exchanges but made the route automatic to help bring more investment and make the existing exchanges more competitive. Commerce Minister Anand Sharma announced the decision after Prime Minister Manmohan Singh reviewed foreign direct investment in several sectors.
Earlier, FDI in commodity exchanges needed an approval from the the Foreign Investment Promotion Board (FIPB). “No FIPB approval would be required now,” said an official………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Alex Salmond has insisted his “plan A” of keeping the pound if Scotland votes for independence will win agreement from the UK Government. The First Minister hinted that without a deal on the UK’s “assets” in the wake of a Yes vote in next year’s referendum, the Scottish Government could refuse to accept a share of UK debts.
He argued that an independent Scotland would be “entitled to share of the assets of the United Kingdom - at least if they want us to accept a share of the liabilities of the United Kingdom”………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

U.S. companies lag behind global peers in using the yuan for international trade, leaving them at a disadvantage as the Chinese currency plays a bigger role in cross-border transactions, according to HSBC Holdings Plc. (HSBA).
Only 9 percent of the 102 U.S. business leaders surveyed by HSBC for a report released today said they had conducted cross-border yuan transactions. In comparison, 47 countries are using the yuan for more than 10 percent of their payments with mainland China and Hong Kong, according to the Society for Worldwide Interbank Financial Telecommunication………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Sometimes it seems India is trying too hard to emulate neighbor China. China’s central bank recently engineered a cash crunch by tightening its monetary stance, and now the Reserve Bank of India has followed by pulling liquidity from its financial sector.
Of course, there are big differences. Where the People’s Bank of China aimed to rein in surging credit, the RBI wants to prop up the weak rupee by raising domestic interest rates………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

Australia will drop its carbon tax and replace it with an emissions trading scheme sooner than had been planned.
Under the current carbon tax system which went into effect in July 2012, the country’s top 500 polluters were charged $22 for each ton of carbon emitted into the atmosphere, increasing to about $23.40 next year. It was to remain in place until 2015, when it would be replaced by an ETS scheme………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

The European Commission, the body overseeing Europe’s carbon market, has given an early indication of support for Australia’s plan to accelerate the move to a floating price for emissions by a year.
Under existing arrangements, Australia’s carbon price was to have been linked to Europe’s market when it converted from a fixed price to a floating one on July 1, 2015. Climate Change Minister Mark Butler said this week’s announcement by Prime Minister Kevin Rudd that the government would seek to expedite that shift by 12 months has won approval in Europe………………………………………..Full Article: Source

Posted on 18 July 2013 by VRS |  Email |Print

European Union regulators on Wednesday approved a German scheme to compensate heavy industries for higher electricity costs resulting from the bloc’s emissions trading scheme (ETS).
The scheme introduced earlier this year is meant to prevent energy-intensive industries such as steel and cement makers from relocating outside Europe to avoid the costs associated with the EU’s carbon trading scheme, known as “carbon leakage.”……………………………………….Full Article: Source

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