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Commodities Briefing 14.Oct 2013

Posted on 14 October 2013 by VRS |  Email |Print

The biggest challenge facing commodities companies next year will be managing oversupply, because it is this and not the slowdown in China’s growth rate that is having such an impact on their share prices at the moment.
Supply and demand are surely two sides of the same coin, I hear you say, and so, if the world economy picks up and there is a greater appetite for commodities the balance will be restored. But even in a world of greater demand, oversupply can exist, and it is this that is acting as a laggard for commodity stocks presently. And in a worst-case scenario, subdued demand coupled with oversupply could see share prices battered further still………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Steel can be made with iron ore or with recycled scrap metal. A coal-fired power plant can only be run with freshly mined coal, since there’s no such thing as recycling used coal—once it’s burned it’s gone forever. Looking at commodities through this lens changes the way you look at miners and might just lead you to alter your portfolio if you own any natural resource companies.
When it comes to commodities, metals quickly come to mind, including gold, silver, iron ore, copper, and many others. There is only a finite amount of each of these commodities in the Earth, which is good for companies that own notable reserves. However, the use of these materials generally doesn’t destroy them, so they stick around and get recycled and reused………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Commodities are priced and traded among buyers and sellers in an equivalent manner regardless of where the commodity was produced or by whom. Examples of commodities would include corn, soybeans, oil and copper. The price of copper is virtually the same throughout the world, and fluctuates daily based on global supply and demand.
A commodity futures market (or exchange) is, in simple terms, nothing more or less than a public marketplace. The purchase and sale of a commodity, which must be made through a broker who is a member of an organized exchange, are made under the terms and conditions of a standardized futures contract………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

As firms face increasing regulatory pressure and globalization continues to rise, commodity trading operations worldwide face significant impact. SunGard has identified six key trends that will shape the future of commodities trading over the next 12-18 months:
Low correlation across commodities is driving hedge fund managers to reevaluate their strategies with a micro approach, instead of riding the commodity super cycle. Safe havens from collateral charges in the over-the-counter (OTC) marketplace will become scarce under new regulatory requirements, prompting a need for collateral management systems in both hedging and trading operations………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

With the mainland’s voracious demand, World Bank consultant projects steady climb in prices, and that will hurt global economic growth. Last month, China passed another milestone in its economic development, although not an auspicious one.
In September, China overtook America as the largest buyer of oil on the international markets. According to the Energy Information Administration of the US government, last month China’s net oil imports hit an average 6.3 million barrels a day, surpassing the US, which imported 6.2 million barrels a day……………………………………….Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

OPEC’s crude oil production is at a suitable level for the market and there is no talk of the cartel changing output when it meets in December, UAE energy minister Suhail bin Mohammed al-Mazroui said on Sunday.
A senior official from Angola, a fellow member of the Organization of the Petroleum Exporting Countries (OPEC), later said he shared the minister’s view on OPEC’s output target of 30 million barrels per day (bpd). OPEC, which pumps more than a third of the world’s oil, meets on Dec. 4 in Vienna to decide whether to adjust the output target………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

The U.S. will become the world’s largest oil producer next year, overtaking Russia thanks to its shale oil boom which has remade the global energy landscape, the West’s energy watchdog said.
The prediction comes only days after estimates by the U.S. government showed the spectacular growth in production has allowed the world’s largest oil consumer to reduce imports so drastically that it has lost its ranking as the world’s biggest oil importer to China. “The U.S.’s place in the driver’s seat of growth is also a throwback to decades past,” the International Energy Agency, or IEA, said in its monthly report late last week………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

If a person reads US newspapers, it is easy to get the impression that all of the world’s oil problems are over. But this is not really the case. An Overlooked Part of the Problem: High Oil Prices.
A major piece of the world’s oil problem is high price. Prices continue to be far above historic levels, now in 2013………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

The shale natural gas upswing in the U.S. has been well documented, but closely watched short-seller Jim Chanos told CNBC he’s a “glass half-empty kind of guy,” and there’s a downside to boom.
At historically low nat gas prices of around $3.75 per million British thermal units, “some of the levered players are struggling to cover their debt service and their obligations to drill more holes under their leases,” Chanos said on “Squawk Box” on Thursday. A day earlier, energy entrepreneur T. Boone Pickens appeared on the show, saying he’s unlikely in his lifetime to see nat gas back up to $10………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

For most of the past decade, one of the most widely held assumptions in the energy world has been that demand for coal will keep on rising, fuelled by China’s soaring thirst for power as its population leaves the countryside for the cities in large numbers.
International coal prices duly rose and stimulated mining activity across Australia, Indonesia and as far away as Colombia and South Africa. The International Energy Agency (IEA) last year predicted that coal would rival oil as the world’s top source of energy by 2017 if no changes were made to government policies; global coal consumption would be 4.32bn tonnes of oil equivalent by that year, compared with around 4.4bn tonnes of oil equivalent for oil, according to its projections………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Global investment in clean energy was $45.9bn in the third quarter of 2013, down 14% on the second quarter of this year and 20% below the number for Q3 2012, according to the latest data on deals and projects compiled by research company Bloomberg New Energy Finance.
The latest figure makes it almost certain that investment in renewable energy and energy-smart technologies such as smart grid, efficiency, storage and electric vehicles will end this year below 2012’s $281bn - a total that was itself 11% down from the record established in 2011………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Gold prices may fall towards $1,250 an ounce this week as a possible resolution to raising the U.S. debt ceiling, staving off default, shores up the dollar and undermines the precious metal’s safe-haven status, according to CNBC’s latest market survey of traders, analysts and strategists.
CNBC’s latest poll of gold market sentiment showed 83 percent (15 out of 18 respondents) expect prices will fall this week, 11 percent (2 out of 18) predict price gains, while a single respondent sees prices trading around current levels………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

The US debt ceiling and budget stand-off has begun to generate concern. So, this week assumes heightened importance. Although there is hope the debt ceiling issue may be resolved before October 17, if the fiscal impasse continues, it is possible that the Fed tapering may be again postponed to next year.
However, if an agreement is reached, the market will focus on the strength of the US recovery; and assets that are leveraged to an improving US economy should outperform, according experts. In the LME week gathering in London, there were no clear signals where the metals markets were headed………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Bearish technical charts and negative general sentiment about gold is expected to weigh on prices next week, said a majority of participants in the weekly Kitco News Gold Survey.
In the Kitco News Gold Survey, out of 34 participants, 26 responded this week. Of these, four see prices up, while 18 see prices down and four see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

With applications ranging from industrial use and jewellery to silverware, photography and investment, silver is an essential commodity. A quick break-up shows that industrial demand accounts for 44%, followed by consumption in jewellery and silverware at 22%, investment demand at almost 30%, while photography accounts for a little more than 5%.
Since the metal is used for a variety of industrial purposes, the factors impacting its price are also numerous. Starting with its applicability as a precious metal, it is seen that it takes major cues from the price movements in gold. In case of its usage in industrial applications, base metals also provide direction to silver prices………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

People ask me, “How will I sell my silver if the dollar dies, or during chaotic times?” Or, “If there are no dollars, what would I sell my silver for?” Another variation of this question is, “Why would I want silver if I can’t spend it?” And advanced traders ask, “What is the exit strategy?”
Good questions. I think that part of the reason this is a popular concern about silver is that it’s true that we can’t spend silver today, but people know that silver should be money and that we should be able to be able to spend it. But since we can’t spend it, then silver is considered useless………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

The biggest bullion-importing bank in India plans to team up with jewellers for the first time to offer a gold deposit scheme, hoping ease of access and attractive interest rates will tempt people to part with their jewellery and relieve tight supplies.
Bank of Nova Scotia is in talks with trade group the Gems and Jewellery Trade Federation (GJF) and the Reserve Bank of India (RBI) to finalise details, the head of the bank’s Indian bullion operations said………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Barclays Capital sees potential for the platinum/gold spread to widen. Prices have trended lower throughout the precious-metals complex lately, with gold unable to benefit from the U.S. political stalemate over budget and debt-ceiling issues.
“As we have highlighted previously, a key downside risk for platinum is weaker gold prices, which indeed has overshadowed positive developments for platinum prices,” the British bank added………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

The worldwide glut of copper supply is poised to almost triple in 2014, driving prices to the lowest in at least three years at a time when the International Monetary Fund says economic growth will be weaker than forecast.
The surplus will reach a 13-year high of 272,000 metric tons, according to data from Barclays Plc and the International Copper Study Group in Lisbon. Codelco and Freeport-McMoRan Copper & Gold Inc., the biggest producers, are among those scheduled to add supply next year………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Leading bourse BSE plans to launch the currency futures platform, which will utilise new advanced trading technology, by end of November. The country’s oldest stock exchange has received approval from the Securities and Exchange Board of India ( Sebi) to start trading in currency futures.
“We are likely to start currency futures by November end,” a senior official from the bourse said. The launch of current futures platform would also mark the implementation of advanced technology for trading by the exchange. ……………………………………….Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

Singapore’s central bank maintained its commitment to currency appreciation after the economy shrank less than estimated last quarter, forgoing stimulus as labor shortages and record home prices fuel inflation.
Gross domestic product fell an annualized 1 percent in the three months through September from the previous quarter, when it expanded a revised 16.9 percent, the trade ministry said in a statement today. The median in a Bloomberg News survey of 13 economists was for a 4 percent contraction………………………………………..Full Article: Source

Posted on 14 October 2013 by VRS |  Email |Print

China has some carbon exchanges now. They trade carbon permits in seven trial markets. The price is about $7 to 10 per ton of CO2. China will likely add seven pilot carbon pricing systems by 2015. China is expected to add a carbon tax by 2020 and national emissions trading by 2020. These moves will increase the financial incentives for nuclear energy, hydro power, solar and wind power in China.
Carbon permits on the Shenzhen Emissions Exchange, the first of seven trial carbon markets being launched in China, have risen to a price exceeding those in Europe According to Bloomberg New Energy Finance (BNEF) Shenzhen carbon allowances for 2013 increased to US$7 a tonne, up from US$5 a tonne on June 18, the first day of trading………………………………………..Full Article: Source

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