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Commodities Briefing 18.Oct 2013

Posted on 18 October 2013 by VRS |  Email |Print

Commodities remain the world’s worst-performing asset class this year, with the benchmark Dow Jones-UBS Commodity Index falling 8.95% year-to-date. A number of factors have conspired against commodities like gold and copper this year, but a key reason is China’s slowing growth.
The Asian giant accounts for more than 40% of global demand for iron ore, lead, copper, aluminum, zinc and nickel, and its economic slowdown has hurt production and demand for a number of commodities. “Also note that China represents 40%-50% of global industrial metals demand, compared with just 12% of global oil demand, and year-to-date base metals prices are down 15% versus just 3% for oil,” said PIMCO, a major investment financial institution………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Commodities’ price resilience to the US government shutdown has enhanced their record as assets relatively immune to such “drama”, Societe Generale said – amid worries about a repeat of the budget impasse. Commodity markets proved “largely indifferent” to the political gridlock which shut large parts of the US government for more than two weeks, the bank said.
Their September weakness - which was attributed to the removal of risk premium injected into energy markets during the height of the Syria crisis – eased off “despite the strengthening dollar and the direct loss in US economic growth”………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Our nation once feared the day oil prices would hit $100 per barrel. Today, however, we’ve come to find that price to be more than acceptable. In fact, according to Peter Voser, the CEO of Royal Dutch Shell , an oil price of $100 is a pretty good value. I’d even go so far as to say it’s a good price for America because it’s one that is critical to funding our current oil boom.
Complex production is expensive: In suggesting that $100 oil is a good value for oil to be these days, Voser pointed to one very important fact. He said that, “If you look long term, the oil price in our opinion will rise because it will be technically speaking more complex to develop resources.”……………………………………….Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Today marks the 40th anniversary of the Organization of the Petroleum Exporting Countries embargo against the U.S. and states that supported Israel after Egypt and Syria initiated simultaneous offensives against it on Yom Kippur in 1973. While it’s not an anniversary that many will celebrate, it’s a good opportunity to reflect on how much more secure our energy situation is, despite our continued heavy reliance on fossil fuels.
Most commentators have focused, with good reason, on the West’s greatly enhanced ability to withstand similar shocks were they to occur today. Equally important, although generally overlooked, is the reality that OPEC has no incentive or real ability to inflict them on the world………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Four decades ago this month, members of the Organization of the Petroleum Exporting Countries (OPEC) launched an oil embargo against the United States in retaliation for our steadfast support of Israel in her hour of need.
As the Jewish State fought off the Soviet-backed Egyptian and Syrian armies in what would become known as the Yom Kippur War, the OPEC cartel’s actions sent the price of oil soaring and our economy into a recession………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Kenya will start pumping its first commercial oil next year and begin exporting in 2016, but this is just the opening salvo: new discoveries in recent months and fast-track new well development make Kenya the darling of East Africa from an investor’s perspective.
Kenya is set to soar past Uganda, which discovered oil much earlier, but is now having a hard time getting it out of the ground and into the market. And the next five months should bring not only news of the first commercial output for Kenya, but new commercial prospects coming online………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

The size of investment in energy efficiency measures is equal to that in renewable and traditional energy, making it a significant form of fuel, according to the International Energy Association (IEA).
In its new Energy Efficiency Market Report, the organisation notes that investment in energy efficiency rose to $300 billion (£186 billion) in 2011, gaining an important position among the world’s most important fuels………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Gold is currently extremely out of favor. But anyone who cautions you to let go of your gold is missing an unfathomably huge capital undercurrent - one that’s forming right now. What we’re seeing - and what I will show you today - is the unstoppable chain-reaction of conditions that’s about to unfold in the gold market.
It’s time to move on this. This capital wave could lead to the biggest sustained moneymaking opportunity of your lifetime, if you know exactly how to play it………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

If October has held any surprises for anyone so far, it has to be the bears. While volatility has been in evidence, the crash that some analysts were predicting has so far failed to materialize.
One reason for this was the increase in short interest leading up to the start of the month. According to short interest data provided by Consensus Inc., bullish sentiment has been declining for the last few months and recently hit a low for the year to date. Investors and advisors alike, it seems, have been growing more bearish and had a less-than-favorable outlook for the market heading into the debt ceiling limit debate………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Gold prices are likely to bump along the bottom for some time, says Tom Kendall, head of Precious Metals research at Credit Suisse.
He said the problem gold has at the moment, “is that even if you are an investor who believes that you should have a significant allocation to gold as a hedge against inflation or some other… risk hedge, you probably accumulated that allocation through 2009, 2010, 2011 and you don’t need to add to it at the present time, or until there is a feeling that there is a greater prospect of inflation on the horizon.”……………………………………….Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

During this prolonged downturn in the precious metals market, many mining companies are struggling to turn a profit and have either slashed or completely abandoned exploration activities to lower their total all-in costs.
While I do believe that gold (GLD) and silver (SLV) are due for a breakout because of the debt situation facing the US and the inevitable spike in inflation from the easy-money policies of the Fed, it is very hard to say when this will happen and it could take longer than expected. I had previously predicted a breakout of $1,500 gold by November, but it is looking like it could take a little bit longer for this to play out………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

While silver demand among U.S. traders at the moment is muted, silver demand in India - the world’s biggest buyer of the white metal - is insatiable. It will be one of the biggest factors supporting higher silver prices in 2014. And it all stems from a move the government made to limit gold buying…
India - the world’s biggest gold buyer - imposed heavy import duties on the yellow metal this year to try and narrow India’s swollen trade gap. The government raised the import duty on gold three times this year to 10%………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Global steel prices are expected to recovery in the next three years, according to MEPS International.In the company’s latest long term forecast, it predicts that 2013 will be the low point in this cycle. Consumption should begin to pick up in 2014 as the economic climate improves. Nevertheless, there are a number of difficulties to overcome.
Government spending restrictions in western nations are expected to continue to limit infrastructure and construction activity. Furthermore, concerns are developing over a slowdown in Chinese demand. Moreover, buyers across the world are likely to remain cautious about rebuilding inventories………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Investment management firm FinEx Group and the Moscow Exchange said they had launched Russia’s first gold-backed exchange-traded fund as part of a bid to turn Moscow into an international financial centre.
The FinEx Physically Held Gold ETF fund, which has been listed on the Irish Stock Exchange and cross-listed on the Moscow Exchange, tracks the gold price as calculated using the London Gold Fixing Price, FinEx said………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

China’s Dalian Commodity Exchange on Friday will launch the country’s first iron ore futures with physical delivery, to gain more pricing power on the commodity. Chinese steel makers are the world’s biggest iron ore buyers. Volatile iron ore prices have exposed steel makers to risks.
Chinese steel makers suffered losses from volatile iron ore prices and futures provide hedging tools for domestic steel makers and spot traders, said Zhang Yichen, an analyst with Yongan Futures Research Academy. The futures also help Chinese steel makers gain pricing power………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Louis Dreyfus Commodities has entered a joint venture agreement with Brooklyn Kiev LLC to develop and manage a multi-commodity terminal in Odessa, Louis Dreyfus Commodities said in a statement on Thursday.
Louis Dreyfus Commodities said it plans to ship its first grain cargo through the terminal in the coming months. Once completed, in around August 2014, the terminal will have total grain storage capacity of about 240,000 tonnes………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Goldman Sachs’ net revenues in commodities “declined significantly” in the third quarter from the previous three months, the bank said on Thursday, but reiterated its determination to remain in the physical trading business.
Speaking on the bank’s third-quarter conference call, Chief Financial Officer Harvey Schwartz said the firm’s commodity business had suffered from a difficult trading environment between June and September, a period when the bank came under intense political and regulatory pressure over its role in the natural resources supply chain………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

Argentina is inching closer to a currency crisis that could unleash economic havoc unless the government takes the tough decisions needed to increase confidence in Latin America’s No. 3 economy and stem the outflow of foreign reserves.
Starting in 2003, Argentina’s government began moving away from market-friendly economic policies toward a more populist attitude that grants generous government subsidies on everything from public transport to social programs………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

China, the top greenhouse-gas emitter, will continue to test carbon markets and may consider a tax at a later stage to reduce pollution levels, according to a National Development & Reform Commission official.
Seven pilot programs for markets are going “pretty good,” Jiang Zhaoli, head of climate change at NDRC, said yesterday at a briefing in Beijing, without being more specific. China is seeking to cut emissions per unit of economic output by at least 40 percent by 2020 from 2005 levels………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

The European Commission wants to impose carbon emission charges for all flights using Europe’s airspace. Wednesday’s proposal by the 28-nation bloc’s executive arm would force airlines to buy carbon emission permits for all flights within Europe but also for the parts of intercontinental flights that use the bloc’s airspace.
That means, for example, that a U.S. airline flying from New York to Frankfurt would have to buy pollution rights under the EU emission trading system for the part of the route within Europe’s airspace………………………………………..Full Article: Source

Posted on 18 October 2013 by VRS |  Email |Print

The world economy is still in disarray five years after the financial crash, a new United Nations economic report said. The UN Conference on Trade and Development , or UNCTAD, issued a gloomy assessment of a stagnant global economy.
“The global economy is still struggling to return to a strong and sustained growth path,” the UNCTAD reported. The rate of world output was 2.2 per cent in 2012, and is forecast to grow at a similar rate in 2013, it said………………………………………..Full Article: Source

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