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Commodities Briefing 13.Dec 2013

Posted on 13 December 2013 by VRS |  Email |Print

Following another difficult year of sizeable losses, the commodity sector remains virtually friendless going into 2014. Oversupply has become an increasingly serious issue for a number of commodities, especially industrial metals and, for the two main metals, aluminium and copper, this is expected to undermine pricing through 2014.
The average year-end copper price forecast from the main investment houses we monitor is $6,750/tonne, some 5% below current spot price………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

The $6.4trn boost to China’s urbanisation, announced at the Third Plenum, will boost the eastern giant’s already “voracious” appetite for raw materials, ETF Securities says. The Chinese administration’s focus on reducing overcapacity should also lead to higher prices for metals, especially aluminium.
It has pledged to halve the original 20-year timeframe for urbanising 400 million citizens through a massive investment drive. That will push up government infrastructure spending, which was 9 per cent higher in 2013 than the previous year………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

It is a common misconception that one barrel of oil is much like another. Crude varies by viscosity from watery to almost solid, by colour from fawn to deepest black and by sulphurousness from negligible to devilish. Around 100 benchmark grades are traded around the world, though a couple garner the most attention.
Patriotic Americans focus on West Texas Intermediate (WTI). Most of the rest of the world uses Brent from the North Sea as a reference. When the two, differing slightly in quality, cost the same the distinction made little difference. In recent years the extraordinary flow of oil from American shale beds has led to a parting of the spigots………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

The International Energy Agency revised its global oil demand forecast for 2014 to 92.4 million barrels per day, up 1.2 million from 2013, Bloomberg reported. The IEA attributed this 1.3 percent rise to strong U.S. oil consumption post-recession. The agency also anticipated that Iranian exports could bounce back.
On Nov. 24, six countries and Iran made an agreement that in exchange for Tehran reducing the size of its nuclear program, international restrictions will be relaxed partially, according to The Wall Street Journal. For November, Iran oil production rose 89,000 bpd to 850,000 bpd with shipments to China and Taiwan………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Exxon Mobil says the U.S. should lift its decades-long restriction on exporting crude oil. ”We are not dealing with an era of scarcity, we are dealing with a situation of abundance,” Ken Cohen, Exxon’s vice president of public and government affairs, told the Wall Street Journal.
Here’s what’s behind the ban – and the energy industry’s effort to reverse it: Why can’t Pumped-in-the-USA crude be exported? In 1973, some members of the Organization of Petroleum Exporting Countries stopped selling crude to the U.S. in retaliation for its support of Israel in a war with Egypt and Syria………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will increase crude shipments through this month as peak refinery capacity is restored to meet rising heating demand, according to tanker tracker Oil Movements.
OPEC, supplier of about 40 percent of the world’s oil, will boost sailings by 380,000 barrels a day, or 1.6 percent, to 24.14 million barrels in the four weeks to Dec. 28, the researcher said today in a report. That compares with 23.76 million in the period to Nov. 30. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Gulf members of the Organization of the Petroleum Exporting Countries, or OPEC, will not act unilaterally in the future to balance the market, the United Arab Emirates’ energy minister said Thursday.
“As a group we are reacting to make sure that the market is well-supplied and we will continue this coordination to make sure that supply is there,” Suhail Mohamed Al Mazrouei said on the sidelines of an energy event in Dubai………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Citi Research and UBS sees Gold prices to average $ 1,200 an ounce range next year. According to Citi Research, gold prices will average $1,255 an ounce next year, falling early in the year on expectations for tapering of Federal Reserve quantitative easing but drawing support from continued Chinese buying.
According to UBS, gold prices to average $1,200 an ounce next year, saying gold is hampered by investor selling interest and limited support to push up prices………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Germany’s financial regulator has demanded documents from Deutsche Bank as part of an investigation into potential manipulation of gold and silver prices.
The probe from the German watchdog comes as regulators around the world step up their scrutiny of benchmarks after the recent Libor interbank lending scandal led to hefty fines for banks………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Gold investors beware - the precious metal could continue to fall in value for another eight years. The gold price peaked in August 2011 at $1,883 per ounce, the culmination of a decade long bull run.
Ever since the dot-com bubble burst, investors have poured cash into the so-called safe haven, pushing the price sky-ward. This gold bull market coincided with the “lost decade” in equity markets, when prices slid sideways………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

The Volcker Rule, a provision of the 2010 Dodd-Frank Act that prohibits banks from ‘proprietary trading’ will have far reaching impact on gold and silver futures, according to Jeff Nichols, renowned precious metals economist and Managing Director of American Precious Metals Advisors.
The new rule goes into effect from April 1, 2014 and full compiance will be effective from July 21, 2015. According to Jeff Nichols, the Volcker Rule would mean large US banks such as Goldman Sachs and JP Morgan will be prohibited from trading gold and silver, including forward, futures and options-except on behalf of customers and not for their own short-term speculative gains………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Wholesale London gold tumbled more than $20 per ounce in quiet trade Thursday morning, falling with world stock markets after the week’s “three-day rally [in gold] prompted some profit-taking” according to one dealing desk.
“The fact that India,” said investor, fund manager and best-selling author Jim Rogers to BullionVault overnight, “which has been the largest buyer, has reduced its buying a lot is one of the main factors that’s causing gold prices to go down.”……………………………………….Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Investors in major gold miners say a return to hedging future production after a slump in gold prices would be a sign of financial weakness in companies and could rob them of the chance to reap the rewards of any price rebound.
The incoming chairman of Barrick Gold, the world’s largest gold miner, last week rekindled the debate over the practice of selling production forward. John Thornton, a former senior executive at Goldman Sachs, said he would seriously consider hedging………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Copper surplus is expected to widen and outpace demand growth in 2014, according to International Copper Study Group (ICSG).
ICSG pointed out that surplus is expected to grow from 387,000 tons this year to 632,000 tons in 2014.Global copper demand is expected to increase by 4.5% in 2014 as economic recovery gains steam internationally………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

The reasons behind the wheels of the base metals complexes coming off. Raul de Frutos, MetalMiner’s lead forecasting analyst, contributed what he sees in the cards for aluminum, copper, steel and nickel.
A current index rise for our Raw Steels MMI (and coincidentally, the Construction MMI), but tempered with our Debbie-Downer reasons for why there’s not a whole lot of optimism in the sector. A bunch of activity in the grain-oriented electrical steel (GOES) sector, namely why there appeared to be such a crash in December’s index reading and what AK Steel and Allegheny Technologies have to do with that market……………………………………….Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Commodities such as copper, lead and platinum are the ones to watch next year as the global economy starts to recover, Nicholas Brooks has predicted.
The head of research and investment strategy at ETF Securities said 2014 will be a “turnaround year” for the asset class, which has underperformed developed market equities for the last three years in a row………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

There is a bright spot in what has been a dark year for precious metals: palladium. Demand for palladium is rising just as supplies from key supplier Russia have diminished. And the launch of a new palladium exchange-traded fund in South Africa is giving investors additional reason to buy the metal.
Absa Capital Ltd. , a unit of Barclays PLC, in January plans to open to investors an ETF that will buy physical palladium—the first such ETF on the Johannesburg Stock Exchange. Some investors believe the fund will immediately start to draw large amounts of metal into its vaults, exacerbating tightness in global supplies………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Heirs Holdings Ltd., a Nigerian investment company with interests across Africa in banking, energy, real estate and agriculture, plans to set up a commodities exchange in the continent’s most populous nation.
The Lagos-based investor wants to acquire the state-owned Abuja Commodities Exchange when it is sold, Heirs Chairman Tony Elumelu said in an interview with Bloomberg Africa TV to be broadcast Dec. 14. If it’s unable to buy the exchange, Heirs Holdings will apply to Nigeria’s Securities and Exchange Commission to set up one, he said………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

The European Union’s bid to clinch a deal next week on overhauling its financial market law may fail amid clashes over rules for commodity derivatives and other issues, a lawmaker said.
Members of the Parliament and officials from Lithuania, which holds the rotating presidency of the EU, didn’t resolve any of the main outstanding points in the draft law during talks today in Strasbourg, France, Markus Ferber, the Parliament’s chief negotiator on the law, said in a phone interview. Sticking points included how to handle overseas-based firms and access to clearinghouses’ trade-feed data, he said………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Newedge Group’s global commodities and currencies chief, John Fay, has left the U.S.-based futures brokerage ahead of a major ownership change.
Fay’s resignation, announced by Newedge on Thursday, comes as the firm’s owners, French banks Societe Generale SocGen and Credit Agricole, prepare for SocGen to take full control of the company………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

It’s a big moment for Bitcoin. With Coinbase Inc. raising $25 million from Andreessen Horowitz and others, it’s not only the largest venture round on record for a Bitcoin startup–according to Dow Jones VentureSource it’s actually more than all venture capital invested into all Bitcoin startups combined during the past 15 months–it also represents the beginning of a shift.
Along with bankrolling the usual employee growth and tech improvements, the startup’s founders will use the infusion to expedite the evolution of Bitcoin from commodity to global currency………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

China’s Guangdong province has warned emitters that unless they bid for carbon permits in government auctions at a regulated minimum price, they will not receive any free permits under the nation’s fourth emissions trading scheme, sources said.
China, the world’s biggest emitter of greenhouse gases, is launching seven pilot carbon markets ahead of a nationwide scheme later this decade as a key measure to cut its emissions per unit of GDP to 40-45 percent below 2005 levels by 2020………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

Support for voluntary retirement of United Nations carbon credits at last month’s global climate talks is unlikely to dent a surplus that drove prices to record lows, according to Bloomberg New Energy Finance.
Envoys at the UN Conference of the Parties in Warsaw encouraged canceling Certified Emission Reductions, or CERs, while stopped short of simplifying the retirement process. About 4 million CERs have been voluntarily canceled by nations and companies, UN data show, compared with more than 1.4 billion created since 2005, according to New Energy Finance………………………………………..Full Article: Source

Posted on 13 December 2013 by VRS |  Email |Print

The markets for CO2 have had about as good a year as Obamacare. Europe’s emissions-trading system (ETS), the world’s largest carbon market, collapsed in April. Australia’s new government is killing off that country’s fledgling market. Yet companies are blithe.
“Internal carbon prices”, the price of a tonne of CO2 used for planning purposes within firms, are becoming an increasingly common business tool. Perhaps firms know something that markets and politicians do not. ……………………………………….Full Article: Source

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