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Commodities Briefing 17.Dec 2013

Posted on 17 December 2013 by VRS |  Email |Print

While 2013 has seen tumult in emerging markets characterised by sizeable downgrades to growth expectations and a sell-off in EM currencies, commodity demand has not fared badly, said Barclays Research in a snippet.
According to Barclays, 2014 growth expectations for the BRICs have stabilised, fears of a China hard landing have dissipated and there has been a rebound in global manufacturing………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Tougher Chinese policies aimed at reducing the nation’s dependency on coal and curbing pollution will help moderate global coal demand growth over the next five years, said a leading world energy watchdog Monday.
The International Energy Agency said in its Medium-Term Coal Market Report that coal is forecast to grow at an average of 2.3% a year through 2018 compared with the 2012 report’s forecast of 2.6% for the five years through 2017 and the actual growth of 3.4% a year between 2007 and 2012. Coal is forecast to be the fossil fuel with the largest growth in absolute terms up to 2018, although natural gas demand is forecast to grow at 2.4% a year over the same period………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

International demand for coal is only going in one direction: up. Radical action to stall the growth of coal and curb the growth in greenhouse gas emissions is off-track, according to the International Energy Agency (IEA).
The IEA’s latest five-year outlook predicts coal consumption will grow at an average 2.3 per cent per year. The world will burn almost nine billion tonnes of coal per year by 2018, the agency predicts. Despite efforts from the Chinese government to encourage more efficient use of energy and more power from renewables, China will account for nearly 60 per cent of the predicted growth………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

The Energy Department says the nation’s energy picture is getting ever rosier. Production is rising, consumption is slowing, and prices are expected to remain in check. According to the Energy Department’s annual outlook, domestic oil output may regain the peak it reached in 1970 over the next two years and gasoline prices will fall over the same period to just over $3 per gallon.
Natural gas production and use will continue to soar, demand for gasoline will fall, and energy-related emissions of carbon dioxide will remain below 2005 levels for the next quarter-century………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Morgan Stanley believes that by the middle of the decade Australia will be a global energy superpower thanks to increases in its natural gas exports, allowing it for the first time in nearly 40 years, to eliminate a current account deficit.
They expect LNG production to increase vastly as huge projects start to come online and turn Australia into the world’s largest exporter of LNG by 2017, overtaking Qatar………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Soon after the Organization of Petroleum Exporting Countries held its regular ministerial meeting Dec. 4 in Vienna, the usual question was asked: Does its decision to maintain the group’s official production quota level at 30 million b/d even matter?
Non-OPEC production continues to rise. So does global demand, particularly in China, India, and other rapidly industrializing nations. Yet OPEC’s deliberations every 6 months don’t seem to carry the force they once did. One reason may be that it may never have been that effective as a cartel despite the rude awakening consuming nations received when gasoline prices quickly doubled during the 1973 Arab oil embargo, according to one observer………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Oil prices rebounded from their early November lows as markets digested the Iranian nuclear deal and responded to a flow of positive global economic data, according to a National Bank of Kuwait (NBK) report.
With non-OPEC supplies expected to rise strongly in 2014, OPEC may still need to cut output in order to maintain prices close to USD 100, it said An oil price of between USD 103 and USD 105 pb in FY13/14 could generate a budget surplus for Kuwait of around KD 12 bn this fiscal year, equivalent to around 24 percent of GDP, the report showed………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Gold prices may close the end year near $1,300 lifted by a “relief rally” if the U.S. Federal Reserve votes this week to keep stimulus measures intact, CNBC’s latest survey of bullion market sentiment shows.
The precious metal, one of the biggest casualties of Fed ‘taper’ fears, has lost more than a quarter of its value this year – its first annual decline in 13 years as investors increasingly rotate into equities and away from safe-haven bonds and bullion………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Investors are dumping gold-backed exchange traded products at the fastest pace since the securities were created a decade ago, mirroring the steepest price drop in 32 years.
Holdings in the 14 biggest ETPs plunged 31 per cent to 1,813.7 tonnes since the start of January, the first annual decrease since the funds started trading in 2003, data compiled by Bloomberg show. The removals erased $69.5 billion in the value of the assets as prices fell by the most since 1981………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

The supply demand data clearly shows that ETP liquidations are being matched by robust global demand, especially in China. Even if ETP holdings dropped by another 300 plus tonnes in 2014, average Chinese imports through Hong Kong alone are running at well over 100 tonnes per month.
Outflows of gold from ETFs amounted to 24.3 million ounces, nearly 700 metric tonnes, in 2013 from their peak at the end of 2012. Much of this gold was taken out of ETF holdings in London and shipped to refineries in Switzerland, where it was melted down and made into kilogramme bars, then sent to Hong Kong and ultimately to China………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Despite aggressive downward lurches in the gold price in recent years, gold miners remain reluctant to hedge their gold production.
The majority of new hedge books opened since gold’s nominal peak in 2011 have been imposed by lenders or motivated by tactical cash flow concerns. London-listed Shanta Gold and Australia’s Evolution Mining have both used hedging this year, but only as a ‘last-dollar’ funding technique, used to bring new mines into production, with the majority of their output remaining unhedged………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Good news is in the offing in India with the government deliberating a review of the duty structure and the restrictive measures to import gold. With the country’s current account deficit shrinking to $5.2 billion, India’s tough measures on gold are set to ease, according to reports.
“India’s CAD is just 1.2% of gross domestic product for the quarter ended September 2013, as compared to the deficit of $21.8 billion for the quarter ended June 2013 - nearly 76% down. The reduction in CAD is attributed to curbs on gold imports coupled with a smart recovery in exports following the depreciation of the rupee,” said Manish Kedia, bullion retailer………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Time to Buy Silver! So…How many gold and silver investors are still hanging in there? Anybody? Well, chins up, precious metals fans — because 2014 should see a broad range for precious metals prices, from slightly below to well above current levels, with an even broader range expected for silver…
Broad Spectrum of Predictions: Naturally, we’re not surprised to hear long-term silver bulls calling for higher silver prices going forward. “Silver To Hit New Highs Despite Bearish Forecasts,” reads a headline from Silverseek.com. “One Trigger Event is About to Send Silver to All-Time Highs,” proclaims another from The Market Oracle………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Chinese companies are keen to pour money into mining projects in Africa, but investors have received a fresh warning about the risks in the continent’s mining sector. Speakers at the recent Global Resource Investment Conference in Shenzhen told of some of the problems that can beset projects in resource-rich Africa.
“There are many potential Chinese clients who are interested in investing in mines in Africa, but there are lots of challenges,” said Cindy Pan, a lawyer at international law firm Dentons. Pan cited poor infrastructure, political instability, corruption, cultural differences, as well as other political and legal risks………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

The outlook for the global base metals industry remains stable, said the Investors Service of Moody’s, an international credit rating agency, in a report released Monday.
Average prices for aluminum, copper, nickel and zinc will remain near 2013 levels in the next 12 to 18 months, but will continue to show volatility, said the Moody’s report entitled “Slow Global Recovery Will Keep Base Metals Prices Range Bound.”……………………………………….Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Rare earth price rally proved short-lived due to tepid demand. Downstream producers were holding to the sidelines against sluggish rare earth market, sending prices down.
Largest Known Rare Earth Deposit Discovered in North Korea SRE Minerals Ltd. announced December 4 the discovery of what it claimed was the world’s largest deposit of rare earth elements, in North Korea………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Gold ETF funds and gold funds are both supposed to be good paper substitutes for buying physical gold, more or less approximating its returns. However, over the last few months, gold fund investors have been mystified by the divergence of returns between Indian gold ETFs and gold funds. On the face of it, there is no sensible reason for this.
Typically, the gold fund of an AMC invests in the gold ETF of the same AMC. Therefore, one would expect the gold fund to have slightly lower returns because of additional expenses. Taking one example, SBI Gold ETF has a three-month return (loss) of 17%………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

E Fund Management Co Ltd has launched China’s third gold-backed exchange-traded fund (ETF) but, like its predecessors, the product has failed to make a splash as investors in the world’s biggest bullion user show a preference for physical metal.
E Fund Gold ETF began trading on Monday and saw its market value drop by 0.6 percent on the Shenzhen Stock Exchange. According to a statement published in state media, the fund raised 500.4 million yuan ($82.42 million), which at current prices would buy it just about 2 tonnes of gold………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Hedge funds’ sell-down on agricultural commodities extended to the longest in more than six years as investors position for what many commentators expect to be a bearish 2014 for prices, undermined by inventory rebuilds.
Managed money, a proxy for speculators, reduced its net long position in futures and options in the major 13 US-traded agricultural commodities by 18,000 contracts in the week to last Tuesday, according to data from the Commodity Futures Trading Commission………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

ED&F Man Holdings Ltd., the 230-year-old London-based commodities trader, appointed Phil Howell as chief executive officer. Howell, currently head of financial services and group business development, will take up his new post on Jan. 15, replacing Rafael Muguiro, ED&F Man said today in an e-mailed statement. Jan Kees van der Wild, head of the company’s Volcafe coffee unit and the liquid products division, will become managing director of commodities.
ED&F Man, which trades or brokers commodities from sugar to coffee to metals, made a profit of $57.7 million in the year ended Sept. 30, 2012, according to a filing with U.K. Companies House………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

The hottest investment in 2014 will be the virtual currency Bitcoin. Take it to the bank. In fact, I wouldn’t be surprised if Bitcoin doubles in value or more next year. Sure there are those who say it’s nonsense, that Bitcoin is a raging bubble not unlike the “tulip craze” of the 1630s. Blah, blah, blah.
It is not. In fact, it is far from it. Bitcoin is not only here to stay, it is something that if you get in now can make you rich. It is simply the most exciting financial story to come along since the dot-com boom………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

Venezuela is boosting the use of the foreign exchange system known as Sicad to increase the amount of local currency it receives from oil revenue, tourism and gold sales, the country’s oil minister Rafael Ramirez said on Monday.
The government’s Sicad system was created to sell dollars through auctions to importers and travelers at a rate weaker than the official fixed rate of 6.3 bolivars. Though the government has not made the Sicad rate public, participants have said it has ranged between 12 and 14 bolivars………………………………………..Full Article: Source

Posted on 17 December 2013 by VRS |  Email |Print

It’s been a hectic couple of months for government negotiators and the myriad do-gooders, lobbyists and other hangers-on that habitually flock to international summit meetings. In November, thousands descended on Warsaw for almost two weeks of talks at the 19th United Nations conference on climate change.
Then earlier this month, thousands more winged their way to Bali for the ninth ministerial meeting of the World Trade Organisation. But all those days and nights spent in talks haven’t been terribly productive………………………………………..Full Article: Source

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