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Commodities Briefing 23.Jan 2014

Posted on 23 January 2014 by VRS |  Email |Print

Prolonged market volatility is forcing miners to change the way they operate, making tough strategic changes in a bid to remain viable. Deloitte global mining leader Phil Hopwood explains that mining companies are facing a climate marred by volatile commodity prices and shifting demand fundamentals.
“To rectify cost overruns, improve capital efficiency and rebuild investor relationships, companies need to sharpen their focus on productivity, sustainable cost management and enhanced shareholder value,” Hopwood said………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

It is a long time since China was a positive for commodities markets. For most of the last few years China has blown headwinds at commodities, including concerns about a hard landing, the impact on its metals intensive manufacturing sector of rising costs and soft export markets and the need for structural reform to reduce the economy’s overdependence on investment and infrastructure building, said Barclays in a research note.
The difference this year is that hard landing risks have faded and market participants have lowered their expectations for the pace of Chinese economic expansion………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

During QE3, the latest round of the Fed’s quantitative easing, the stock market rose. We all know that. But did you also know that commodities fell?
That’s right: QE3 had zero effect on commodities — or maybe even a negative effect. In fact, an unbiased observer of the trend might conclude that the Fed drove commodity prices down. That, of course, would be heresy to investors who believe that the Fed’s actions have been inflating all financial markets………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

The American Energy Information Agency’s latest Short-Term Energy Outlook projects falling oil prices and rising natural gas prices over the next two years. This is quite a change from recent times when natural gas prices have suffered while crude oil prices remained strong. With anemic U.S. crude consumption, there are many reasons to start weighting your portfolio toward natural gas.
It is time to bet on natural gas: New U.S. environmental regulations are pushing utilities away from coal and toward natural gas. At the same time, the world’s LNG trade is growing at an alarming pace. Together big fundamental changes are pushing natural gas forward………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Oil prices have steadily moved up for years, and the energy trade has been one that has made many investors happy. With production increasing in the United States at a record pace, the energy analysts at Oppenheimer are convinced that the days of $100+ and even $90+ oil are over.
They also believe that the days of tremendous rising revenues and profits at the major integrateds, as well as exploration and production (E&P) companies, may be over as well………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Iraq was the only member of the Organization of Petroleum Exporting Countries to post a decline in oil production last month, the IEA said Tuesday.
The International Energy Agency, which has headquarters in Paris, said Tuesday oil production from the 12 members of OPEC declined 535,000 barrels per day in December year-on-year. OPEC’s December production, however, was 310,000 bpd higher than the previous month………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Saudi Arabia, an Organization of Petroleum Exporting Countries kingpin, is unconcerned by the U.S. shale oil boom, Oil Minister Ali al-Naimi said Sunday as he met the U.S. energy secretary in Riyadh.
“We discussed the increased production of shale oil in the United States and elsewhere. The kingdom welcomes this new source of energy that helps fulfil the growing world demand for energy, and helps stabilize oil markets,” state news agency SPA quoted Naimi as saying………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Global oil demand will rise faster than expected this year, according to a new International Energy Agency (IEA) forecast that found consumption grew by 91.2m barrels per day (bpd) in Q4 last year, it was reported.
The forecast, in its monthly report on the oil market, said consumption accelerated by 135,000 bpd, buoyed by the recovery of advanced economies led by the US………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Climbdown on setting mandatory national targets, enforced in the EU courts, will be welcomed by Britain. The European Commission is to ditch legally-binding renewable energy targets after 2020 in a major U-turn and admission that the policy has failed industry and consumers by driving up electricity bills.
A Brussels paper on the European Union’s “2030 framework for climate and energy” will instead propose binding targets to reduce carbon emissions without imposing requirements on how the reductions are made………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

A sharp and exceptional split in short-term momentum between the energy and precious metal sectors is continuing into a second week. The four metals, led by platinum, are all among the top five performers this month while the energy sector holds on to negative momentum.
Some signs of a break-up are now starting to emerge, with the recent recovery in both WTI crude and natural gas having the potential of a return to positive strength — but not yet………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Some analysts expect price to fall below £1,000, while others are much more bullish. The gold price will average $1,219 an ounce this year, according to a survey of analysts.
The analysts expect the gold price to range between $1,067 and $1,379 this year, a report compiled by the London Bullion Market Association (LBMA) found………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

A short-covering rally is in store for gold after its 28 percent drop in 2013, says legendary investor Jim Rogers, chairman of Rogers Holdings.
Already, the precious metal has gained 4 percent this month, with the February Comex contract trading at $1,241 an ounce Wednesday morning. Investors sold gold last year as anticipation that the Federal Reserve would taper its quantitative easing quelled worries about inflation………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Gold sales by Japan’s biggest bullion retailer surged 63 percent to a five-year high as prices slumped and investors sought refuge from Prime Minister ShinzoAbe’s campaign to stoke inflation and weaken the yen.
Sales of bars to local investors by Tanaka Kikinzoku Kogyo K.K. soared to 37.3 metric tons in 2013, from 22.9 tons a year earlier, the Tokyo-based company said in a statement today. Sales exceeded purchases for the first time since 2004………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

There’s an upswing of interest — and price gains — in gold and precious-metals miners lately. To Wells Fargo Advisors, it’s a good opportunity to get out. Here’s what Wells’ Sameer Samana says on the subject in a note released Wednesday:
In our opinion, precious metals are now in a downtrend and the path of lease resistance is lower. Bounces in downtrends tend to be small in size and quick in duration. Thus, we believe the recent reprieve in gold and precious metals prices should be taken advantage of to eliminate exposure. Investors concerned about higher inflation and weakness in the dollar should consider this an opportunity to rotate towards a more broadly diversified basket of commodities………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

The outlook for copper isn’t very bright, with analysts expecting prices for the metal to fall this year. Goldman Sachs analysts on Tuesday said they expects copper prices on the London Metal Exchange to average $6,850 per metric tons, or about $3.11 a pound this year. That’s down from an estimated average of $7,328 per metric ton, or $3.32 a pound in 2013.
The analysts see a surplus of 385,000 metric tons in 2014. “This reflects the strong growth in supply following a decade of mining capital expenditure, together with an anticipated strong ramp up in smelter output in 2014 and 2015.”……………………………………….Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Investors are punishing commodity-rich countries yet again. As popular developed market funds like iShares MSCI United Kingdom (EWU) prosper, iShares MSCI Canada (EWC) and its heavy energy allocation keep the exchange-traded tracker languishing near 52-week lows.
Similarly, iShares MSCI Frontier Markets 100 (FM) continues attracting buyers, whereas copper king Chile via iShares MSCI Chile (ECH) has seen its fortunes evaporate over the course of three years………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Whether Elton John and Bernie Taupin realized it or not, you can find gold in a silver mine even though most silver is produced as a credit to copper and lead/zinc mining and not in dedicated silver mines. But if I ever got into a contest with Sir Elton about things I know that he doesn’t, I would lose badly.
The discussion of gold ETFs and gold prices from last week cited an analysis of silver ETFs from last May. I noted then that silver ETF shares outstanding from funds such as the iShares Silver Trust and the ZKB Silver ETF, among others, had a far different relationship to silver bullion prices than did their golden cousins………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Is the beaten down gold getting ready for a take off? The cues from coin sales by the U.S. Mint and increased inflows into gold ETFs suggest that gold optimism is growing. The prices of gold held steady, signaling a sense of growing confidence in gold’s outlook for 2014.
The physical demand for gold remains strong in Asian countries. The U.S. Mint sales of gold coins touched multi-month highs in January this year. The total sale of gold American Eagle coins crossed 83,500 so far in January. This as per Mint statistics is the highest since April 2013. The Mint had announced rationing of silver American Eagle coins to build up inventories………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Nigeria’s government plans to sell its ownership of the Abuja Securities & Commodities Exchange by the middle of the year after missing an initial deadline in a plan to revive trading.
“The government wants to privatize the only commodity exchange and it had committed to doing it by the end of last year,” Securities and Exchange Commission Director General Arunma Oteh said in a Jan. 15 interview at the regulator’s headquarters in the capital, Abuja. “It didn’t meet that deadline, but it’s planning to do something by the middle of 2014.”……………………………………….Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Canada’s national anthem celebrates “the true north, strong and free”. And, if not exactly free, its currency is also a lot cheaper than it was. Yesterday, the Canadian dollar, the loonie, weakened to more than C$1.10 to the US dollar for the first time since 2010, after falling 17 per cent in less than three years.
The bet against the loonie looks crowded, but it is only one of a group of widely disliked investments that include the Australian dollar, emerging markets and mining shares. All are fuelled by commodities, and it has become received wisdom that the commodity supercycle – a decade in which prices soared – is over………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

Venezuela has announced measures to address its foreign currency crisis and boost the economy. Oil Minister Rafael Ramirez says Venezuelans travelling abroad will no longer be allowed to obtain foreign exchange at the official rate of 6.3 bolivars per US dollar.
They will have to pay a higher rate, determined by weekly currency auctions. The official rate will be used only for essential goods, such as medicine, industrial supplies and food………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

The end of physical notes and coins is becoming a ‘reality’ as the use of new technologies expands, according to Visa. Cash is becoming increasingly irrelevant as physical coinage and notes make way for contactless payments, according to Visa.
The card payments operator said the displacement of cash was becoming a “reality”, pointing to a fourfold increase in Britain in the last year of contactless transactions………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

A proposed European Union ban on the use of United Nations carbon credits in its emissions market may signal the end of the international offset market, according to energy consultant Nomisma Energia srl.
The European Commission today set out emissions targets for 2030 that only allow the import of carbon credits if an ambitious global climate deal is agreed in Paris next year, the EU’s executive arm said on its website. The commission wants to cut emissions 40 percent from 1990 levels by 2030………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

The Czech Environment Ministry is going to allot about 172 million carbon credit to industrial companies for the period 2013–20, and their amount will gradually decrease by each year, ministry spokesman Matyáš Vitík told ČTK.
The European Commission (EC) decided on the allocation of free-of-charge carbon credits for Czech industrial enterprises that are included in the Emissions Trading System (ETS) last week. The CzechRepublic thus became another EU member state that managed to obtain a positive decision by the EC regarding the proposal for carbon credit distribution………………………………………..Full Article: Source

Posted on 23 January 2014 by VRS |  Email |Print

EU to set up ‘stability reserve’ that will automatically withhold or add allowances at set price levels. The European Commission today put forward a legislative proposal to change the design of the EU’s Emissions Trading Scheme (ETS) after 2020, in hopes of creating a long-term fix to the problem of a chronically low price of carbon.
The reform would establish an automated ‘stability reserve’ which would withhold carbon credits from the market when needed. This would be triggered when the total number of allowances in circulation in a given year is below 400 million. In that instance 100 million allowances would be automatically released from the reserve………………………………………..Full Article: Source

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