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Commodities Briefing 24.Jan 2014

Posted on 24 January 2014 by VRS |  Email |Print

With its recent announcement that it is to quit almost all commodities trading, Deutsche Bank became just the latest bank to exit the sector. Both Morgan Stanley and JP Morgan are divesting assets, Deutsche has gone, and it remains to be seen who will remain.
The primary driving force of this rush for the exit is regulation. The days of banks being able to over-leverage their capital across numerous geographies and businesses are over. They might have ended naturally anyway – the strategy of maximising your leverage ratio did not work out too well – but regulators are pushing the pace………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Like a lot of investors, Ben Willis spent much of the last two years closely watching the dramatic drop in commodity prices. Since April 2011 the MSCI Commodity Producers Index, which tracks a number of global commodity companies, fell 22 percent, while metals such as copper, aluminum and nickel plummeted by more than 30 percent.
While many people have dumped their materials stocks during the free fall, this Bristol-based investment manager was waiting for the right moment to jump in. “I had to see a catalyst that would turn these stocks around,” said Willis, head of research at Whitechurch Securities Ltd………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

The annual moment of truth has arrived. Companies are publishing their numbers for the full year of 2013 and it is time for us all to “brace for a moment of particularly inconvenient truth”, says John Authers in the Financial Times.
Profits aren’t rising fast enough to justify stock-market valuations. The market soared last year – forward earnings multiples are about 16 times at the moment. That’s “well above the historical average” of more like 13 times………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Oil and gas producers will have to keep a lid on investment to appease shareholders, creating a challenge for services companies such as Petrofac Ltd. (PFC), Chief Executive Officer Ayman Asfari said.
“Our industry is facing a huge amount of cost pressure,” Asfari said in an interview in Davos, Switzerland today. “More is being spent to produce less. Our clients are seeing the rate of return on capital dropping and they’re being challenged by investors who want them to be more disciplined.”……………………………………….Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will cut crude shipments through early February as easing growth in Asia adds to a seasonal slowdown in demand, according to Oil Movements.
OPEC, supplier of about 40 percent of the world’s oil, will reduce sailings by 210,000 barrels a day, or 0.9 percent, to 23.66 million barrels in the four weeks to Feb. 8, the researcher said today in a report. That compares with 23.87 million in the period to Jan. 11. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Saudi Arabia’s oil minister and the head of the International Energy Agency have met in the Kingdom to discuss the effects of growing US shale oil production on global oil prices. The Saudi Press Agency says Petroleum and Mineral Resources Minister Ali Al-Naimi met IEA Executive Director Maria van der Hoeven in Riyadh on Thursday.
Earlier this week, Al-Naimi was quoted by the Saudi Press Agency as saying that the Kingdom welcomes the new source of energy to keep up with global demand………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

With this week’s launch of a long-awaited new oil pipeline from the U.S. Midwest to the Gulf Coast, traders are on high alert for a flood of crude they expect to drown local prices.
Yet, instead of heralding a new era of relatively stable prices, TransCanada Corp’s new 700,000 barrels-per-day line may be paving the way for a period of greater volatility as traders attempt to work out exactly when, and how, the long-awaited coastal glut will finally arrive………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

The platinum group of metals holds promise this year for investors compared to gold or silver, according to the London Bullion Merchants Association’s (LBMA) annual forecast. Over 25 analysts, taking part in a poll for the forecast, have said gold and silver will continue to face pressure, while platinum and palladium will average higher than last year.
Gold, which dropped 25 per cent last year, is seen heading lower mainly on the US Federal Reserve tapering its stimulus programme. The Fed, which has already cut the programme to boost US economy to $75 billion a month, is likely to review the stimulus at the open market committee meeting during January 28-29………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Despite plummeting gold prices, global production of the precious metal reached a record in 2013 for the fourth-consecutive year. The result appeared in a report on Thursday from the precious metals consultancy Thomson Reuters GFMS. In addition to dispelling theories about “peak gold,” the study shows that gold miners are churning out the metal at a furious pace, even though they are facing severe margin pressure.
Total gold mine supply reached 2,982 tonnes last year, according to GFMS estimates, up 4.1% from 2012. But Rhona O’Connell, head of metals research and forecasting at GFMS, said the final number will likely be higher as fourth quarter production guidance from miners has been stronger than expected………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Gains in the metal’s price accelerated after it rose above key technical resistance at $1,260 an ounce, a level where it had repeatedly failed. The U.S. dollar’s tumble following a strong manufacturing report in the euro zone also lifted gold prices to a nearly two-month high.
Bullion investor sentiment was lifted after manufacturing data in China showed that a mild slowdown at the end of 2013 in the world’s second-largest economy had continued into the new year………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Barrick gold met 2013 gold production guidance of between 7.0 million and 7.4 million ounces - ceo jamie sokalsky. Barrick gold ceo sokalsky says company met 2013 all-in sustaining cost guidance of $900-$975 an ounce
Barrick expects to record further impairment charge on pascua-lama project, looking at other impairment charges. Barrick gold recalculating reserves assuming gold price of $1,100/ounce……………………………………….Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Are investors too bullish on the stock market’s prospects for 2014 and too bearish for gold’s? It would certainly seem that way based on the near unanimity of analyst consensus. Most institutional analysts have published bullish forecasts for equities in 2014 and a bearish, or at least cautionary, outlook for gold. The favorable forecast for stocks and bearish gold outlook is based on the assumption that deflation remains at bay for the coming year.
But what if analyst expectations are disappointed and deflation rears its ugly head? That is precisely the scenario we’ll discuss here. For if deflation returns at some point this year it would easily upset the status quo for both asset categories………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

In Thomson Reuters GFMS’ 2013 Gold Survey – Update 2, released today, the specialist consultancy’s Rhona O’Connell – Head of Metals Research and Forecasting – notes that the professional market seems to be over-obsessed with issues around the Fed’s proposed tapering programme but that “private individuals in the traditional gold investing countries had no such qualms and as the price tumbled in the second quarter, hordes of these buyers appeared in the market.”
This has led, GFMS notes, to the centre of gravity in the physical market moving “dramatically eastwards during the middle of 2013 as professional investor disgorged metal, for it to be snapped up by rampant demand in Asia and the Middle East.” This resulted in the largest movement of gold, by value, in history……………………………………….Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Lead, tin and zinc are likely to be the best-performing base metals for 2014, based on tightening supply fundamentals, said a base-metals analyst at BNP Paribas on Thursday. Stephen Briggs, base-metals strategist at BNP Paribas, also said he’s slightly bearish on copper and is taking a wait-and-see attitude toward nickel and aluminum.
Briggs said BNP as a whole expects the global economy to grow 3.5% globally, which would be a “benign demand environment” for base metals………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

World crude steel production reached 1,607 megatonnes (Mt) for the year 2013, up by 3.5% compared to 2012. The major chunk of ouput was mainly from Asia and Middle East while crude steel production in all other regions decreased in 2013 compared to 2012.
Annual production for Asia was 1,080.9Mt of crude steel in 2013, an increase of 6.0% compared to 2012. The region’s share of world steel production increased slightly from 65.7% in 2012 to 67.3% in 2013. China’s crude steel production in 2013 reached 779.0 Mt, an increase of 7.5% on 2012………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Commodities are products that investors seem to view as interchangeable widgets. While a baker may have opinions about the source of his grain or a rocket engineer may carefully choose a specific aluminum for her satellite housing, investors tend to see commodities as equivalent inputs for products. A way to invest in this big-picture view of commodities in general is through PowerShares DB Commodity Index Tracking Fund (DBC).
PowerShares DB Commodity Index Tracking seeks to track changes, positive or negative, in an index tracking futures contracts in 14 physical commodities in the agriculture, energy, industrial metals and precious metals sectors. The exchange-traded fund (ETF) invests in a variety of sector-specific ETFs to replicate the index’s results………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Although 2013 was a pretty rough year for commodities, the past few weeks have been solid for the space. A weak jobs report pushed fears of more tapering to the backburner, while sluggish stock prices (and a flat dollar) have rekindled investors’ interest in many natural resources.
While most commodities have benefited from this trend, investors in the platinum market have to be especially pleased. After all, this commodity has risen in the past few weeks thanks to the aforementioned trends, as well as some other platinum-specific factors as well……………………………………….Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Exchange-traded funds (ETFs) have changed the face of investing. First launched in 1993, the ETF industry has surged to more than $1.5 trillion in assets spread across more than 3,100 ETFs and exchange-traded notes (ETNs).
Nearly every conceivable strategy has been converted into an ETF. I can only imagine the financial mad scientists who are hard at work designing the latest ETFs. Unusual ETFs are meant to fill a niche in your portfolio while allowing you to capitalize on your investment ideas for the coming year………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

Today’s plunge in the Argentine peso was the biggest since the devaluation of 2002 following Argentina’s debt default. The peso fell from 6.92 per dollar yesterday to 7.88, a decline of 12%; and at times today the fall was even bigger, with the peso at one point reaching 8.24, according to Bloomberg.
The collapse came as Argentina’s central bank stopped intervening in the currency markets. According to Neil Shearing of Capital Economics, a London-based consultancy, the country’s foreign-exchange reserves fell from a peak of $47 billion in March 2011 to a seven-year low of $25 billion in November 2013. He says that the price of defending the peso had become too great and that the Argentine authorities “have bowed to the inevitable”………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

The Reserve Bank of India (RBI), the country’s central bank, says it will withdraw all currency notes printed prior to 2005 from 31 March. The move is being seen as an attempt to curb the circulation of “black money” - cash that has not been declared or taxed.
According to some estimates, India’s underground economy accounts for 50% of its gross domestic product (GDP). The RBI said consumers will be able to exchange old notes at retail banks………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

China will allow big emitters to use offset credits from nitrous dioxide (N2O) destruction to meet domestic climate targets, giving its nod to a type of project that has been banned in other carbon markets.
The National Development and Reform Commission (NDRC) published on Wednesday a list of more than 120 new types of projects eligible to earn carbon credits that can be sold to power generators and manufacturers facing emission caps under China’s fledgling carbon markets………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

China will allow big emitters to use offset credits from nitrous dioxide (N2O) destruction to meet domestic climate targets, giving its nod to a type of project that has been banned in other carbon markets.
The National Development and Reform Commission (NDRC) published on Wednesday a list of more than 120 new types of projects eligible to earn carbon credits that can be sold to power generators and manufacturers facing emission caps under China’s fledgling carbon markets………………………………………..Full Article: Source

Posted on 24 January 2014 by VRS |  Email |Print

The European Union executive stuck to its guns Wednesday in proposing far-reaching targets to combat climate change, defying expectations that it would ease off in the face of intense lobbying from heavy industry and even some member states.
The European Commission said the 28-member bloc should cut carbon emissions by 40% by 2030, compared with 1990 levels. Heavy industry and utilities as well as some governments had sought a target of 35%………………………………………..Full Article: Source

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