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Commodities Briefing 03.Feb 2014

Posted on 03 February 2014 by VRS |  Email |Print

Deal-making across the global metals and mining sector is set to pick up in 2014 following a seven-year low in mergers and acquisitions volume last year, said consultancy and accountancy firm Ernst & Young. The pickup in activity likely will be driven by improving economic sentiment, healthier balance sheets among the large miners, and the presence of private funds with more than $10 billion looking to invest in the mining sector, Ernst & Young said.
M&A activity in the global mining and metals sector reached 703 deals valued at $124.7 billion in 2013, the consultancy said in its mining and metals mergers, acquisitions and capital-raising report. Excluding the all-share merger of Xstrata and Glencore, deal volumes and value were down 25% and 16% year-on-year to 702 and $87.3 billion, respectively. This marks the lowest number of deals in the sector since 2006 and the lowest global deal value since 2009………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Commodities drifted lower on divergent outlook between emerging and developed economies that raised uncertainty about the demand for commodities, according to Ole S Hansen, Head of Commodity Strategy at Saxo Bank. Industrial metals were weakened on China slowdown fears and lacklustre trading activity ahead of Lunar New Year shut down in Asian markets.
Precious metals failed to find support from the emerging-market turmoil and as result went looking for support. The energy sector was mostly driven by the near-term outlook for US weather which created some extreme volatility in natural gas and supported heating oil………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Hedge funds raised bullish gold wagers by the most since July and sold copper holdings as emerging-market turmoil boosted concern the global economy will slow and increased demand for precious metals as a haven.
The net-long position in gold jumped 40 percent to 60,672 futures and options in the week ended Jan. 28, U.S. Commodity Futures Trading Commission data show. Long wagers rose 5.5 percent to the highest since September, and short bets dropped 16 percent. Net-bullish copper holdings tumbled 62 percent as shorts gained by the most in 11 weeks………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will reduce shipments through to mid-February as western demand falls with the end of winter in the northern hemisphere, according to Oil Movements.
OPEC, supplier of about 40 percent of the world’s oil, will reduce sailings by 90,000 barrels a day, or 0.4 percent, to 23.72 million barrels in the four weeks to Feb. 15, the researcher said today in a report. That compares with 23.81 million in the period to Jan. 18. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

OPEC’s oil output has risen in January from December’s 2-1/2-year low, due to a partial recovery in Libyan supply and higher shipments from Iraq and Iran. Output from the Organization of the Petroleum Exporting Countries averaged 29.94 million barrels per day (bpd), up from a revised 29.63 million bpd in December, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants.
The survey illustrates the potential for OPEC supply to rebound in 2014 if Libya, Iraq and Iran sustain higher output. That could put pressure on oil prices without cutbacks from other members………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

We’ve got to talk about natural gas, because it’s recently been by far the most volatile commodity and, truth be told, a fantastic long-term investment for the past year. Is there still opportunity in the space? What should we make of this mercurial commodity now?
Look at a long-term chart of natural gas, and you’d have made quite a score over the last year, just by being long. Since a spot price low of under $2/mcf in the spring of 2012, we saw futures top $5.50/mcf briefly yesterday before February futures expired. Even my most hated ETF the United States natural gas fund (UNG) rallied from $18 to over $26 since early December………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Shale gas will not herald an energy revolution in the UK in the same way it has in the US, according to chief economist and director of global energy economics at the International Energy Agency (IEA).
In remarks that may temper the enthusiasm of shale gas supporters, Fatih Birol told the Daily Telegraph: “The UK has significant shale gas resources but people shouldn’t expect a US scale energy revolution in the UK. The economics are not as favourable as in the US.”……………………………………….Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Gold has been one of the best performing commodities in January 2014 due to emerging market stress, weakness in equities, strong China physical demand, likely relaxation of India gold import curbs and US macro data, according to Deutsche Bank (DB).
However, the bank said many of these supportive factors may fade out in the course of the year. Bouts of threats from emerging markets are posing a renewed threat to global markets with CDS spreads in Argentina, Venezuela, Turkey and South Africa widening, Deutsche Bank said………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

A recent price increase in gold may reflect the metal’s investment appeal. But local merchants say everyday consumers shouldn’t expect any noticeable changes. “It’s really not much different than what it’s been for a good while now,” said Brent Messer, manager of Facet Foundry Jewelry Studio in Gastonia. “Really, the increase we’ve seen is not all that great.”
Analysts say a sharp decline for equities on Wall Street and fears of an emerging-market crisis boosted the allure of investing in gold, which is a reason gold futures settled higher Wednesday………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

“After three painful years in gold prices and related stocks, have we hit the bottom? Will they head higher?” Steve Todoruk began a recent letter to his clients at Sprott Global Resource Investments Ltd. with these pressing questions.
His take is that either the metals will start going up in the next six months, or the big mining companies will have to close down a lot of their operations. That, in turn, could squeeze supply, initiating another long-term up move, but at a high cost to the producers. So, where are we headed next for precious metals and mining companies?……………………………………….Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

In former times, the rise in the gold price was held down by central banks selling gold or leasing gold to bullion dealers who sold the gold. The supply added in this way to the market absorbed some of the demand, thus holding down the rise in the gold price.
As the supply of physical gold on hand diminished, increasingly recourse was taken to selling gold short in the paper futures market. We illustrated a recent episode in our article. Below we illustrate the uncovered short-selling that took the gold price down today (January 30, 2014)………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Jeffrey Christian, Managing Partner of New York based commodities and agricultural research organisation CPM Group, is something of a bête noire to the ardent gold bull community given his stated views run contrary to theirs on a number of issues – most notably on gold market manipulation.
Christian had noted just over a month ago that he anticipated gold would trade between $1,240 and $1,500 over the next two years (actually a pretty bullish prediction compared with those most mainstream bank analysts have been putting out since the beginning of the current year) with the possibility of spikes above and below these levels occurring in a fairly volatile market which seems to be driven up and down almost daily by the latest economic news items………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Money is flowing out of the emerging markets. A debate is raging over whether this is the fault of the US Federal Reserve, which has effectively encouraged investors to bring their money back home.
That debate is right and proper. But the fund management industry must face a debate of its own. Just why has the money funding companies and governments in the emerging markets proved so fickle? Even given decisions by the Fed, how can sentiment towards such a large swath of the world turn so rapidly?……………………………………….Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

South Korea’s exchange-traded funds (ETFs) took up nearly 20 percent of the main bourse’s trading volume in 2013, data showed Sunday, apparently as investors sought after safer investment destinations.
The average daily trading volume of ETFs came to 792.5 billion won (US$739 million) last year, accounting for 19.3 percent of the 3.9 trillion won by the main bourse, according to the data compiled by the Korea Exchange (KRX). An ETF refers to an investment fund traded on stock exchanges and represents a basket of stocks that reflects an index. It provides retail investors and institutions with a more liquid and risk-hedging tool………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

The nuclear industry fell on hard times and piled up heavy losses following the Fukushima disaster in March 2011, which resulted in the near-collapse of the uranium sector. In fact, the price of uranium plummeted 51% since the meltdown.
With the ongoing nuclear developments globally, the sector seems back on track. A major development is underway in Japan which is looking to restart its 50 shuttered nuclear power plants later this year. China is also seeking to expand its nuclear power capacity to 40 million kilowatts by 2015 and 58 million by 2017 from 12.54 million kilowatts at the end of 2011………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Commodity prices will eventually shed all their gains from the China boom as new supplies and new technologies bring supply and demand back into balance. This finding, contained in academic research presented at the recent American Economics Association conference, is much more pessimistic than implied by the new forecasting methods adopted by Treasury, which assume that Australia’s terms of trade (export prices compared with import prices) will settle at a level 40 per cent higher than their long-term average and remain there at least until 2030.
Estimating the probable path of export prices has been the most vexed forecasting problem for Treasury over the past decade………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Potash Corp of Saskatchewan reported a weaker than anticipated outlook this year, as CEO Bill Doyle observed that 4Q13 “was a challenger quarter.” “Pricing headwinds, most notably in potash persisted as global markets struggled to find stability,” Doyle said.
“Although we witnessed potash demand begin to return in certain regions, most notably in North America, where fall application was underway, limited buyer engagement in contract markets kept offshore shipments at muted levels,” he said. “In this environment, prices eroded and put pressure on gross margin for both the quarter and the full year.”……………………………………….Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

A rise in foreign funding at China’s banks poses a threat for international lenders. The growing problems in the Chinese banking system could spill over into a wider financial crisis, one of the most respected analysts of China’s lenders has warned.
Charlene Chu, a former senior analyst at Fitch in Beijing and now the head of Asian research at Autonomous Research, said the rapid expansion of foreign-currency borrowing meant a crisis in China’s financial system was becoming a bigger risk for international banks………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

Will the emerging market rout be different this time? The fear is it won’t. Defending a currency is a tricky business. Take Thailand in 1997, where massive overspending left it with a huge current account deficit and high interest rate, inflated to protect a currency pegged to the dollar.
But markets are never forgiving and speculators soon attacked the baht, believing poor economic fundamentals left the country vulnerable to shocks. Soon, much of Asia was knocking on the International Monetary Fund’s door and the contagion quickly spread. Russia was next, followed by perennial basket-case Argentina and even Brazil………………………………………..Full Article: Source

Posted on 03 February 2014 by VRS |  Email |Print

South Korea remains on course to meet its target of a 30% cut in greenhouse gas emissions by 2020, according to new data from the Ministry of Environment. It says the total reduction in climate warming greenhouse gases will be equivalent to 233 million tonnes.
Specifically, the country plans transportation emission cuts of 34.3%, 26.9% in the building sector, 26.7% from power generation, 25.0% in the public sector, 18.5% in industry, 12.3% from waste and 5.2% in agriculture and fishery………………………………………..Full Article: Source

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