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Commodities Briefing 05.Feb 2014

Posted on 05 February 2014 by VRS |  Email |Print

A recovering world economy may just be the wind beneath the wings to lift commodities, last year’s laggard, to new heights. To some investors they appear too cheap to resist buying. This is a cyclical story. Stocks had their run in recent times, with last year a blowout too high to be repeated.
Stands to reason that the seesaw should go the other way soon: While the Standard & Poor’s 500 soared in 2013 by nearly 30%, the Dow Jones-UBS Commodity Index dipped 9.6%. Precious metal investors had the worst of the pain, particularly gold (down 28%), as they endured their worse year in almost two decades. ……………………………………….Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Turmoil in emerging markets and nervousness about the Chinese economy rocked global bulk commodity prices last month, economists say. Iron ore and coal were the hardest hit. Thermal coal prices out of Newcastle fell 8.4 per cent last month, and premium hard coking coal from Queensland dropped 5 per cent, data from Platts showed. Iron ore fell 8.4 per cent.
In comparison, the IMF primary commodity price index fell 1.9 per cent. Copper and aluminum eased modestly, while lead, nickel and zinc rose, HSBC data showed………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

China’s economy may be at its slowest in decades, but that doesn’t mean the country’s 1.3 billion people can’t keep plenty of producers, from Africa to Asia, afloat with all the goods Chinese consumers demand.
Last year, one-third of Zimbabwe’s tobacco crop was auctioned off to its biggest customer, China, bringing in about $700 million to the struggling African economy. This year, the government is expecting an even bigger crop, one that will bring in about $1 billion from Chinese buyers, Zimbabwe’s Tobacco Industry & Marketing Board said………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

This year could be another time for testing the abilities of oil producers led by Saudi Arabia on how to manage the volatile market. High on the list of challenges is the growing supply not only from outside OPEC but also from non-conventional sources such as shale and sand oil coupled with timid economic recovery.
And accordingly oil prices are expected to hedge lower than last year putting more pressure on finances of oil exporting countries. A Reuters’ market survey by the end of December expects that the price of a Brent barrel, one of the main benchmarks, will average $104 in 2014 against $108.70 in 2013………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

When I took issue with part of T. Boone Pickens’ stance on OPEC, stating that his ideas were dangerous to domestic oil producers, I wasn’t expecting to get a direct response from Pickens himself.
However, the co-founder of Clean Energy Fuels, owner of private investment company BP Capital, and hardcore advocate of wind and natural gas through his Pickens Plan, reached out to to offer specific thoughts and feedback. While I walked away from the conversation with essentially the same — if a little more moderated — opinion, Pickens’ insight is certainly worthy of sharing with readers………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

If gold dips below $1,200 per ounce for a “sustained” period, serious production cutbacks are likely, World Gold Council representatives warned Monday.
The average industry cost of production is $1,200 per ounce, according to the council, which cited recent Thomson Reuters data. About 30 percent of the gold mining industry becomes unprofitable if prices fall below that threshold, the council estimates………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

As gold prices continue to hover around the $1240 an ounce level, demand for the physical metal remains extremely robust especially demand from China. Yet, despite reports of strong demand, prices still seem to be taking the lead from traders reacting to announcements from central banks, particularly the US Federal Reserve and certain non-related economic news.
After gaining for most of the month, the price of gold notched up its first weekly drop in six due to further signs of U.S. economic growth, concerns over the U.S. Federal Reserve’s withdrawal of monetary stimulus and a slump in Chinese demand………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

A double bottom developing on gold charts suggests a possible rally for the precious metal which is underpinned by major support near its three-year low at $1,180 an ounce, analysts said on Friday.
The formation, which has two troughs at about the same level, is particularly reliable for chartists because it reflects investors’ psychology by pinpointing the critical level where heavy selling has exhausted twice. The pattern, which resembles the letter “W”, connects the two lows on June 28 and Dec. 31 both near $1,180, with a peak in the middle at $1,433 an ounce on Aug. 28. ……………………………………….Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Silver demand in 2014 is likely to be “helped” by continued recovery in the global economy, says a leading analyst, but the price will continue to rely on investment if it’s to move higher.
“A recovering global economy will help boost silver demand,” writes Dr.David Jollie, precious metals analyst at Japanese trading house Mitsui. But while “economic growth is certainly positive for silver, [it] is unlikely to be enough to drive significant price strength alone.”……………………………………….Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Gold may fare well in February but platinum group metals could be “vulnerable,” says INTL FCStone in a monthly outlook. “We think gold will likely continue to do well over the course of February, as we do not think that the correction in the equity markets is over just yet,” the firm says.
“Once the dust settles and equities start to stabilize, we could see a renewed assault on the precious metal, but this will likely not take place until later in the month. Platinum and palladium look somewhat vulnerable to us given that they do not seem to be responding to the ongoing South African mine strikes. In fact, once these actions are over — the various sides have resumed negotiations this week — both complexes could sell off some more from here.” For gold, the firm sees a February range of $1,210 to $1,285 an ounce………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Copper dropped for a 10th day, heading for the longest losing streak since at least April 1986, on signs of weakening demand after manufacturing slowed in China and the U.S., the world’s top metals consumers.
The metal for delivery in three months on the London Metal Exchange slid as much as 0.3 percent to $7,016 a metric ton, the lowest intraday level since Dec. 4, and was at $7,030.50 at 4:28 p.m. in Tokyo. Prices have lost 4.3 percent in this run of declines………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Copper prices marked their longest losing streak in 18 years this week, but while some say the slump is a bad sign for the metal’s biggest importer China, others say it’s no cause for alarm.
The industrial metal’s price, widely perceived as a bellwether for global market sentiment and often referred to as ‘Dr. Copper,’ fell to $3.184 per pound or $7,020 per ton Monday, its ninth consecutive decline, as softer manufacturing data out of China and the U.S. led investors to ditch the commodity amid supply concerns………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

International Stainless Steel Forum (ISSF), in its preliminary report, shows that global stainless crude steel production increased by 5.5% for the first 9 months of 2013 y–o–y. Production for the first nine months of 2013 totalled 28 million metric tons (mmt), up 1.4 mmt in comparison to the same period of 2012.
Production for the 3rd quarter 2013 was at 9.3 mmt, a new all–time 3rd quarter high. However significant differences in regional development prevail. Asia excluding China recorded a stainless crude steel production of 6.5 mmt during quarters 1–3 of 2013 corresponding to a y–o–y decrease of -1.4%………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Some of the most successful trend-following technical analysts focus purely on commodities, for several reasons. One, commodity futures are liquid, highly traded and driven by global considerations. So, price discovery is, by and large, good. Two, when commodities go into trends, those can last for months or even years. Three, these contracts are margin-traded and it is as easy to go short as to go long.
Price trends in non-precious metals are driven largely by global supply and demand. Last year was bad for metals. Downbeat economic conditions meant iron ore declined a little over 15 per cent in price, globally. Copper prices on the London Metal Exchange dropped nine to 10 per cent. Aluminium hit a five-year low………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

In a release timed to coincide with this year’s big Mining Indaba meeting in Cape Town, Standard Bank’s London-based global head of mining and metals, Rajat Kohli had some very pertinent comments to make on the necessity for the mining industry to consider innovative funding structures in 2014.
Equity markets are spurning new resource ventures amid continuing uncertainty in the commodity price outlook, spurred in part by the Federal Reserve’s decision to begin withdrawing its unprecedented monetary stimulus. Meanwhile existing quoted companies equity valuations, particularly in the gold sector, have fallen so low that raising money in equity markets leads to unacceptable dilution………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

BlackRock Inc’s iShares, the largest U.S. provider of exchange-traded funds, is launching a new set of currency-hedged ETFs on Tuesday as it looks to target investors interested in international equity exposure but concerned about potential losses from a rising U.S. dollar.
The new iShares ETFs, which are set to begin trading Tuesday on the NYSE Arca, will focus on Japan, Germany, and EAFE countries, which include developed markets outside of the U.S. and Canada. The ETFs hedge by using foreign currency forward contracts, which allow market participants to lock in an exchange rate on a specific date………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

EBS, ICAP’s electronic foreign exchange business, has launched precious metals trading on its EBS Direct platform, the markets operator said on Tuesday.
London-based ICAP operates a number of electronic platforms in a range of asset classes and instruments, as well as acting as an interdealer-broker, matching buyers and sellers of currencies, swaps and bonds………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

The Chinese Gold & Silver Exchange Society, which operates the precious metals exchange in Hong Kong, has set up a concern group to ramp up its lobbying efforts in the Qianhai special economic zone in Shenzhen after the central government said it would create more free-trade zones.
At the exchange’s first trading session in the Year of the Horse yesterday, president Haywood Cheung Tak-hay said it expected to unveil a legal and logistics framework in the first half of this year for setting up an exchange and a metals warehouse in Qianhai………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Here we go again. First, money poured into emerging markets when it looked like they offered juicy returns. Then it poured out after they didn’t. Currencies are collapsing. Stock markets are falling. And central banks are sacrificing the real economy to save the exchange rate.
We’ve seen this movie before. It was called the East Asian financial crisis, back in 1997. But, for once, the sequel won’t be worse than the original. Emerging markets don’t have enough foreign-money debt this time around to make their falling currencies much of a concern. What is a concern is whether their central bankers realize this………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Scottish independence: Chancellor George Osborne has claimed that the recent intervention by the Bank of England Governor Mark Carney has “demolished” the SNP’s arguments that an independent Scotland could continue in a sterling zone with the rest of the UK.
In a hardening of his position against a currency zone, Mr Osborne told the Lords economic affairs committee that the “assertions made by the SNP are simply not credible” on Scotland being able to keep the pound or have a share in the Bank of England………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Global cotton production is expected to decreae 4% to 25.7 mn tons in 2013/14 compared to 2012/13 while mill use is likely to rise 1% to 23.6 mn tons according to International Cotton Advisory Committee (ICAC).
The 2013-14 production would be 8% off from peak production of 28 million tons in 2011/12. This is due principally to lower yields and less area planted with cotton. The world average yield in 2013/14 is forecast at 777 kilograms per hectare, down 2% from last season and world area is forecast at 33.1 million tons, also down 2% from last season………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

The European Commission’s proposed carbon price stabilisation mechanism is a “masterpiece of Brussels technocracy” that could fuel greater market volatility, says a group of academics charged with defining France’s position on the proposed package of 2030 climate legislation.
Jean-Michel Charpin, the inspector general of the French government’s finances, who will lead the mission, was critical of the European Commission’s proposed reform. The stability of the carbon market is “essential”, Charpin said, stressing that the current CO2 prices of around €5 a tonne “are not satisfactory”………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

Britain’s greenhouse gas emissions rose 3.2 percent in 2012 from a year earlier due to a move from natural gas to coal for power generation and increased use of heating during a cold winter, final government data showed on Tuesday.
Britain, the world’s ninth largest emitter in 2012, saw greenhouse gas emissions reach 581.2 million tons compared to 563.2 million tons in 2011. Carbon dioxide, the main greenhouse gas blamed for climate change, accounted for 82 percent of 2012 emissions, rising 4.4. percent to 474.1 million tons from 2011………………………………………..Full Article: Source

Posted on 05 February 2014 by VRS |  Email |Print

The European Parliament will decide on Feb. 6 whether to speed up the start of a measure to prop up emissions prices after the assembly’s smallest group raised an objection to fast-tracking the proposal.
The Europe of Freedom and Democracy group, which has 31 members out of a total 766 Parliament seats, opposes the carbon market rescue plan because it boosts industry costs, its member Zbigniew Ziobro said……………………………………….Full Article: Source

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