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Commodities Briefing 07.May 2014

Posted on 07 May 2014 by VRS |  Email |Print

The global economy will grow by less than expected this year as growth in developing economies slows, The Organisation for Economic Co-operation and Development predicts. It expects 3.4% world growth this year, down from its 3.6% November forecast. In 2015, however, it still expects growth of 3.9%.
It cut forecasts for China and the US. “We are still not out of the woods yet,” said OECD Secretary General Angel Gurria………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Global natural gas consumption rose by just 1.3% in 2013, down from an average of 2.8%/year in the previous decade, according to a recent report from Cedigaz, the international natural gas association based near Paris. Production growth also slowed, to 0.8%, with the association ascribing the change to supply constraints in a tense geopolitical environment.
Increased pipeline trade led international natural gas trade 2.1% higher year-on-year, overcoming a stagnant, supply-restricted LNG market, Cedigaz said. Interregional pipeline gas exports were strongest from the CIS to Europe (+15%) and China (+36%). Global trade totaled 1,048 billion cu m (bcm)………………………………………..Full Article: Source

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International sales from companies serving the oil and gas sector grew by more than a fifth to reach £10bn in 2012-13, a new report revealed. Overseas sales from companies providing goods and services to the sector increased by 22%, according to new figures from Scottish Enterprise.
Meanwhile total oil and gas supply chain sales from Scotland amounted to £19.9bn in 2012-13, a rise of 15.4% on the previous year. That meant that international deals accounted for just over half (50.2%) of all sales from the sector, up from 47.6% in 2011-12………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

The U.S. Energy Information Administration Tuesday revised upwards its expectations for retail gasoline prices from April through September, commonly known as the “summer driving season,” but said that record U.S. crude oil output should apply “downward pressure” on gasoline prices and protect households’ pocketbook.
In its May Short Term Energy Outlook, the agency also lowered forecasts for how much it expects both world oil demand and non-OPEC supply to grow in 2014, but raised its expectation for oil prices. The EIA expects regular-grade gasoline retail prices will average $3.61 per gallon during the current summer driving season, compared to $3.57 in April’s report………………………………………..Full Article: Source

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The Kuwaiti government has announced that it intends to support Opec’s decision to achieve stability in the oil market. On the sideline of the two-day high-level meeting on climate change in Abu Dhabi, Al-Omair told KUNA that Kuwait will support OPEC’s efforts to create a comfortable atmosphere for both oil suppliers and consumers.
He noted that his country would back OPEC’s decision to keep the current oil production. In regards to Kuwait Petroleum Corporation’s (KPC) strategy to produce four million barrels per day by 2020, Al-Omair said that that the corporation was taking the necessary steps to realize this goal, noting that oil production was increasing gradually………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Frustrated traders and offbeat activists have complained for years in whispers and in online screeds that the price of gold has been subject to collusion. On Monday, these accusations of manipulation found a more august arena for expression: the federal courts.
At a 40-minute hearing, lawyers for more than 20 plaintiffs gathered in Federal District Court in Manhattan to coordinate their linked lawsuits against the five banks that make up what is known as the London gold fix. The suits, filed by hedge funds, private citizens and public investors like the Alaska Electrical Pension Fund, contend that the banks have used their privileged positions as market makers to rig the price of gold to their benefit………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Ian Williams, co-fund manager of the WAY Charteris Gold & Precious Metals Fund, has told Every Investor that he believes both gold and silver will hit new highs within the next 2 to 3 years. Since launch in February, 2010 the fund has lost approximately 50% for investors in line with the performance of other gold funds over that period.
Yet, Williams believes this is set to change as the gold market is currently in ‘backwardation’, when the spot price is higher than the nearest futures contract. Also, the selling of 700 tonnes last year by American holders of ETF’s has now dried up but the ongoing demand from Asia continues apace………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Martin Murenbeeld, Dundee capital Markets’ chief economist has been one of the more prescient gold price forecasters, although was caught out badly by last year’s big gold price fall – as was virtually every other analyst making their predictions early in the year when he was looking for a plus $1600 gold price!
He always predicts three possible scenarios – Worst Case, Median and Best Case and under these three his latest analysis comes up with a gold price average for 2014 of $1182, $1307 and $1409 with a weighted average of $1311. He looks for a year end price of $1367 as his weighted average, with Worst, Median and Best as $1105, $1350 and $1575………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Jim Rogers: I’m very bad at market timing. I’m a very bad short-term trader, so I have absolutely no idea what is going to happen. I do own gold, but I have hedged some of my gold. I expect there will be another opportunity to buy gold sometime in the next year or two.
If that means gold is under $1,000, I hope I’m smart enough to buy. If it means gold is $1,600 because America and Iran end up going to war, I hope I’m smart enough to buy it. In my view, it’s more likely there will be another chance to buy gold lower than now, and that’s why I’ve hedged some of my gold, but I’m not selling………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Nickel prices are on a tear. Since January 12, when the Indonesian government surprised nickel market participants by going through with its plan to ban unprocessed ore exports, the metal has risen precipitously.
In terms of just how precipitously, the numbers speak for themselves. Though the metal’s gains were modest at first, by mid-March, London Metal Exchange (LME) nickel for three-month delivery had reached an 11-month high of $16,230 per metric ton (MT). As one Singapore-based metal trader told the news outlet, “[i]t’s simple: the ban stays in place, the nickel price goes up further. Prices above $20,000 are perfectly plausible.”……………………………………….Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Nickel rebounded on Tuesday after two days of losses as worries persisted about supply from Russia and Indonesia while stainless steel buyers were also fuelling the rally. Nickel prices have surged 33 per cent this year after Indonesia imposed a ban on unprocessed ore exports and as investors became concerned that the Ukraine crisis could squeeze supply from major producer Russia.
Nickel price gains also are reinforced by the structure of the stainless steel market, which accounts for about two-thirds of global nickel demand, said Nic Brown, head of commodities research at Natixis in London………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Primarily used as a risk management tool, the growing use of iron ore derivatives is pushing the evolution of the bulk metal into the 21st century. Iron ore’s rise to prominence is only recent and there are signs it is following the same path as many of its commodity cousins.
Iron ore watchers from afar have often bemoaned the widely accepted benchmark iron ore price from the Tianjin Port in China because it only updates once per day. While a live price is still a few years off, the increased use of iron ore derivatives allows trades to come through more frequently in a more liquid market………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Lanthanum and cerium make up the bulk of what China produces in the REE space, but they’re not the value-added metals. Metals like europium may enjoy better prices, but they’re a small part of the whole REE complex. China’s bread and butter comes from Bayan Obo, which is not a rare earth mine at all. It’s an iron ore mine that produces REEs as a byproduct.
The Chinese can’t stop producing REEs at Bayan Obo because they’d have to stop producing the iron ore as well. One of the intriguing things about REEs is that you can’t just take the ones you want and leave the others behind. You have to go through the whole chemical extraction process to get those with the biggest market or the best price. You can’t send a metal into the tailings pond because it doesn’t have a good price today. You have to do them all………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Flows into ETFs and ETPs listed in the United States rebounded in March gathering net inflows of $10.9 billion which, when combined with a small positive market performance in the month, pushed assets in the global ETF/ETP industry to a new record high of $1.73 trillion, according to ETFGI’s latest quarterly global ETF and ETP industry insights report.
At the end of Q1 2014, there were 1,568 ETFs/ETPs listed in the United States, from 57 providers on 3 exchanges………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Investors are paying the most on record to hedge against losses in Russian stocks as the conflict in neighboring Ukraine intensifies. The cost to protect against declines in the Market Vectors Russia ETF, the biggest U.S. exchange-traded fund that holds Russian shares, rose to an all-time high relative to emerging-market stocks, based on implied-volatility data for options.
The ETF has lost 8.4 percent since President Vladimir Putin’s intervention in Crimea started on March 1………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

ETFs have found their way into countless portfolios over the years thanks to the efficiency of the exchange-traded product structure; day traders have embraced these funds for their unparalleled liquidity and precision, while investors have taken advantage of the low-cost and diversification features. While there’s more than a handful of reasons why ETFs are better than mutual funds, at the heart of the matter lies one straightforward advantage: cost
There are many good reasons why a lot of noise has been made about the cost difference between mutual funds and ETFs. At ETF Database, we’ve certainly emphasized the cost advantage of ETFs over mutual funds, especially over a long-term investment horizon, and we’re certainly not alone when it comes to preaching the benefits of lower fund management fees………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Nearly 160 exchange traded products are up at least 10% this year, according to a Finviz screen. That works out to almost 10% of the entire U.S. ETP universe and nearly 16% of those ETFs have something in common: Exposure to agriculture, livestock or soft commodities.
A drought in Brazil and a harsh winter in parts of the U.S., among other catalysts, have lifted agriculture and soft commodities ranging from coffee to sugar to wheat and livestock. Investors and professional speculators are taking notice………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Tightening shareholding norms of commodity exchanges after the National Spot Exchange (NSEL) crisis, the Forward Markets Commission (FMC), on Tuesday, said no resident individual could hold more than 5 per cent stake in them and scrapped the concept of promoters and anchor investors for such bourses.
In an eight-page document laying out shareholding norms for national-level commodity exchanges, the FMC said at least 51 per cent of the shares of any commodity exchange will have to be held by the public. This is to ensure broader participation in commodity bourses………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

JPMorgan Chase & Co has appointed veteran traders John Anderson and Michael Camacho as co-heads of its commodities business, replacing Blythe Masters, as the bank prepares to sell its physical commodities business.
The appointments are effective immediately, the bank said in an internal memo on Tuesday. A spokesman for the bank confirmed the appointments. The news comes a month after Masters, one of Wall Street’s most powerful women, announced plans to leave after a 27-year career during which she built one of the biggest commodities businesses on Wall Street………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

The division head at China’s State Administration of Foreign Exchange (SAFE) said on Tuesday the current weakness of the Chinese currency is acceptable and he predicted more volatility going forward.
Guan Tao, head of the international payments division at SAFE, wrote in the official Shanghai Securities News on Tuesday that the yuan’s dramatic slide in 2014 was rational, given the performance of other emerging market currencies………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Violent currency swings are the new normal for finance chiefs, forcing them to go beyond traditional hedging strategies. Currencies in at least 20 countries have fallen 6% to 37% against the U.S. dollar over the past year.
The economic turmoil in Argentina and Venezuela and the conflict between Russia and Ukraine have hit their currencies, as well as the first-quarter earnings of dozens of international companies, such as Avon Products Inc., Coca-Cola Co. and Ford Motor Co………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

The majority of businesses based elsewhere in the UK do not support a currency union with an independent Scotland, a survey claims. A British Chambers of Commerce (BCC) survey of 2,400 employers based in England, Wales and Northern Ireland found that just 35 per cent support a formal currency union with Scotland.
A formal currency union that would enable Scotland to keep sterling while continuing to share the Bank of England as a central bank is a key economic policy of the SNP………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

China will launch its first carbon-linked financial product on Thursday, a debt note linked to the performance of carbon offsets on the Shenzhen Emissions Exchange, issued by a unit of China General Nuclear Power Group (CGN).
The launch will be a first test of financial market confidence in China’s emerging emissions markets, as trading houses generally consider outright trade in carbon permits unattractive, since it is limited to spot deals………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

Most of Europe’s heavy industries should keep receiving free carbon permits to help them compete in global markets, the European Commission said in new proposals tabled on Monday (5 May).
The Commission, the EU’s executive, proposed that 175 industry sectors out of the 245 in total that it assessed should be entitled to get most of their allowances for free over 2015-2019 to help meet obligations under the EU’s Emissions Trading System (ETS)………………………………………..Full Article: Source

Posted on 07 May 2014 by VRS |  Email |Print

The U.S. Global Change Research Program released a landmark report on climate change on May 6, put together by over 300 experts across multiple government agencies. The National Climate Assessment (NCA) finds that climate change is already affecting the U.S. – from changing weather patterns to increased floods, wildfires, droughts, pest outbreaks and more.
“Climate change, once considered an issue for a distant future, has moved firmly into the present,” the report concludes. The NCA draws a direct link between the burning of fossil fuels and the effects of climate change………………………………………..Full Article: Source

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