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Commodities Briefing 09.May 2014

Posted on 09 May 2014 by VRS |  Email |Print

China’s economy consumes more steel per unit of gross domestic product than anywhere else, but the emerging market is slowing down spending. The transition of China’s economy from a largely investment driven to consumption driven is underway. Production of steel in China in 2013 grew at a heady 9.3% to virtually match output from the rest of the world combined. China consumes almost half of the world’s steel.
This is outsized relative to other commodities and additional strong growth from this high base will be challenging. Pushing the fixed-asset investment model further, risks future economic shocks. China’s economy consumes more steel per unit of gross domestic product than anywhere else………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

China extended its buying spree for major industrial commodities in April, signaling that its decelerating economy still needs huge amounts of inputs to fuel growth.
China is the largest buyer of many commodities, from nickel to iron ore, and its slowing economic growth has pushed global prices down. But China’s economy is still growing fast – around 7.5% annually – and it appears that Chinese buyers have been bargain hunting for commodities and energy………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

The oil markets have plenty of reasons to be spooked. In Libya, home to Africa’s largest reserves, production has fallen more than 80 percent since militias seized control of the country’s biggest ports last summer. Most of Iran’s oil remains trapped as well. Sanctions aimed at punishing Iran for its nuclear weapons program have crippled its crude exports by 1.5 million barrels a day.
Nigeria is in the midst of its worst oil crisis in years: Rising violence, plus rampant sabotage and theft, have knocked out about 300,000 barrels of oil output a day. In Venezuela, which has the world’s largest oil reserves, production has remained unchanged after years of underinvestment………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

NYC-based PIRA Energy Group believes that the physical markets are recovering. In the U.S., commercial stocks continue to March higher. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Physical markets are recovering: PIRA’s economic growth forecast is on track. Market positioning is more of a concern for next month’s prices than seasonality. Physical markets are recovering, especially in the Atlantic Basin, supported by relatively low stocks and higher crude run demand……………………………………….Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

For oil executives there are few things more exciting than expensive, large-scale projects aimed at pumping more of the black gold. That doesn’t mean investors in oil majors should approve.
Large oil companies are betting up to $1.1 trillion on “high-risk” oil projects over the next decade, according to London-based think tank The Carbon Tracker Initiative. Investors, it says, should question the assumptions underpinning that spending………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

On Thursday, India Ratings said gold prices in the domestic market could lower in the range of Rs 25,500 per 10 gram to Rs 27,500 per 10 gram in FY15.
“The expected decline in domestic gold prices takes cues from the likelihood of a decline in international gold prices to between $ 1,150 per ounce to $1,250 per ounce during FY15, from the current levels of $ 1,300 per ounce,” adding that an economic recovery in the US and euro zone would strengthen the US dollar that has historically a negative correlation with gold………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

Gold prices have probably peaked this year and could sink to their lowest since 2010 at $1,100 an ounce as the U.S. economic recovery gathers pace, consultancy Metals Focus said on Wednesday.
Weakness is likely to set in after an impressive start to the year, it said, when gold rallied to six-month highs. But a replay of last year’s 28 percent plunge, triggered by the U.S. Federal Reserve’s tapering of extraordinary stimulus measures, is not on the cards………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

Iron ore retreated to the lowest level since 2012, heading for a fourth weekly loss and nearing $100 a ton, as increased seaborne supplies of the steel-making raw material boosted a global glut.
Ore with 62 percent content delivered to the Chinese port of Tianjin fell 1.3 percent to $103.70 a dry ton yesterday, the lowest level since September 2012, according to data from The Steel Index Ltd. The commodity has lost 23 percent this year, extending a 7.4 percent loss in 2013………………………………………..Full Article: Source

Posted on 09 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). That positive performance continued in April, when nickel was the best-performing commodity; most recently, LME nickel for three-month delivery hit $18,250 per MT, as per the Financial Times………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

China, the world’s biggest buyer of metals, is back on the hunt for acquisitions, triggered by a decline in prices and a shift in government policy. Chinese demand for assets may help fuel a doubling in the number of mining deals worldwide this year, according to Jay Leary, law firm Herbert Smith Freehills’s joint global relationship partner for BHP Billiton Ltd., the world’s biggest miner. Copper, iron ore and coal are the top targets, he said.
“Over the past six weeks we have seen a significant step- change in the amount of M&A activity in the mining sector,” Leary said in an e-mail. “Over the next year, we would expect Chinese investors to represent a material proportion of mining global transactions, perhaps as much as 30 percent of transactions.”……………………………………….Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

Exchange-traded products’ global assets reached a record high at the end of April with a total of $2.49trn (£1.41trn) being held in the offerings. According to ETFGI’s April 2014 Global ETF and ETP Industry Insight report, ETFs and ETPs captured net new assets of $34bn in April.
iShares saw the most of these inflows in April with $10.7bn being channelled into its products, closely followed by Vanguard and SPDR ETFs with $6.2bn and $4.6bn in net inflows respectively. ……………………………………….Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

ETFs and ETPs listed in the United States gathered US$19.9 billion in net new assets in April which, when combined with a small positive market performance in the month, pushed assets in the US ETF/ETP industry to a new record high of $1.76 trillion, according to preliminary data from ETFGI’s April 2014 Global ETF and ETP industry insights report.
At the end of April 2014, the US ETF/ETP industry had 1,577 ETFs/ETPs, from 57 providers listed on 3 exchanges. The ETF/ETP industry globally hit a record high of US$2.49 trillion in assets at the end of April 2014………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

Exchange-traded fund (ETF) investing is still more popular than ever, with record-breaking levels of cashing pouring into these investments.
In March, assets of ETFs and ETPs (exchange-traded products) in the United States reached a new record high of $1.73 trillion. In the first quarter of 2014 alone, ETFs/ETPs in the United States gathered net inflows of $15 billion, with 1,568 ETFs/ETPs listed from 57 providers on three exchanges………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

Hong Kong Exchanges and Clearing, which operates the city’s stock and futures markets, reported its profit attributable to shareholders gained 2 per cent in the first quarter. The result was aided by rising fee income from commodities trading and an increase in the number of new listings.
The exchange yesterday said profit for the three months to March stood at HK$1.18 billion, up from HK$1.16 billion a year earlier. The growth was driven by a 5 per cent annual increase in revenue to HK$2.34 billion, which offset a 10 per cent increase in expenses to HK$734 million………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

SGX, the Singapore exchange, has hired a top executive at China’s Citic Securities International to head a new office in Hong Kong as part of a focus on drumming up business in Asia amid intensifying competition from exchanges in China.
Ringo Chiu, former chief operating officer at Citic Securities International, will join the Singapore bourse in a newly created job based in Hong Kong that will focus on derivatives, three people familiar with the matter said. SGX has a sales office in Beijing………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

The recent bout of vertigo in US technology and momentum stocks has coincided with another, less-heralded, reversal. Commodities, the fallen angel of the investment world, are on pace to have their best year since 2007. The first quarter of 2014 was only the second in the past 10 in which commodity indices outperformed their equity counterparts. In the second quarter, so far, that has accelerated.
Since the discovery in 2008-09 that commodities neither go up in a straight line forever nor pay a dividend, they have suffered a period in the wilderness with respect to investor demand. But they may be starting to emerge………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

One thing that the European Central Bank (ECB) does not lack is advice on tackling low inflation. This week the OECD added its voice to that of the IMF in April in urging prompt action, calling for a cut in the bank’s main lending rate, from the already low 0.25% reached in November to zero.
The ECB’s governing council, meeting on May 8th (after The Economist had gone to press), was not expected to respond to this plea any more than it did to the IMF’s. The difficulty facing the 24-strong council is highlighted by the euro zone’s differing labour-market trajectories over the past decade (a period during which it expanded from 12 to 18 countries)………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

The euro rose against the dollar on Thursday, trading not far from recent two-month highs and buoyed by a rise in overnight money market rates driven by dwindling excess cash in the euro zone.
The single currency has gained over 4 percent in the past six months and the latest trend came ahead of an interest rate announcement by the European Central Bank that was unlikely to make changes to benchmark rates………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

As part of the Enerdata China energy report we focus on the carbon trading pilot schemes currently implemented in China. Just under a year since China’s first emissions trading scheme launched in Shenzhen, Beijing is now looking to expand these schemes into more of the country’s key industrial regions, according to Su Wei, a senior climate official at the National Development and Reform Commission.
Among the plans being considered is the possible linkage of the Beijing and Tianjin markets that was launched in November 2013, linking the manufacturing hubs of Jiangsu and Zhejiang to the Shanghai market and linking the Guangxi and Hainan regions to the Guangdong market in the south………………………………………..Full Article: Source

Posted on 09 May 2014 by VRS |  Email |Print

Roof insulation may not be deadly, but it is Europe’s unused secret weapon against Russia. An experiment with two identical houses in Hungary laid bare the threat to Gazprom, which supplies 30 per cent of Europe’s gas.
One house was left uninsulated and consumed 1,848 cubic metres of gas from September to February. The German company Knauf Insulation fitted the other with its highest grade materials and almost halved consumption to 982 cu m………………………………………..Full Article: Source

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