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Commodities Briefing 09.Jun 2014

Posted on 09 June 2014 by VRS |  Email |Print

The mad dash by banks and traders to see who owns what metal inventories at Qingdao port should help bring a swift, and much-needed, end to the practice of using commodities for credit. For the past few years, one of the known unknowns in the mainland’s metal markets has been the use of imports as collateral to secure financing for investments in higher-yielding assets, such as construction.
This has been most apparent in copper, with iron ore, gold, soya beans and other commodities also affected, with the consequent build-up of so-called dark inventories, which are stocks being held for purposes unrelated to supply and demand fundamentals………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

China’s imports of major commodities fell in May from the previous month, official customs data showed on Sunday, as companies scaled back on orders after robust shipments in the previous months caused a supply overhang.
Falling product prices on the back of sluggish demand have led loss-making companies, especially steel mills and crushers, to reduce orders, while increased scrutiny on commodities financing and tighter credit also weighed on import demand………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

To revive investor confidence in commodities market that has plummeted after the NSEL crisis, sector regulator FMC has asked the Securities and Exchange Board of India (SEBI) to make it mandatory for listed companies to disclose their exposure in commodities hedging.
The Forward Markets Commission (FMC) has also written to the Finance Ministry to direct banks to insist on borrowers, who have exposure to commodities, hedging their price risks………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

OPEC ministers say they will almost certainly leave their oil-production ceiling unchanged when the group meets this week. What really matters for global markets is whether Saudi Arabia will respond to global supply shortfalls by pumping a record amount of crude.
Just six months ago, energy analysts predicted output from the Organization of Petroleum Exporting Countries would climb too high and Saudi Arabia needed to cut to make room for other suppliers. They changed their minds after production from Libya, Iran and Iraq failed to rebound as anticipated, and industrialized nations’ stockpiles fell to the lowest for the time of year since 2008………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

An official with the National Iranian Oil Company (NIOC) says Iran ranked fourth among OPEC members due the decrease in oil exports as a result of Western sanctions.
Seyyed Mohsen Qamsari also hoped that Iran’s oil exports will increase in the next month to improve its ranking among members of the Organization of Petroleum Exporting Countries, Iran Daily wrote in its Saturday issue. “Taking the second place in OPEC is quite tough given the increase in Iraq’s (oil) output,” he said. He added Iran’s oil exports are about one million barrels per day………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Opec is set to stick by its oil output ceiling this week, as supply tensions linked to global crises help to keep crude prices high, benefiting producers. The Organisation for Petroleum Exporting Countries, whose dozen member nations together supply about a third of the world’s crude, is widely predicted by experts to keep its daily output ceiling at 30 million barrels of oil.
While Opec is satisfied with current price levels at around US$100 a barrel, the cartel is in fact pumping below its collective target owing to abundant supplies in top crude consumer the United States. Offsetting this are worries of potential supply strains as Ukraine risks sliding into all-out civil war………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Until now natural gas producers were merrily burning up methane gas as there were no regulations stipulating its capture. “Up until now, companies have been perfectly content to do this because there were no regulations stopping them, nor any financial incentives and infrastructure to help them move this extra gas to market,” according to Keith Kohl, in Energy and Capital.
However, some states like North Dakota where its Industrial Commission have already stipulated oil and gas companies to submit a methane capturing plan with every new drilling permit they apply for.The goal is to motivate Bakken operators (shale energy) to capture 85% of the gas they produce by 2016 and 90% within six more years………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Speculators cut bullish bets on U.S. crude oil from a record as inventories were close to a seasonal high following the Memorial Day weekend.
Hedge funds reduced net-long positions in benchmark West Texas Intermediate by 1.5 percent in the week ended June 3, the U.S. Commodity Futures Trading Commission said. Long positions slid 1.1 percent and shorts jumped 5.3 percent………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Barry Ritholtz is out with another article spelling more doom for the precious metals sector and the gold bugs. The self-proclaimed “Gold Agnostic” penned a 2,500 word missive in January which followed a blog post amid the spring 2013 collapse titled “What are Gold’s Fundamentals.”
For the record, Ritholtz’s calls on the markets and gold have been very good. He was bullish during most of the 2001-2011 advance and sold out prior to the 2013 breakdown. But while the anti-gold bug mainstream eat up his gold analysis like a lap dog, we have to mention some errors and a startling omission of gold’s key driving force………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

At some stage, the South African platinum strike will end – probably sooner rather than later now government mediation is putting pressure on both sides to settle. The strike impact on the South African economy is significant. Global industry users of platinum group metals will, no doubt, breathe a sigh of relief and platinum group metal prices may fall back a little on the news when it comes.
But the strange thing is that platinum prices haven’t moved up at all due to the strike, despite the large percentage of global output affected. Indeed the metal’s price is currently some $20 an ounce lower than it was at the start of the strike back in late January!……………………………………….Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

We saw a strong week for markets and select stocks as bears backpedaled from their cries for a major downturn. It still seems that we’re in the early stage of a major bull market, and that any corrections should be relatively shallow, like the one we just saw.
We aren’t going straight up, though, because markets always need to a breather from time to time. We had that breather from March until two weeks ago. The correction was the right amount of time, and we are just emerging from it now………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Hedge funds cut bullish copper bets by the most in a month on concern that a supply surplus will return as demand growth slackens in Europe and China.
Money managers trimmed their net-long position by 24 percent to a four-week low. A probe into inventories in China spurred speculation that imports by the biggest consuming nation will drop, while the European Central Bank took unprecedented steps to combat deflation. Barclays Plc anticipates that global supply will outpace demand from the fourth quarter………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Some 150 people gathered at the Fullerton Bay Hotel rooftop for drinks on a Wednesday night recently to meet fellow members of the mining industry in Singapore. The crowd was so large that the organisers, the Singapore Mining Club, had to turn away another 50 who were interested because of space constraints, a reflection of how much the Singapore metals sector has grown in breadth and depth from an insignificant presence five years ago.
“When we were here five years back, Geneva was the trading hub,” said Dhaval Shah, UIL Singapore head of non-ferrous metals. “All the trading houses have now moved their base to Singapore because this is where they see the growth coming in the future.”……………………………………….Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

ETFs and ETPs listed in the United States gathered US $13.59 billion in net new assets in May which, when combined with a small positive market performance in the month, pushed assets in the US listed ETF/ETP industry to a new record high of US $1.8 trillion, according to preliminary data from ETFGI’s May 2014 Global ETF and ETP industry insights report.
At the end of May 2014, the US ETF/ETP industry had 1,591 ETFs/ETPs, from 58 providers listed on 3 exchanges………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Barbados’ government does not support devaluing the Caribbean island’s currency and says it is determined to maintain its fixed exchange rate with the U.S. dollar. The Barbados dollar has been pegged 2-to-1 to the U.S. dollar since the 1970s. But some analysts believe the currency of the economically struggling country should be devalued.
Moody’s Investors Service has downgraded the island’s government bond rating by two notches from Ba3 to B3, citing “anemic economic growth” and “limited prospects for improvement.”……………………………………….Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Stanford economist Ronald McKinnon argues that China is caught in a currency trap because of its own savings surplus, the U.S. fiscal deficit and near-zero interest rates on dollar assets. As a result, China cannot at this time move toward a more market-driven economy with liberalized interest rates and private banking.
Until the global economy improves dramatically, China’s policymakers will have no easy way out of their currency trap, argues a Stanford economist. In a new research paper, Ronald McKinnon, professor emeritus of economics, concludes that China is hostage to its own savings surplus – and the United States’ lack of savings – and almost-zero interest rates on dollar assets………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

Australia’s lack of action on greenhouse gases is of deep concern to everyone except climate change deniers, a former adviser to Barack Obama has warned ahead of a meeting between the Australian and US leaders.
The concern over Australia’s stance came as the leaders of the Group of Seven major economies expressed their ‘’strong determination” to adopt a global climate treaty that was ”ambitious, inclusive and reflects changing global circumstances” at a summit in Paris next year………………………………………..Full Article: Source

Posted on 09 June 2014 by VRS |  Email |Print

United Nations carbon regulators will consider new rules next month to make it easier for China to switch emission-reduction projects from the Clean Development Mechanism to a new domestic offset program.
China’s National Development and Reform Commission, the chief regulator, has so far approved 16 projects designed to cut annual emissions by almost 8 million metric tons, according to data on its website. Credits from the projects, originally intended for the UN market, may instead be used against limits set for China’s first seven emissions trading programs, according to Bloomberg New Energy Finance………………………………………..Full Article: Source

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