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Commodities Briefing 11.Jun 2014

Bankers Focus on Trading Firm in Search for Metals Used as Collateral
China Commodity Financing Seen Declining by Goldman Sachs
StanChart says not pulling out of China commodities financing
Morgan Stanley CEO expects commodities sales to close in 3rd qtr
Commodity shipping demand to surge
Low volatility is translating into less liquid energy commodity markets
OPEC nations see no reason to alter oil output ceiling
Saudi Arabia, Kuwait expect OPEC to maintain current oil output
Nigeria vies for control of Opec as cartel ponders oil output
Oil Prices Rise Before OPEC Meeting
Global natural gas faces challenges from coal, pricing difficulties: IEA
IEA outlook: ‘Golden Age’ of gas to extend to China
IEA Investment Report: What is Right; What is Wrong
Gold price benchmark open to manipulation-London Metal Exchange CEO
Why James Turk and John Rubino say the price of gold is set to soar to $10-12,000 an ounce
A Bear-Raid on Gold – Is that about to happen?
Platinum and palladium soar
LME Aluminium may rebound to $2000/ton on falling inventory
Iron Ore prices soften as more supplies hit market
Boost ETP sees value in commodities
Is It Time to Buy Top-Ranked Aluminum ETFs?
Energy ETFs Surge Into High-Demand, Summer Months
Eurex concentrates commodity trading on one platform
Commodities Regulator Names New Enforcement Chief
Wheat Poised for Bear Market on Signs of Rising Global Reserves
PBOC keeps yuan traders guessing as currency rallies
Zambia's currency poised to strengthen
China becomes world No. 2 carbon trader
Tony Abbott missing signs of world's switch to carbon trading, experts say

Posted on 11 June 2014 by VRS |  Email |Print

Bankers in China are focusing on the actions of a commodities-trading firm as they scramble to find metals they believed were backing loans but which appear to have been used as collateral multiple times.
The operator of Qingdao port, on China’s eastern coast, said this week Chinese authorities were investigating an alleged fraud involving metals stored at the port and used as collateral to obtain multiple bank loans………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Foreign banks are projected by Goldman Sachs Group Inc. to lend less money against commodity inventories in China amid a probe into metals stockpiles in the biggest consumer of raw materials.
Claims that single batches of copper and aluminum at Qingdao Port were pledged as collateral for multiple loans risks undermining a broader practice in which traders use everything from iron ore to rubber to get funding. The investigation is already weighing down copper prices and may curb foreign exchange inflows to China, according to a report by Goldman………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Standard Chartered said on Tuesday it acknowledges there are issues in China around commodity financing and while it is monitoring the situation, it is not pulling out of its commodity financing business in the country.
Arun Murthy, global head of comomodities at Standard Chartered, also said in an email response to Reuters that commodity financing remained a key focus for the bank………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Morgan Stanley will “probably” close sales of two physical commodities businesses in the third quarter, Chief Executive James Gorman said on Tuesday.
The Wall Street bank is in the process of selling a global oil merchanting business to Russian energy company Rosneft, as well as its ownership stake in TransMontaigne to NGL Energy Partners………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Demand for ships to haul iron ore, coal and other cargoes poised to surge this year, outpacing expansion in the fleet of vessels that can transport the commodities, according to ACM Shipping Group, a shipbroker. Demand for ships to haul dry-bulk goods will jump 12 per cent this year while the supply of vessels expands 4.7 per cent, ACM said in a report on Monday.
Fleet utilisation will jump 7.3 per cent, the most in more than five years, and by a further 8.1 per cent next year, it estimates. Demand is strengthening because falling prices for iron ore are driving up shipments to China from countries including Brazil and Australia, ACM said………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

There has been considerable discussion of late about the lack of volatility in some key trading markets, and the impact that is having on trading groups, their profitability, and thus their interest in remaining engaged in certain markets.
The argument has been that low or relatively flat prices have driven some key trading firms — a fair number of which are big banks — from a number of commodity markets, including energy commodities. Some believe the liquidity of some of these markets has taken a hit as counterparties have left, both because of reduced profitability but also as a result of regulatory pressures………………………………………..Full Article: Source

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OPEC, the oil producing cartel, will likely stick by its output ceiling at a meeting here, member nations indicated Tuesday as they expressed satisfaction with current high crude prices. The Organization of Petroleum Exporting Countries, which pumps out about one third of the world’s oil, has stood by a daily production ceiling of 30 million barrels for almost three years.
OPEC kingpin Saudi Arabia, the cartel’s biggest and most influential producer, declared Tuesday that he expected no change to oil output levels………………………………………..Full Article: Source

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Saudi Arabia and Kuwait said on Tuesday they expect OPEC to keep oil production levels stable so as not to alter prices at a meeting of the cartel this week. Saudi Oil Minister Ali al-Nuaimi said the market was “stable and balanced” and that he therefore believed there would not be any decision to change output.
“The price is at a comfortable level for producer and consumer countries as well as for the oil industry,” he said ahead of Wednesday’s meeting of the Organisation of Petroleum Exporting Countries in Vienna………………………………………..Full Article: Source

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Ministers from the Organisation of Petroleum Exporting Countries reportedly divided over new Nigerian leadership pitch. The Organisation of Petroleum Exporting Countries (Opec) - a group of 12 nations who control over a third of the world’s crude - meets on Wednesday in Vienna as political turmoil in Iraq and Libya pushes prices higher and opens up divisions within the cartel.
The price of North Sea Brent crude nudged up above $110 (£65) per barrel in the run up to the gathering of oil ministers, offering little hope to British motorists that fuel prices in the UK will be falling at anytime in the near future………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Oil prices rising Tuesday to near $105 a barrel leaves smiling OPEC ministers with an easy task to leave crude output levels as they are at their Wednesday meeting. Brent North Sea crude has stayed above that price, the preferred level of top OPEC producer Saudi Arabia, all year and was trading near $110 on Tuesday, supported by the almost total loss of supplies from OPEC member Libya.
The Organization of the Petroleum Exporting Countries, whose dozen member nations pump more than a third of the world’s oil, is meeting in Vienna to agree on policy for the second half of the year………………………………………..Full Article: Source

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Despite its many advantages, natural gas is losing ground globally to its rivals while buyers and sellers struggle to agree on what constitutes a fair price, the International Energy Agency said in a report published Tuesday.
In its annual Medium-Term Gas Market Report, it said global gas demand grew less last year than did demand for competing fuels: estimated at 3.49 trillion cubic meters, it was up just 1.2% from 2012, while oil demand rose 1.4%, coal was up 3-4% and renewables were up more than 4%………………………………………..Full Article: Source

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The “Golden Age” of natural gas that has taken such a strong foothold in North America will extend to China over the next 5 years, driven by booming demand, according to the latest 5-year gas market outlook from the Paris-based International Energy Agency.
In its Medium-Term Gas Market Report 2014, IEA noted that a near-doubling of Chinese gas demand by 2019 will offset a slowdown in demand in other regions. The annual report sees global demand rising 2.2%/year by the end of the forecast period compared with the 2.4%/year rate projected in last year’s outlook………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Recently, the IEA published a “Special Report” called World Energy Investment Outlook. Lets’s start with things I agree with: 1. World needs $48 trillion in investment to meet its energy needs to 2035. This is certainly true, if we assume, as the IEA assumes, that world economic growth will actually improve a bit, from 3.3% per year in the 1990 to 2011 period to 3.6% per year in the 2011 to 2035 period. It is likely that the growth in investment needs will be even higher than the IEA indicates.
In my view, this is a CYA report. The IEA sees trouble ahead. There is no way that investment of the needed amount (which is likely far more than $48 trillion) can be met. With the publication of this report, the IEA can say, “We told you so. You didn’t invest enough. That is why energy supply ran into huge problems.”……………………………………….Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

The global gold price setting benchmark or “fix” is open to manipulation, said the head of the London Metal Exchange (LME), which is competing to offer an alternative to the silver fix when the system is disbanded in August.
The gold and silver fixes, along with other commodity benchmarks, have come under increasing scrutiny by regulators in Europe and the United States since a London Interbank Offered Rate (Libor) manipulation case last year………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Former head of commodities at the Abu Dhabi Investment Authority and GoldMoney.com founder James Turk and John Rubino are well known figures in the gold industry. They’ve just published a new book, ‘The Money Bubble’. It argues that the price of gold is about to soar to $10-12,000 an ounce.
In a nutshell the authors contend that the major paper currencies of the world actually now have less gold backing them than previously thought. An analysis by the Gold Anti-Trust Action Committee concluded that nearly half the world’s gold reserves of 29,000 tonnes have been dumped on the open market through central bank leasing or lending as they term it………………………………………..Full Article: Source

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After some considerable selling of gold from the SPDR gold Exchange Traded Fund in the preceding months, early in 2013, Goldman Sachs came out with a warning that the gold price was going to fall and fall heavily. It did after Goldman Sachs and JP Morgan Chase helped it down with a bear-raid. Thereafter, selling from the SPDR fund persisted throughout 2013.
But it became clear that this selling of physical gold provided an opportunity to ‘short gold’. Goldman Sachs along with JP Morgan Chase and their clients, followed through on their forecast and around mid-April 2013 plus/minus 400 tonnes of gold was dumped onto the market knocking the gold price down by $200 within a fortnight………………………………………..Full Article: Source

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Palladium futures jumped to a 39-month high and platinum headed for the longest rally since April after South African government mediation failed to end a 19-week strike at the largest mining companies. Gold advanced.
Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc said they will consider steps to end the dispute. More than 70,000 mineworkers have been on strike since January in South Africa, the world’s largest producer of platinum and the second-biggest for palladium………………………………………..Full Article: Source

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Aluminium prices which had hit a four-and-a half year low in February at London Metal Exchange (LME) but recovered 14% from those lows. According to United Company Rusal Plc, world’s leading aluminium producer, prices may peak to $2000 per ton in the coming months due to bullish physical and technical factors.
Angel Commodities noted in a monthly report that Chinese aluminum smelters are restarting some idled capacity after prices of the metal rebounded from five year lows hit in March, also taking advantage of lower power costs. ……………………………………….Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Iron ore prices softened in May as more supplies hit the market and prices fell to $90 levels for 62% Fe fines. The Steel Index (TSI) in a monthly report pointed out that the precipitous fall in iron ore prices comes despite a relatively healthy steel sector in China where mills have been back in the black for some time and while trader’s steel inventories are falling.
TSI’s monthly average of 62% Fe fines benchmark price used to settle May derivatives and futures contracts as well as monthly physical contracts was US $100.56/dry metric ton, down 12.2% month-on-month………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Boost ETP’s Viktor Nossek explains how the pace of European equity inflows to ETPs has slowed while outflows from commodity ETFs have recently reversed.
Boost ETP, the specialist provider of short and leveraged ETPs listed in the UK and Italy, is going through interesting times. It has been acquired by US-based Wisdom Tree Investments………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

After nickel, it is aluminum which has been gaining massively as Indonesia enforced a ban on unprocessed mineral ore shipments, effective January 12. Initially the impact of the ban was felt less on this base metal’s prices probably thanks to higher supplies in China.
Also, bauxite (an aluminum ore) which has a huge reserve in Indonesia, makes up a small part of aluminum’s total output cost. Whatever be the case, the ban gradually started to gnaw on the aluminum inventory thus pushing the prices for the metal higher……………………………………….Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

With the summer driving season rapidly approaching and growing demand reducing energy stockpiles, the price of crude oil has continued to surge higher. As of Tuesday, the price of West Texas Intermediate Crude Oil was nearing the significant $105 mark, ahead of the Department of Energy’s weekly inventory report.
Speculation over an additional reduction in stockpiles has energy traders making increasing bullish bets on crude oil ahead of the report. This speculation, in turn, has lifted the United States Oil Fund more than eight percent so far this year and added to gains in energy stocks as well………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

The European Energy Exchange (EEX) and Eurex Exchange have decided to concentrate trading in agricultural derivatives within EEX, in which Eurex holds a majority stake of 63%. The move is set to give customers access to a large and standardised offering of commodity derivatives contracts via one platform.
Agricultural derivatives currently tradable on Eurex Exchange will be offered on EEX from 2015. Eurex Exchange’s product portfolio comprises futures on potatoes, skimmed milk powder, whey powder, butter, hogs and piglets. All contracts are quoted in Euro and are settled in cash. Market indices which reflect the underlying physical transactions are used as reference prices………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Wall Street’s smallest regulator has hired a big-name enforcement director. The Commodity Futures Trading Commission announced on Tuesday that Aitan D. Goelman, a former federal prosecutor turned white-collar defense lawyer, would become the head of its enforcement division. Mr. Goelman, a 45-year-old trial lawyer, will join the agency from the Washington office of Zuckerman Spaeder, where he is a partner.
“He will be a tough, aggressive and fair leader at a critical time in the commission’s history,” Timothy G. Massad, who became chairman of the agency last week, said in a statement………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Wheat prices are poised to enter a bear market on signs that global inventories are climbing as demand wanes for supplies from the U.S., the biggest exporter.
Global stockpiles before the 2015 harvest may rise to the highest in three years, a Bloomberg survey shows. American exporters have sold about 30 percent less wheat for shipment before June 1 than at this time a year earlier, according to government data. The dollar has gained 1.3 percent against a basket of 10 currencies since May 6, when futures touched the highest since February 2013………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

Recent gains after five months of declines attest to policymakers’ new norm of valuation swings, with central bank tweaks adding to volatility. Mainland policymakers have been saying since February that two-way swings in the yuan are the “new norm”. A surprise surge in the currency shows that they mean it.
Twelve-month non-deliverable forwards, which traders use to speculate or hedge, strengthened 0.9 per cent against the US dollar this week, their biggest advance since January 2012………………………………………..Full Article: Source

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Zambia’s local currency, the Kwacha, is expected to strengthen further this week after the Central Bank intervened to save the currency which had depreciated significantly against major currencies, the Zambia Daily Mail reported on Tuesday.
The Zambian currency lost its strengthen to the extent of being labeled among Africa’s worst performing currencies by analysts when it weakened by as much as 2.3 percent during the last week of May………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

China is the world’s second largest carbon trading market following the European Union (EU), according to data released on Tuesday. Xie Zhenhua, deputy head of the National Development and Reform Commission, said Chinese enterprises traded over 3.85 million tonnes of carbon emission quotas as of May 23.
These quotas were sold for 125 million yuan (20.2 million U.S. dollars), making China a major carbon trader only second to the EU. China began pilot carbon trading in 2011 and has approved seven trading schemes in Beijing, Tianjin, Shanghai, Chongqing, Shenzhen, Guangdong and Hubei………………………………………..Full Article: Source

Posted on 11 June 2014 by VRS |  Email |Print

The world’s two largest economies - China and the US - are increasingly adopting carbon trading to cut greenhouse gas emissions, contrary to suggestions by Prime Minister Tony Abbott that other countries are not introducing schemes. Speaking in Canada, Mr Abbott said carbon taxes and emissions trading were the wrong way to address climate change.
He said the debate was not about the existence of climate change, but the best approach to respond to it and he backed ”direct action measures” such as improving energy efficiency and planting more trees………………………………………..Full Article: Source

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