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Commodities Briefing 03.Jul 2014

Posted on 03 July 2014 by VRS |  Email |Print

Why trading water futures could be in our future? In the next quarter century, demand for water will boom as the world population swells. This liquid gold is expected to be traded like oil. Already commodity experts are brainstorming on how to create a marketplace for water futures.
Water is the one natural resource required to sustain all life on the planet, making it already the most important commodity on Earth. Although it has been fought over, sold, diverted, dammed, claimed by governments and overseen by authorities, Wall Street has never really gotten its hands in it the way it has with, say, oil………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Since 2003, Europe has made the greatest inroads into China’s chemicals, machinery and transport equipment import markets, dominating them all in 2013. Some of the gains seem to have come at Japan’s expense, especially in recent years. This increased exposure to China also implies increased vulnerabilities to a China slowdown. Also, the US and Japan seem to have made a comeback of late.
China’s importance for global growth has risen incredibly over the past decade not only for emerging but also developed markets. In the 2014 edition of our annual China export exposure chart book, we look at how China’s importance as an export market has evolved over the past decade. We note that the importance of China as an ultimate “consumer” of imports has gone beyond commodities………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Chinese petrochemical imports have become the latest commodity financing tool to come under investigation for possible fraud, highlighting the risks from the widespread use of raw materials as collateral to raise loans and skirt credit restrictions.
Commodity financing deals in China, which Goldman Sachs has estimated to be worth as much as $160 billion, have come under close scrutiny after an alleged metal financing fraud at Qingdao Port, a huge trading hub in eastern China………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Kuwait Oil Minister Ali Al-Omair said he expects oil prices to ease following a rise prompted by unrest in oil-producing OPEC members Iraq and Libya. “Markets have witnessed a slight increase recently, but this rise will not last for long as prices will stabilize.
They have already started to ease and return to normal levels,” said Omair, cited by the KUNA news agency. He attributed the prise rise to violence in Iraq and Libya, both key oil producers and exporters in the Organization of Petroleum Exporting Countries………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

The daily newspapers are now full of stories predicting that Iraq, as we know it, will soon disintegrate into three or more warring states. In the last two weeks Sunni insurgents led by the extremist ISIS have routed a good part of the Iraqi army, taken over much of northern Iraq not controlled by the Kurds, and now are moving close to Baghdad.
Despite the dispatch of American and Iranian military advisors to at least assess the situation, most observers say government forces are too weak to drive back the insurgents and retake the lost territory. Washington is refusing to get involved unless the Shiite-dominated Iraqi government makes radical changes in its relations with the Sunnis and Kurds………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

US Treasury Secretary Jack Lew said on Tuesday there was ample oil production capacity to offset any supply disruptions that may occur due to the violence in Iraq. “I believe that world energy markets will be able to deal with the situation as it goes forward,” Lew said.
“I don’t think it’s in the interest of any of the parties in Iraq for there to be a severe disruption in supply,” he added. “There is sufficient capacity in the world right now to deal with whatever we need to deal with.”……………………………………….Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Opec’s oil output has fallen in June from May’s three-month high, a survey found on Monday, as fighting in Iraq closed its largest oil refinery and technical problems slowed its southern exports.
The slight decline underlines how unrest and outages in the Middle East and Africa are taking their toll on Opec supply, just as the International Energy Agency is highlighting a greater need for Opec oil in the rest of the year………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Texas now is pumping 36 percent of the nation’s oil, more than doubling its production in three years, according to new federal data. The Energy Information Administration reports that Texas oil production topped 3 million barrels per day in April, for the first time since the late 1970s.
Nearly as much crude flowed from Texas as from Iraq, which was the second largest OPEC producer in April at 3.2 million barrels per day, according to estimates from Bloomberg. The news agency estimates that Iraq’s production fell to 2.9 million barrels in June amid insurgent violence, which would drop it below Texas oil if the state’s supply continued to rise as it did every month since 2011………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

The world’s 14 billion television set-top boxes, printers, game consoles and other electronic devices waste $80 billion of power a year due to inefficient technology, according to the International Energy Agency.
“Electricity demand of our increasingly digital economies is growing at an alarming rate,” the Paris-based adviser to developed nations said today in a report. By 2020, an estimated $120 billion will be wasted as many devices use about the same amount of power even on standby………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Collusion among banks in setting the gold price benchmark was possible but there is no evidence of this, a senior British regulator said on Wednesday when answering lawmakers’ questions on the trustworthiness of the gold market.
Gold prices and other benchmarks have come under scrutiny, with banks fined $6 billion for rigging the Libor interest rate, used to price a range of financial products. Allegations are also emerging of potential rigging of currency markets………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

British MPs have called on the UK’s financial watchdog to investigate allegations of price-rigging in the London gold market after a senior regulatory executive said that there may have been co-ordinated attempts to manipulate a crucial benchmark.
Members of the influential parliamentary Treasury select committee pressed the Financial Conduct Authority to act after hearing evidence on Wednesday from gold market analysts who believe there is scope to rig the daily price-setting process and that it has probably been exploited frequently………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Gold is generally seen as a safe haven during periods of high inflation. As inflation increases, the value of money decreases and the prices of all goods increase. People prefer to hold gold instead of cash during these periods as gold acts as a retainer of value for them.
Traditional theory states that prices of real assets such as gold does not change permanently in times of high inflation but changes proportionately with the rate of inflation………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

The gold mining industry was fundamentally broke at a gold price of $1 300/oz, Randgold Resources CEO Dr Mark Bristow said. Bristow said the industry was unable to make returns at that low level of gold price range.
The consequences would be a reduction in the supply of gold, which would ultimately push the gold price higher, as physical demand was definitely present. The crystal ball that needed to be studied was the extent of damage the industry would need to experience to reduce supply to drive up the gold price and rescue the rest of the industry………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Copper closed at its highest price in more than four months on Wednesday as more signs of economic growth pushed prices for the industrial metal up. Copper for September delivery gained 6 cents, or 1.9 percent, to settle at $3.27 a pound Wednesday. That’s the highest price for the metal since February, according to the data provider FactSet.
A report on hiring from ADP, a payroll processor, said private employers added 281,000 workers last month, another sign the US economy is shaking off a winter slump………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

BHP Billiton Ltd. played down fears that a probe into commodity-backed loans in China would have a lasting effect on the mining industry. Mike Henry, marketing president for BHP, said Wednesday that jitters about the investigation were overblown and that it hadn’t affected BHP or the broader industry “in any serious way.” BHP is the world’s largest miner by market value.
Metal traders recently warned China’s commodity imports could face an extended fall from near-record rates as banks withhold credit and customs officials tighten checks on incoming shipments. That followed allegations a Chinese trading company illegally pledged metals as collateral to more than one lender………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Global mining productivity has been declining on a volume and cost basis since 2000 as miners have chased production growth during the commodity boom, said EY Global Mining & Metals Advisory Leader Paul Mitchell.
Mining productivity in Australia has declined about 50% since 2001. Despite massive investment in new equipment and automation, Australian mining capital productivity has declined by 45% compared to 22% in all industries, says a new EY report, Productivity in mining: A case for broad transformation. Labor productivity in the U.S. coal sector has declined nearly 30% from 2009-2012, while in the South Africa gold sector, labor productivity is estimated to have declined 35% since 2007………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

A great way to see which themes have worked in the market so far this year — and which haven’t — is to look at the top 10 performing exchange traded funds. ETF’s by definition are baskets of different assets — such as stocks, commodities or bonds — and trade close to their net asset value. Because of this — and the fact that most ETFs track an index — ETFs are less influenced by short-term noise, and more likely to reflect larger underlying fundamental factors.
Bets on volatility, natural gas and Russia have not worked well this year, based on the returns of the major ETF’s that cover those themes. But on the winning side are themes based on coffee, India and precious metals………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Although exchange traded funds backed by physical holdings of gold, such as the SPDR Gold Shares, have gained over 8% this year, investors have been reluctant to return to gold ETFs after scurrying out of the funds last year.
Reluctant until now. Geopolitical tensions in the Middle East and Eastern Europe coupled with some help from the Federal Reserve have helped gold recapture investors’ attention. GLD and rivals such as the ETFS Physical Gold Shares and the iShares Gold Trust gained about 6% last month, convincing some investors to return to gold ETFs……………………………………….Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Crude oil prices have been rising over the past few months and are now hovering above the triple-digit mark thanks to geopolitical tensions in the Middle East. A strained relation between the West and Russia for invading Ukraine as well as uncontrollable violence in Iraq have threatened global oil supply disruption.
This is because both the countries are rich in oil and gas resources and are the major suppliers of the commodity. Russia is the world’s largest producer of crude oil while Iraq is the seventh largest producer. The supply crunch in other oil producing countries added to further woes………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

South Korea’s financial authorities issued a rare warning on Wednesday about the surging Korean currency as the won hit a six-year high against the dollar, which threatens to erode the nation’s export competitiveness. The won has risen about 10% in the past year and is the best-performing Asian currency of 2014.
In a joint message, the Bank of Korea and the finance ministry said they were concerned “about the possibility of overly one-sided moves among market participants,” adding that financial authorities were watching for any unusual trading patterns. The joint warning—the first in eight months—put traders on watch for possible won-weakening intervention by the central bank………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

Australia, this year’s G20 chair, sees little consensus among the Group of 20 leading economies to take major new steps on climate change, senior official Heather Scott said on Wednesday.
Scott, the personal representative or G20 sherpa of Australian Prime Minister Tony Abbott, is helping shape the agenda for November’s G20 summit in Brisbane, and spoke of the importance of finding agreement across the group………………………………………..Full Article: Source

Posted on 03 July 2014 by VRS |  Email |Print

If the Abbott government is successful in reducing Australia’s greenhouse gas emissions by 5 per cent based on 2000 levels then Australia will have done more to reduce greenhouse gas emissions than almost any other advanced nation.
You will never hear this in the Australian debate because there are so many institutional vested interests in favour of a carbon tax or an emissions trading scheme and most of the media are sympa­thetic to them………………………………………..Full Article: Source

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