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Commodities Briefing 12.Aug 2014

Posted on 12 August 2014 by VRS |  Email |Print

Rising commodity prices in the second quarter of the year strengthened mining companies’ balance sheets, reducing the urgency of their plans to sell unwanted assets, Ernst & Young LLP said.The number of mining mergers and acquisitions declined 41 percent to 112 in the quarter from a year earlier, E&Y said in a report today. The value of the deals was $9.5 billion.
Nickel prices jumped 39 percent in the quarter from a year earlier, aluminum rose 6.7 percent and copper gained 3.9 percent at the London Metal Exchange. The largest mining companies consider divestments as a way of reducing debt, maximizing returns on capital and optimizing their portfolios, the consultants said. Stronger balance sheets have reduced the pressing need for that, according to E&Y……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Ever since the Great Recession, it’s been a mixed bag for investors in natural resources. Though driven by the expanding emerging world, prices for commodities — with the exception of energy — haven’t really approached their pre-recession highs. From lower growth in key markets like China to oversupplies of several metals and minerals, commodities as a whole have been a terrible place to park your money over the last three or four years.
That could make them an ideal bargain play. Aside from their diversification benefits, the overall stronger global economy has some of the supply-demand dynamics finally working in investors favor. And after the recent slide in risk assets, the time to buy could be now……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

After hitting a sixth month low at the end of July, the broad based Bloomberg Commodity Index (formerly known as DJ-UBS) managed a small comeback this week. Multiple geopolitical worries halted the slide in crude oil and gave precious metals a lift while industrial metals took stock following disappointing economic data from China and Europe.
The agriculture sector was higher as the grain sector returned from the abyss, thereby helping to offset losses in soft commodities, not least coffee and sugar, while livestock fell for a third week……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

The current quarter witnessed the worst performance from agriculture and energy and a bright spot in industrial metals. The decline in long time yields shown by precious metals is unlikely to sustain over the medium term, indicating that Gold’s resilience is likely to fade, according to a Deutsche Bank report.
The Russian ban on European and US food is only likely to have a limited impact globally as its direct result will be domestic inflation. The real issue for agriculture will be the excessive rains in France, Germany and Ukraine and their impact on this year’s harvest. The rains have already affected Wheat prices……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

The US oil and gas industry experienced a substantial rise in mergers and acquisitions during the second quarter, according to a quarterly report by PwC US Energy Practice. During the 3-month period ending June 30, 54 oil and gas deals took place with values greater than $50 million, accounting for $42.2 billion, compared with 47 deals worth $30.3 billion during last year’s second quarter.
The upward movement is largely attributed to an increase in megadeals, with 12 occurring worth a combined $30.8 billion—73% of total deal value—due to larger oil and gas companies divesting more valuable assets. There were just five megadeals during the first quarter……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Expansions by U.S. refiners might not come soon enough to keep crude prices afloat in 2015, as the companies rush to add capacity to process more shale oil, Credit Suisse says. This year, the market has managed to stave off threats of an oversupply by processing more oil and importing less. As crude production keeps rising, the challenge will be to keep prices from tanking next year.
“2015 looks a slightly more risky year for U.S. crude prices versus Brent than 2014,” Credit Suisse says. Brent is the global oil benchmark……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

A Saudi investment bank has increased its forecasts for both oil prices and the amount of oil Saudi Arabia pumps out in 2014, citing events around the world that are keeping prices high, supply disruptions to other key producers, and a faster than expected rebound in the U.S. economy.
The report by Jadwa Investment does caution that higher crude production by the oil market heavyweight will erode the amount of spare production capacity available to counter new threats to global oil supply. The bank said its expects the Gulf kingdom to use part of its windfall from higher oil prices to add to its foreign asset holdings by more than $45 billion over the whole of 2014……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

The Opec oil cartel trimmed its 2014 forecast for global oil demand growth on Friday after weaker-than-expected economic growth in rich countries in the second quarter and a “fragile” worldwide recovery.
The Organisation for Petroleum Exporting Countries said it now expects demand to grow by 1.10 million barrels per day (mbd) to 91.11 mbd, down from a previous projection of 91.13 mbd. In its new monthly report Oped, which pumps a third of the world’s crude, stuck however to its forecast that demand would grow by 1.12 mbd in 2015 to 92.32 mbd……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

One of the key drivers of the US economic recovery in recent years has been the so-called ‘energy revolution’, as new technology and improved ‘fracking’ techniques have allowed access to unconventional energy reserves.
This boom in energy production in the past few years has had a number of effects, both within the US and the wider energy market. It has also meant the idea of ‘energy independence’ for the country could eventually become a reality……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

A third of gold and silver investors think monetary policy will have the biggest effect on gold prices in the second-half of 2014, with geopolitics in second place. These two factors beat inflation, which came in fourth place, alongside the direction of the stock market.
BullionVault the physical gold and silver exchange online, asked its users in July what they thought most impacted the price of gold. With the Bank of England expected to hold interest rates at 0.5% for the foreseeable future, 33% of respondents believe monetary policy will have the biggest influence. However historical data shows that there is no constant relationship between interest rates and UK gold prices……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Industrial metals from aluminum to zinc rose as tensions eased in the Gaza Strip and signs emerged that the U.S. pushed back militants in Iraq, boosting investor sentiment for commodities. There were no rockets fired from Gaza or no Israeli airstrikes on the territory since a cease-fire went into effect at midnight, the Israeli army said.
Yesterday in Iraq, Kurdish forces were able to retake two towns as militants retreated after U.S. strikes, according to the Kurdish news agency. A gauge of metals fell 1.4 percent in the two weeks ended Aug. 8 as turmoil escalated in the Middle East and Eastern Europe……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Simply put, there is a short-term supply problem in the uranium industry. We believe, however, in the long term, supply will not be able to keep up with demand growth. The point at which we previously expected demand to outstrip supply has been pushed out by a couple of years. That development has impacted the price in recent months, as well as Raymond James’ outlook for the price going forward.
The three main reasons for continued global growth of uranium mine production are the persistence of long-term fixed-price sales contracts, the intransigence of government producers who believe that security of supply is more important than mine economics, and byproduct uranium production. Secondary supply sources also remain robust……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Gold rose to two-week highs last week as worries grew over economic weakness in the euro zone and tensions between Russia and the West. The rise in gold continued a rally sparked Tuesday afternoon, when Polish Foreign Minister Radoslaw Sikorski said Russian troops are poised to pressure or invade Ukraine, causing gold prices to reverse losses and head higher in aftermarket electronic trading.
Conflicts in Ukraine and the Middle East have helped buoy gold prices in recent months, even as the market has been weighed down by expectations that the Federal Reserve may tighten monetary policy sooner than expected, according to the Wall Street Journal……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Mankind has been mining silver for more than 5,000 years. It is believed to have first been mined in what is now Turkey. Through the centuries it became an important trading component especially along the Asian spice routes. Today, silver is not only important for the value it holds but for the vast array of usages derived from its versatility.
What is silver and why is it important ?: Silver is a soft and shiny metal that has the highest electrical and thermal conductivity of all the metals, as well as being the most reflective……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

I remember my first drug high. No, it wasn’t from a shady deal made with a seedy character in a bad part of town. I was in the hospital, recovering from surgery, and while I wasn’t in a lot of pain, the nurse suggested something to help me sleep better. I didn’t really think I needed it-but within seconds of that needle puncturing my skin, I WAS IN HEAVEN.
The euphoria that struck my brain was indescribable. The fluid coursing through my veins was so powerful I’ve never forgotten it. I can easily see why people get hooked on drugs……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

The WTO has made a verdict, believing tariff and quota measures launched by China on the export of rare earth, molybdenum and tungsten go against concerned WTO rules and promises made by China when joining the WTO .
Chen Weidong , a professor with the University of International Business and Economics and a part-time researcher at the China WTO Research Institute , said there would be possibility for a resource tax to replace the export tax that would be canceled. This had been researched by a long period of time, but had not been unveiled……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Multinational professional services group, Ernst & Young, which nowadays likes to be known as EY, has just produced its latest quarterly Mergers and Acquisitions analysis for the mining sector. This shows that there were around 112 deals in the sector during Q2 this year totaling US$9.5b.
Deal volume was down 21% on the previous quarter and down 41% on the same quarter in 2013. Total deal value was up 33% on the previous quarter, primarily due to the US$3.6 billion acquisition of Osisko Mining Corp. by Yamana Gold and Agnico Eagle. Similarly, H1 comparisons show total deal values down 69% year-on-year to US$16.7 billion from US$53.8 billion in H1 2013, the fourth consecutive year of decline…………………………………..Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Investors and hedge funds have shifted away from gold bullion in favor of mining stocks and related exchange traded funds as miners begin to reveal improved business fundamentals. The Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest gold miners ETF, has surged 26.7% so far this year, whereas the SPDR Gold Shares (NYSEArca: GLD) is up 8.7%.
High-profile hedge-fund managers like George Soros, John Paulson, Peter Palmedo and Eric Sprott have benefited from the surge in gold stocks this year, the Wall Street Journal reports……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Shares of Elon Musk’s Tesla Motors (NasdaqGS: TSLA) are up 5.5% Monday and flirting with all-time highs after Deutsche Bank raised its price target on the stock to $310 from $220.
At this writing, Tesla is trading just under $262, implying upside of more than 18% to Deutsche Bank’s price target. Some traders have even more ambitious forecasts for Tesla than Deutsche Bank with at least one money manager recently saying the stock could double……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

With rising geopolitical tension in Ukraine and the Middle East, the stock market will surely continue to struggle in the coming days. Chinese slowdown and concerns over the health of the European economy will also weigh on the broad U.S. equities.
Given the grumpy economic climate, it is difficult for investors to maintain a healthy portfolio. Here actively managed ETFs offer a far better option. This is because these funds are actively managed by a manager who uses various skills and attributes (like top-down approach, bottom-up approach, value investing, growth investing or absolute returns strategy) so that the fund outperforms the benchmark index even if the odds are against it……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

China’s Zhengzhou Commodity Exchange (ZCE) started trading ferro-silicon and silico-manganese futures on Friday August 8. The most-traded January ferro-silicon contract on the ZCE closed at 5,804 yuan ($943) per tonne on the first trading day, after opening at 5,892 yuan per tonne. The contract’s listing reference price was 6,600 yuan.
The most-active January silico-manganese contract on the ZCE closed at 6,482 yuan per tonne, down from its opening price of 6,560 yuan on Friday……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Brazil’s real climbed as the central bank signaled that it will sustain support for the currency when it increased the number of foreign-exchange swap contracts offered in a rollover. The real advanced 0.3 percent to 2.2755 per dollar in Sao Paulo. Swap rates, a gauge of expectations for interest-rate moves, fell seven basis points, or 0.07 percentage point, to 11.59 percent on contracts maturing in January 2017.
The central bank extended the maturity on all of the 10,000 currency swap contracts that it offered today, rolling over $494.2 million, compared with 8,000 available in prior daily auctions. The real dropped 1.1 percent last week as turmoil in Iraq sank demand for emerging-market assets……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Investors and policy makers generally seem to recognize that the prolonged period of low interest rates and low volatility provides fertile ground for its opposite. It facilitates excessive risk taking. The excessive risk taking can take on many forms and employs various vehicles.
Recently Yellen singled out a couple of sectors in the equity market that may excessive. In the past, other Fed officials have cited specific sectors of the credit market, like the high yield bond market, that did not seem sustainable……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

If you were to ask most investment professionals to explain the difference between bitcoin, lowercase, and Bitcoin, upper case, they would probably stare at you blankly.
But for Jan Skoyles, recently promoted from Head of Research to CEO at The Real Asset Company, who provide a platform for retail investors to gain access to the gold bullion markets, the distinction is the basis for a new kind of wealth-management that provides an alternative to the regulated financial services industry……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

The companies we turn to every day for electricity, transportation, consumer goods, and even electronics face risks from climate change. Most need reliable water for production processes and products. Extreme weather and temperatures can hurt their productivity and damage their supply chains and assets.
Business leaders understand that climate change can have real economic impact, and that their current business models may not be profitable in a 4-degree warmer world. They also see opportunity in innovating for a cleaner future……………………………………Full Article: Source

Posted on 12 August 2014 by VRS |  Email |Print

Carbon offset programs are a means to exchange a number of tons of GHG (greenhouse gas) pollution reduction for an equal amount of pollution continuation. Various offset programs allow program participants with relatively low pollution control costs to profit by cutting their GHG discharges and selling the resulting emissions reductions as offset credits that could be subtracted from the buyers’ pollution control requirements.
The buyer will have to pay an offset credit price — usually set by trading in a carbon market — to avoid eliminating a selected amount of its own discharges, while the offset seller must cut its emissions by the corresponding volume of GHG emission reductions at a presumably lower per-ton pollution control cost……………………………………Full Article: Source

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