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Commodities Briefing - Archive | February, 2015

Global commodity AUM rebounds in Jan to $267 billion

Posted on 27 February 2015 by VRS  |  Email |Print

Total global commodity assets under management ( AUM) rebounded to $267 billion in January from a five year low of $259 billion in December 2014, Barclays capital said on Thursday.
Commodity investments saw net inflows of nearly $5 billion in January, the biggest since September 2012, led by energy and precious metals, Barclays said in a research note………………………………………..Full Article: Source

Commodities Bust Leaves Latin America with a Hangover

Posted on 27 February 2015 by VRS  |  Email |Print

Five years ago spirits were soaring across Latin America. The region’s economies were bouncing back with startling speed from the global financial crisis to post their strongest growth rates in more than a decade. Robust Chinese demand for copper, iron ore, oil, soybeans and other commodities was filling government and private sector coffers and lifting millions of people into the ranks of the middle class.
Companies like Brazilian aircraft maker Embraer, Chilean fashion retailer Falabella and Mexican bakery goods manufacturer Grupo Bimbo were extending their reach across the region and around the world. The Economist boldly proclaimed the region to be on the verge of a Latin American decade………………………………………..Full Article: Source

Oil industry investment plunges after commodity price tumble

Posted on 27 February 2015 by VRS  |  Email |Print

A sharp fall in oil prices has led to a decline in investment by the oil and gas industry, which statisticians believe reflects falling profitability in the sector. Investment in the oil and gas industry slumped in the final three months of last year, amid a dramatic collapse in the price of oil.
Business investment fell by £0.6bn in the final quarter of 2014, down 1.4pc on the previous three months, the Office for National Statistics (ONS) said. The unexpected drop marked a second quarterly fall in investment. The Bank of England had pencilled in growth of 2.5pc for the period………………………………………..Full Article: Source

OPEC mulls emergency meeting amid low oil prices

Posted on 27 February 2015 by VRS  |  Email |Print

Some OPEC members, concerned about the economic impact of low oil prices, say the cartel may have to call an emergency meeting sooner rather than later. But Saudi Arabia, the most influential member, is likely to veto such an idea.
Many OPEC members say the cartel may have to call an emergency meeting production and prices because of the damage the collapse of oil prices has been doing to their countries’ economies. But the prospects of such a gathering seem remote………………………………………..Full Article: Source

IEA Sees Oil-Demand Boost Balancing Market in Echo of Saudi View

Posted on 27 February 2015 by VRS  |  Email |Print

The oil market will rebalance in the next several months as a price collapse boosts consumption and curbs supplies, the International Energy Agency said, a day after Saudi Arabia’s oil minister told reporters demand is rising.
An oil price as low as $45 a barrel is unsustainable, Fatih Birol, the chief economist for the Paris-based adviser to 29 nations, said at a conference in London Thursday. Investment cuts in the U.S., Russia and Brazil will curtail output growth, bringing supply and demand back in line, he said………………………………………..Full Article: Source

Opec sees market stabilising, okay with current price of $60

Posted on 27 February 2015 by VRS  |  Email |Print

Oil prices have started to stabilise around current levels of $60 a barrel and demand is showing signs of improving in Asia and other regions, a senior Gulf Opec delegate said. The comments indicate that the core Gulf members of the Organisation of the Petroleum Exporting Countries (Opec) are showing no sign of wavering in their strategy to focus on market share rather than cutting output, despite concerns from other members about falling oil revenue.
“Oil prices seem to stabilise around the current level … there are a lot of indications showing that demand is growing,” the senior Gulf Opec delegate said. “The market is stabilising as well as prices,” the delegate said, adding that $60 a barrel is “okay for now.”……………………………………….Full Article: Source

Regulator plays down impact of rules shake-up on gas traders

Posted on 27 February 2015 by VRS  |  Email |Print

Fewer than four natural gas traders hold positions big enough to breach broad new limits on speculation in the US, a regulator said in comments that played down the impact of a controversial rule proposal.
The disclosure came as the US Commodity Futures Trading Commission held its latest meeting to ponder its proposed “position limits” rule for commodities that would cap the number of futures contracts held by any single trader………………………………………..Full Article: Source

Analysts see gold price recovery ahead

Posted on 27 February 2015 by VRS  |  Email |Print

Analysts are warming up, albeit cautiously, to gold after more than three years of falling prices that put the great majority of Canadian gold exploration companies in the deep freeze. CIBC World Markets senior economist Peter Buchanan is predicting an uptick this year to $1,300 US from $1,200 in 2014, and a modest gain to $1,325 in 2016.
Scotiabank’s Commodities Price Index, taking note of last year’s price drop, has suggested that physical demand for the metal is recently bolstered by “general economic uncertainty.”……………………………………….Full Article: Source

What To Make Of Gold Prices In 2015

Posted on 27 February 2015 by VRS  |  Email |Print

For much of the past decade, gold has been viewed as one of the most stable and predictable investments in existence. The price of gold was rising slowly but steadily, and crises in world politics and financial markets continually proved that the precious metal had value as a protective hedge.
And yet, in mid-2012, this popular outlook began to change as gold prices became more volatile than most modern investors are used to seeing. Take a look at the 10-year gold pricing chart at online precious metal market BullionVault.com, and you’ll see the trend as clear as day. While gold today remains at a significantly inflated per ounce price than what we saw a decade ago, the steady rise that investors got used to between 2005 and 2012 is no more………………………………………..Full Article: Source

China’s new Shanghai-Hong Kong gold link-up hope to rival Western competition

Posted on 27 February 2015 by VRS  |  Email |Print

China is set to launch a link between gold markets in Shanghai and Hong Kong this year following a landmark stock connect scheme, aiming to enhance its pricing power of gold contracts and ultimately challenge its competitors in the West.
While China is the world’s largest consumer of the precious metal, having surpassed India, daily trading of gold in financial centre Shanghai is small compared with London. The move to develop gold trading comes as more trade flows to Asia and is in line with Beijing’s efforts to open up its domestic markets to foreign investors. China wants more market players to use its yuan currency when settling trade contracts and for making investments………………………………………..Full Article: Source

US ‘Probes Banks’ Precious Metals Rigging’

Posted on 27 February 2015 by VRS  |  Email |Print

The United States is reportedly probing major banks over possible manipulation of precious metals markets. The investigation centres on prices for gold, silver, platinum and palladium, the Wall Street Journal says.
It is being carried out by the Justice Department with help from Commodity Futures Trading Commission, which regulates raw materials and derivatives, the newspaper said, quoting sources close to the case. The banks targeted are HSBC, Bank of Nova Scotia, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Societe Generale, Standard Bank and UBS………………………………………..Full Article: Source

Platinum Dives to 5-Year Low

Posted on 27 February 2015 by VRS  |  Email |Print

For more than a year, you must have heard hundreds of analysts arguing that investors were moving money into precious metals and that global economic uncertainty would push these metals higher. Well, that hasn’t happened.
If we look back in time, periods of economic concern do not always translate into higher rising precious metals price. Furthermore, the market is just fine in spite of all the economic news that keep coming up talking about global economic concerns………………………………………..Full Article: Source

Coffee ETFs Tumble, What’s Behind the Slump?

Posted on 27 February 2015 by VRS  |  Email |Print

Coffee - a top-performing commodity in 2014 - returned a fabulous 50%. The winning streak continued into the New Year as drought conditions in Brazil - the primary driver of coffee’s incredible run-up last year - continued to play foul. Brazil is the world’s top coffee producer and supplies about one-third of the world’s coffee.
However, coffee prices have recently been badly hit, falling to their lowest levels in a year as improving weather conditions in Brazil took investors by surprise. Moreover, there are expectations of more rains going forward. This has raised fears of abundant supplies, dragging coffee prices lower………………………………………..Full Article: Source

Hedge Fund Returns Falter, Yet Money Continues to Flow In

Posted on 27 February 2015 by VRS  |  Email |Print

Another year, and another mediocre performance by hedge funds, to put it kindly. The Barclay Hedge Fund Index gained a meager 2.89 percent in 2014, while the Standard & Poor’s 500-stock index gained over 13 percent and the Barclays United States Aggregate Bond Index rose over 5 percent.
Even as their high fees have minted scores of new billionaires, hedge funds have now substantially underperformed a simple blend of index funds — 60 percent stocks and 40 percent bonds — for three-, five- and 10-year periods. And the 10-year numbers cover the period of the financial crisis and the sharp decline in stocks — the very calamity that hedge funds are supposed to protect against………………………………………..Full Article: Source

Noble overstated commodity values by at least US$3.8 bln: Iceberg Research

Posted on 27 February 2015 by VRS  |  Email |Print

Singapore-listed Noble Group overstated the value of commodities it holds by at least US$3.8 billion, Iceberg Research said in a report on the Asian commodity trading firm’s accounting practices. “Impairing these fair values dramatically impacts Noble’s performance indicators,” the little-known research firm said on its website on Wednesday, its second report this month raising questions about Noble’s books.
Iceberg released its first analysis on Feb 15, to which Noble issued a detailed rebuttal. The company’s shares fell a combined 13 percent in the two trading sessions following the initial report. It has recovered about 1 percent since then………………………………………..Full Article: Source

Ecuador launches new digital currency – but most residents know little about it

Posted on 27 February 2015 by VRS  |  Email |Print

Bill passed last July gives Central Bank authority to create digital dollars, but opinions divided along party lines amid concerns of a presidential power grab. The new system, which is officially set to launch on Thursday, will work much like mobile phone bank payments in other countries: users will be able to exchange hard cash for digital money which is stored in an electronic wallet on their phones.
As with other mobile payment programmes, text messages will allow users to make payments to other accounts, but what makes this plan different is that this is the first time a national government will have full control; everything from the creation of new units to securing the system against attack will be managed by the Central Bank of Ecuador………………………………………..Full Article: Source

Ukraine Dials Back on Latest Attempt to Halt Currency Free Fall

Posted on 27 February 2015 by VRS  |  Email |Print

Ukraine’s central bank abruptly reversed a broad ban on foreign-currency purchases Thursday, a day after imposing the measures in an attempt to halt the hryvnia’s free fall. Prime Minister Arseniy Yatsenyuk had criticized the earlier decision as bad for Ukraine’s economy, which is staggering after nearly a year of fighting with Russia-backed separatists in the east of the country.
Although a cease-fire signed Feb. 12 appeared to be taking hold this week, government coffers in Kiev have been drained, inflation has soared and a fight with Moscow over natural-gas payments has been exacerbated………………………………………..Full Article: Source

Poland not keen on quick rescue of emissions trading scheme

Posted on 27 February 2015 by VRS  |  Email |Print

A simmering disagrement between member states about when to start a market stability reserve for the bloc’s struggling emissions trading system has been taken up a political notch by Poland. Polish PM Ewa Kopacz has written to European commission president Jean-Claude Juncker asking that the market intervention mechanism only kick into place in 2021.
The letter, signed Wednesday 25 February, came the day after MEPs in the environment committee agreed the scheme should go into place two years earlier………………………………………..Full Article: Source

EU court rules against Czech tax on carbon permits

Posted on 27 February 2015 by VRS  |  Email |Print

A Czech tax imposed in 2011 and 2012 on carbon emission allowances granted to companies for free breached a European Union directive, the European Union’s Court of Justice ruled on Thursday.
The ruling was made at the request of a Czech court which is considering an appeal of an electricity producer, Sko-Energo, against the tax, but a similar claim to get the gift tax back was made by the country’s biggest energy firm, CEZ. Under the EU’s Emissions Trading Directive, companies were awarded at least 90 percent of each member state’s permits for carbon emissions for free in 2008-2012………………………………………..Full Article: Source

Cap-And-Trade Costs California Businesses $1 billion

Posted on 27 February 2015 by VRS  |  Email |Print

California businesses paid a whopping $1 billion this year buying permits to comply with the state’s cap-and-trade law — the largest sale recorded since the state began regulating carbon dioxide in 2012.
Even with record permit sales, the $1 billion raised was well below market expectations. But environmentalists sold the auction as a huge success, because now oil and gas companies have to buy permits………………………………………..Full Article: Source

Commodities slump to deliver $110bn hit to export earnings: ANZ

Posted on 26 February 2015 by VRS  |  Email |Print

The aggressive slump in Australia’s key commodities will wipe $110 billion off export earnings over the next three years, new analysis has found. ANZ’s major project update for 2015, which includes developments requiring at least $100 million of investment, also anticipates that aggregate major projects spending on mining, energy and infrastructure projects would fall to about $32bn in 2017 from $88bn last year.
The slump in the resources sector is set to be significant, with the pipeline of potential mining sector projects declining. ANZ said the mining states were expected to be hit hardest as large projects wind down and sharply lower commodity prices reduced the likelihood of new capital spending or project expansions………………………………………..Full Article: Source

Yellen: Fed to Issue Bank Commodity Rules This Year

Posted on 26 February 2015 by VRS  |  Email |Print

Federal Reserve Chairwoman Janet Yellen said Wednesday that the Fed plans to propose new rules this year relating to banks’ activities in physical- commodity markets, such as aluminum and oil.
The Fed has been engaged in “a careful review” of the activities it has permitted, Ms. Yellen told the House Financial Services Committee during the second day of her semiannual monetary policy testimony. “With respect to the concerns they raise about safety and soundness, we are likely to propose new rules during this year,” Ms. Yellen said………………………………………..Full Article: Source

How Do Commodity Suppliers Go Sustainable?

Posted on 26 February 2015 by VRS  |  Email |Print

Social and environmental responsibilities are rarely at the top of mind when suppliers are racing to the bottom of the price curve. That’s why sustainability is hard to come by in commodity industries. But a small giant in New Zealand is changing all that, at least when it comes to wool.
Dave Maslen is global partnership and sustainability manager at the New Zealand Merino Co. (NZM). In this video interview (after the jump), he shares the story of how Merino brings traceable, sustainably-produced wool to market by working directly with farmers and the value chain………………………………………..Full Article: Source

Why Oil Will Fall To $40 As Obama Looks The Other Way

Posted on 26 February 2015 by VRS  |  Email |Print

On August 20, 2014 I warned Forbes.com readers that oil prices were going to drop a lot. (See article; the price of WTI was $104/barrel at the time). I’ve rarely felt more conspicuous about a prediction and I’m in the business of making predictions. Now what? Prices have collapsed–or I should say: the bubble has popped. What happens next?
First, prices are firming up while news of marginal production cuts invite buyers. In the long run, prices will reflect the advent of new supplies of cheap oil coming from two very important sources in the Western Hemisphere. Mexico’s Pemex reforms could lead to a one million barrel per day production increase while President Obama’s restrictive energy policies are about to be reversed………………………………………..Full Article: Source

Nigeria Proposes Cutting Oil Price Benchmark to $52 a Barrel

Posted on 26 February 2015 by VRS  |  Email |Print

Nigeria’s Senate and executive proposed cutting this year’s budgeted oil price benchmark to $52 per barrel from $65 suggested in December, as falling prices erode the income of Africa’s biggest crude producer.
Nigeria’s finance ministry said an agreement had been made with the Senate and most members of the House of Representatives, though the lower chamber has yet to approve. “The proposal is $52 a barrel for 2015 due largely to decline in crude oil prices,” Enyinnaya Abaribe, chairman of the Senate Committee on Information and Media, said……………………………………….Full Article: Source

Oil Price Crash: Top 5 At-Risk Countries

Posted on 26 February 2015 by VRS  |  Email |Print

Since June 2014, global oil prices have dropped by more than 50%. The drop could strongly affect the economic and political stability of these five oil exporting countries. Oil prices make winners and losers. In general, oil importers will gain from low prices, while most oil exporters will suffer. Still, there are differences. While the United States, Norway, and the Gulf States can protect themselves with diversified economies and high hard currency reserves, the oil shock could bring some countries to the verge of economic default and political crisis.
Venezuela entered the period of low oil prices with an already frail economy ruined by the more than a decade-long socialist regime of Hugo Chavez and his successor Nicolas Maduro. The oil price slump significantly worsened the country’s already failing economy………………………………………..Full Article: Source

Oil Demand Seen as Growing

Posted on 26 February 2015 by VRS  |  Email |Print

Demand for crude oil is growing, Saudi Arabia’s top oil official said Wednesday, amid new data showing the world is getting hungry again for petroleum products and potentially bolstering OPEC’s decision to maintain production in the face of a price collapse.
Saudi Arabia Oil Minister Ali al-Naimi used his first public comments since December to note that the oil market had become “calm” and chided anyone who would “rock the markets.” “Why do you want to rock the markets? The markets are calm…Demand is growing,” Mr. Naimi told reporters on the sidelines of a conference in Jazan, a coastal city in Saudi Arabi’s southwest………………………………………..Full Article: Source

The end of OPEC

Posted on 26 February 2015 by VRS  |  Email |Print

At first, people thought that OPEC was purposefully keeping prices low (by not reducing supply) in order to smother the emerging shale industry in the crib. With low oil prices, less investment would flow to alternatives to conventional oil, which can be expensive. But, as Bloomberg reports, that might not be the answer. The answer increasingly seems to be that OPEC isn’t raising prices because it can’t raise prices.
The cartel isn’t holding. The smaller OPEC members don’t want to shrink output — which would have to happen to raise prices — because their economies are too unstable and they can’t afford it. Even Saudi Arabia, the most important OPEC member, is in favor of staying the course………………………………………..Full Article: Source

Gold trade coming back, if you can wait 2 years: BofA

Posted on 26 February 2015 by VRS  |  Email |Print

Gold will come under further pressure over the course of the year as the Federal Reserve moves closer to lifting rates, but prospects for the precious metal looks far more promising in the next few years, according to Bank of America Merrill Lynch.
“Right now, investors are not in the mood for holding gold because they see the Fed raising rates. So, I think in the next three months you’ll see downside risk, $1,100 an ounce is likely,” Francisco Blanch, commodities analyst at Bank of America Merrill Lynch told CNBC. “But if you look out 2-3 years, things are a lot brighter for gold,” he said………………………………………..Full Article: Source

Can platinum regain its premium over gold in Q2-Q3?

Posted on 26 February 2015 by VRS  |  Email |Print

On the positive side, precious metals consultancy, Metals Focus, in its latest Precious Metals Weekly, reckons that there’s a good chance that platinum will regain its premium over gold, perhaps as soon as in Q2 this year and possibly get back to a premium level during the year averaging as much as $100 over the gold price (which is pretty much the normal situation).
However there’s little in their opinion on the fundamentals side to support this argument, the key factor, being in their view, that when the U.S. Fed eventually ceases shilly-shallying and starts to raise interest rates, it will be the gold price which bears the bulk of any adverse reaction in the markets and platinum less affected………………………………………..Full Article: Source

Will a dry spell in Chile curb a global oversupply of copper?

Posted on 26 February 2015 by VRS  |  Email |Print

A raging seven-year drought affecting copper-rich Chile is making miners grow anxious as the dry spell is now affecting the supply of power necessary to sustain their operations, responsible for around a third of global copper output. Companies such as BHP Billiton and Anglo American have recently highlighted the impact of the country’s extreme conditions in their latest financial reports.
Output at BHP’s Escondida, the world’s largest copper mine, dropped 2% percent in the second half of 2014. Water scarcity at Anglos’ Los Bronces — the world’s sixth-largest copper operation— may cost the company as much as 30,000 tonnes of lost production, equivalent to 4% of Anglo’s overall copper output this year, Reuters reports………………………………………..Full Article: Source

Copper Signal May Be Flashing Green

Posted on 26 February 2015 by VRS  |  Email |Print

Copper has been down for so long that some are saying the only way is up. A key signal in the market is starting to flash green, with bets that copper prices will continue to fall recently hitting a record high on the London Metal Exchange, though they’ve since started to fall back. For some, that suggests the red metal’s fortunes may be about to turn. At these levels, there’s simply no more stomach to bet against copper, they say.
“People have kind of run out of ammunition,” said Guy Wolf, global head of market analytics at Marex Spectron, a broker “There’s no more new money to come in.” According to Marex Spectron, there were 130,000 lots that were bets that copper would fall on Jan. 29. That was equivalent to 76% of all copper contracts registered with the London Metal Exchange, a record high, above even the bets made against copper during the global financial crisis of 2008, according Mr. Wolf………………………………………..Full Article: Source

The Various Costs of Trading ETFs

Posted on 26 February 2015 by VRS  |  Email |Print

Investors can access exchange traded funds on a normal brokerage account throughout the day. Consequently, people should be aware of all the explicit and implicit costs of using the investment vehicle.
For starters, investors will typically compare the explicit fee or expense ratio to determine how costly it is to hold onto an ETF. Most have adopted ETFs due to their cheap fees, especially when compared to traditional mutual funds. The average mutual fund charges 1.25%, writes Dan Moskowitz for Investopedia………………………………………..Full Article: Source

3 big surprises in ETF flows so far in 2015

Posted on 26 February 2015 by VRS  |  Email |Print

With February almost over, we revisit where U.S.-listed exchange-traded fund money flows are pointing. At the beginning of the year, the answer was “nowhere.” Things have since picked up a lot. One-month flows into ETFs now stand at over $30.7 billion, putting year-to-date inflows at $23.9 billion.
Big surprise No. 1: U.S. equities may be at all-time highs, but year-to-date flows are negative $18.4 billion, thanks to $28.7 billion out of SPY (the largest U.S.-listed ETF). Surprise No. 2: Fixed-income ETFs are the big winners year-to-date, with $20.1 billion of fresh money — 85% of the total ETF flows so far in 2015………………………………………..Full Article: Source

How to Use Commodity Futures to Hedge

Posted on 26 February 2015 by VRS  |  Email |Print

Futures are the most popular asset class used for hedging. Strictly speaking, investment risk can never be completely eliminated, but its impacts can be mitigated or passed on. (Related: A Beginner’s Guide to Hedging) Hedging through future agreements between two parties has been in existence for decades.
Farmers and consumers used to mutually agree on price of staples like rice and wheat for a future transaction date. Soft commodities like coffee are known to have standard exchange-traded contracts dating back to 1882. Let’s look at some basic examples of the futures market, as well as the return prospects and risks………………………………………..Full Article: Source

Currency Manipulation: Why Something Must Be Done

Posted on 26 February 2015 by VRS  |  Email |Print

Currency manipulation occurs when countries sell their own currencies in the foreign exchange markets, usually against dollars, to keep their exchange rates weak and the dollar strong. These countries thereby subsidize their exports and raise the price of their imports, sometimes by as much as 30-40%.
They strengthen their international competitive positions, increase their trade surpluses and generate domestic production and employment at the expense of the United States and others. About 20 countries, most notably China, have engaged in such practices over the past decade at an annual rate that has averaged $1 trillion in recent years. The U.S. trade deficit has been several hundred billion dollars a year higher as a result and we lost several million additional jobs during the Great Recession………………………………………..Full Article: Source

Bitcoin revolution could be the next internet, says Bank of England

Posted on 26 February 2015 by VRS  |  Email |Print

The Bank of England has unveiled analysis of cryptocurrencies like Bitcoin that suggests electronic money could cause a tectonic shift in the payments industry. The arrival of electronic currencies could revolutionise the way Britons pay for goods and services, in much the same way as the internet shook up how we access information, the Bank of England has said.
Cashless forms of payment like the cryptocurrency Bitcoin “potentially combined with mobile technology, may reshape the mechanisms for making secure payments”, the central bank said. While traditional currencies, including the pound, are backed by central banks, new alternatives have allowed individuals to exchange directly without any such third party………………………………………..Full Article: Source

California carbon permits fetch $12.21 a tonne at auction

Posted on 26 February 2015 by VRS  |  Email |Print

California said on Wednesday that carbon allowances fetched $12.21 a tonne at the cap-and-trade program’s first auction of the year, a rate below market expectations even though all of the permits offered were sold.
The auction was the first since the two-year-old cap-and-trade program expanded to cover distributors of transportation and home heating fuels on Jan. 1, roughly doubling the market’s size. The state sold all 73.6 million permits offered to cover 2015 emissions and 10.4 million allowances offered to cover emissions in 2018………………………………………..Full Article: Source

MEPs call for emissions trading reform to start in 2019

Posted on 26 February 2015 by VRS  |  Email |Print

The environment committee of the European Parliament on Tuesday (24 February) voted to introduce a market mechanism for the EU’s struggling emissions trading system at the end of 2018. The date was the subject of much wrangling among MEPs and national governments with European Commission having originally proposed 2021.
A majority voted to adopt a deal that was struck by the two largest political groups saying that “market stability reserve is established in 2018 and shall operate by 31 December 2018”. The Green group, which wanted an earlier year, criticised the deal saying MEPs had caved into pressure from energy intensive companies………………………………………..Full Article: Source

ETS ‘back on track’ thanks to market stability reserve

Posted on 26 February 2015 by VRS  |  Email |Print

Parliament has requested that the measure be implemented by December 2018 at the latest. The emissions trading system (ETS) allows businesses to purchase CO2 emission allowances. Unfortunately, too many allowances have been made available on the market. As a result, their price has dropped dramatically in recent years. They currently cost €7 to €8 per tonne, whereas it was originally hoped they could be sold for €30 per tonne.
A market stability reserve (MSR) would reduce the number of allowances on the market if there are too many, and introduce new ones onto the market in case of a shortage………………………………………..Full Article: Source

Commodity crash reflects global economic slump

Posted on 25 February 2015 by VRS  |  Email |Print

Global commodity prices have tumbled to levels below the depths of the Great Recession, underscoring the widespread difficulties facing the global economy. While crude oil’s price collapse has been in the spotlight, a wide range of other commodities are suffering as well, including natural gas, coal, iron ore, copper, grain and pulp and paper.
The commodity crash is the result of too little demand for raw goods now in plentiful supply after producers ramped up capacity in recent years in anticipation of steady global growth. But trouble spots are everywhere. Commodity markets have declined during worldwide turbulence as the pace of growth in China continues to slow, Russia grapples with an imploding economy and ruble and Greece struggles through an economic crisis that Europe must solve. ……………………………………….Full Article: Source

Investors in Commodity-Related Companies Need To Be Aware Of This Risk

Posted on 25 February 2015 by VRS  |  Email |Print

The business of producing or trading in commodities have always been volatile. The fact that no player in the market has the ability to control the pricing of the underlying commodity they’re involved with makes it extremely challenging for any commodity-related business.
Steel manufacturer BlueScope Steel Ltd is a great example of how difficult it can be to be a commodity producer. Even though BlueScope Steel is the largest company of its kind in Australia, the Wall Street Journal had reported earlier today on the firm’s warning of weaker profit margins in the coming months………………………………………..Full Article: Source

Why a small dip in the oil price matters an awful lot

Posted on 25 February 2015 by VRS  |  Email |Print

After a mini rally, oil prices are falling again. From $62 a barrel 10 days ago, Brent crude has slipped to $58.43 on Tuesday. It may not seem like much of a cut after the collapse in world oil prices that sent Brent tumbling from $115 to $45 a barrel between last June and January, but it is still significant.
The reason this turn in the price of oil matters can be seen in every corner of the world economy: when fear of a new cold war or a eurozone break-up hangs over every corporate and government decision, cheap energy lightens the load………………………………………..Full Article: Source

Is there a Logical Oil Price?

Posted on 25 February 2015 by VRS  |  Email |Print

If you have been following the price of oil over the last few months, the chances are you are a little confused. On the one hand, you have the likes of A. Gary Shilling who, in this Bloomberg article, loudly trumpets the prospect of oil at $10/Barrel, and on the other, there is T. Boone Pickens, who, at the end of last year was predicting a return to $100 within 12-18 months.
Pickens prediction has moderated somewhat as WTI and Brent crude have continued to fall, but in January he was still saying that oil would return to $70 or $80/barrel in the near future. So, who is correct? ……………………………………….Full Article: Source

Oil market is stabilising, $60 is OK for now - Gulf OPEC delegate

Posted on 25 February 2015 by VRS  |  Email |Print

Oil prices have started to stabilise around current levels of $60 a barrel and demand is showing signs of improving in Asia and other regions, a senior Gulf OPEC delegate said on Tuesday.
The comments indicate that the core Gulf members of the Organization of the Petroleum Exporting Countries are showing no sign of wavering in their strategy to focus on market share rather than cutting output, despite concerns from other members about falling oil revenue………………………………………..Full Article: Source

Oil back below $50 as OPEC hopes fade

Posted on 25 February 2015 by VRS  |  Email |Print

Any hopes of a sustained rally in the price of oil disappeared Tuesday morning as doubts were raised over an anticipated cut in production from the Organization of the Petroleum Exporting Countries (OPEC). The oil cartel is not due to meet until June this year but a report by the Financial Times - with comments by Diezani Alison-Madueke, the Nigerian oil minister - suggested that an emergency meeting was due in the near term.
This raised hopes that OPEC could cut production, something it had refused to do back at its last meeting in November 2014. An anonymous delegate from the group denied these claims, telling Bloomberg overnight there was no emergency meeting planned. Brent crude futures dropped to 58.56 a barrel by 8:00 a.m………………………………………..Full Article: Source

Gold and silver prices: The next bank rigging scandal?

Posted on 25 February 2015 by VRS  |  Email |Print

US authorities open investigations into banks including HSBC and Barclays over possible rigging of precious metals benchmarks. The world’s biggest banks are still reeling from the consequences of the Libor and foreign exchange scandals, but US authorities are now investigating the possibility of more rigging.
Several banks are being scrutinised over how they set influential benchmarks in the markets for gold, silver, platinum and palladium in London, with at least 10 under investigation from the Department of Justice (DoJ) and Commodities and Futures Trading Commission (CFTC), according to reports………………………………………..Full Article: Source

Hedge funds raise bearish gold price bets by 44%

Posted on 25 February 2015 by VRS  |  Email |Print

Large scale speculators in gold futures added massively to short positions – bets that prices will fall – ahead of Greek bailout deal. On Monday the gold price fell sharply at the open as markets continued to digest the implications of the Greek debt deal reached on Friday, but soon recovered to hover around $1,200 for most of the day.
In thin volumes on the Comex division of the New York Mercantile Exchange, gold futures for April delivery – the most active contract – ended the day at $1,201.30 an ounce, down $3.60 or 0.3% from Friday’s close after earlier slumping to near its lowest for the year at $1,190.85………………………………………..Full Article: Source

Platinum price puzzles

Posted on 25 February 2015 by VRS  |  Email |Print

Despite a big perceived supply deficit, platinum prices have remained depressed. How can this be? If anything demonstrates the illogicality of the precious metals markets, it appears to be platinum. But is this really the case?
Currently the metal is languishing at around a five-year low, yet most analysts put global platinum supply as being in a substantial deficit situation ever since last year’s South African platinum mine strikes, which took a substantial hunk of the metal out of the markets. Platinum is also selling at a lower price than gold – around $40 an ounce lower at the moment – which is a relatively rare, but not unknown, occurrence………………………………………..Full Article: Source

Market not paying enough attention to copper supply situation: Citi

Posted on 25 February 2015 by VRS  |  Email |Print

The current bearish sentiment toward copper is being driven by concerns about China’s economy slowing with the market ignoring the fact that mine supply is looking increasingly constrained, Citibank’s research department said Tuesday.
Over the last decade, average global copper consumption growth has been in the region of 2.5% a year, “a remarkably low average given the strong growth in China consumption rates. This average annual rate is less than half that for aluminium.” Analyst at the bank David Wilson said that two factors have been at work to limit the rate of global copper demand growth………………………………………..Full Article: Source

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