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Commodities Briefing - Archive | July, 2015

How China is Driving the Commodity Rout (Video)

Posted on 31 July 2015 by VRS  |  Email |Print

Michael Haigh, global head of commodities research at Societe Generale, discusses the factors dragging down commodities prices, why he sees a buying opportunity created by the drop and which commodities might be the best long-term bet. He speaks on “Market Makers.”.………………………………………Full Article: Source

Will commodities crash trigger new financial crisis?

Posted on 31 July 2015 by VRS  |  Email |Print

The equity market has suffered sharp falls in the last two months, and investors are divided on whether the Hong Kong and A-share markets have stepped into the bear territory. Several commodities like gold, base metal and oil are certainly in the bear market territory. And the meltdown in commodity market may trigger a new financial crisis.
The market predicts that the chance for a “lift-off” within this year has increased to 50 percent from the previous one-third, according to recent remarks by Federal Reserve chief Janet Yellen. If that is the case, the Fed could open a “Pandora’s Box”, which could further strengthen the US dollar and trigger a further slide in the prices of commodities………………………………………..Full Article: Source

Roubini: Combination of Factors Weighing on Commodities (Video)

Posted on 31 July 2015 by VRS  |  Email |Print

Roubini Global Economics Chairman Nouriel Roubini talks about the factors affecting commodity prices and the reduced pricing power of OPEC. He speaks on “Bloomberg Surveillance.”……………………………………….Full Article: Source

Is it Time to Buy Commodities?

Posted on 31 July 2015 by VRS  |  Email |Print

A quick glance at recent headlines would lead a reasonable person to assume that this year’s big losers are Greek and Chinese stocks . Yet, despite all the furor in the news , the Athens Stock Exchange is down less than 5 percent year-to-date, while the Shanghai Composite remains up more than 10 percent, according to Bloomberg data.
The real damage has been in the commodity complex. Through late July, year-to-date crude oil prices were down around 10 percent, platinum prices were off nearly 20 percent and coffee prices were down almost 30 percent, Bloomberg data shows. Based on the Bloomberg Commodity Index of 22 commodities, the overall complex is now trading at a 13-year low. Several factors account for the sell-off………………………………………..Full Article: Source

OPEC says oil should not fall further, sees stability in 2016

Posted on 31 July 2015 by VRS  |  Email |Print

OPEC expects increasing oil demand to prevent a further fall in prices and sees a more balanced market in 2016, its secretary-general said on Thursday, the latest sign the group is sticking to its policy of defending market share.
Oil has dropped about 15 percent this month and halved in value in the past year but neither OPEC nor Russia, the world’s top producer, have cut output to support prices, hoping cheaper oil will hit U.S. shale and other rival sources. “I would not expect they (prices) are going to fall because demand is growing,” OPEC Secretary-General Abdullah al-Badri told reporters in Moscow. OPEC pumps around 40 percent of global oil production………………………………………..Full Article: Source

OPEC, Russia: ‘Oil market to stabilize’

Posted on 31 July 2015 by VRS  |  Email |Print

OPEC and Russia expressed confidence the global oil market would become more balanced and stable in 2016 after recent sharp drops. At a meeting between OPEC Secretary-General Abdullah El-Badri and Russian Energy Minister Alexander Novak in Moscow on Thursday, both sides made clear they didn’t expect oil prices to experience any more sharp falls.
While Badri and Novak insisted talks on possible cuts in oil output were not on the agenda, the OPEC representative reiterated the stance communicated at the cartel’s meeting earlier this year. “We met in December, and we met in June; and we decided to keep out production at 30 million barrels a day. And we’re not ready to reduce our production,” Badri said after the talks in Moscow………………………………………..Full Article: Source

ABN Amro keeps 2015 oil price forecasts, cuts 2016 view

Posted on 31 July 2015 by VRS  |  Email |Print

ABN Amro kept its 2015 oil price forecasts, but reduced its 2016 prices significantly, citing a worsening oil oversupply situation. The bank maintained its 2015 Brent and West Texas Intermediate (WTI) forecasts of $60 and $55 per barrel, respectively. But it cut 2016 Brent and WTI price forecasts by $10 to $65 and $60 per barrel, respectively.
ABN Amro said it expects a recovery with the market returning to balance with lower oversupply, mainly due to marginally higher demand and a weaker dollar during the course of 2016. “However, the oversupply will remain larger than previously expected as the OPEC produces above its quota, and also the US crude production will remain elevated,” Hans van Cleef, senior energy economist at the bank said in a note Tuesday………………………………………..Full Article: Source

Oil prices sinking - even without Iran

Posted on 31 July 2015 by VRS  |  Email |Print

Oil prices worldwide have been falling for the past year. And the return of oil from Iran - following its landmark nuclear deal - is expected to put further pressure on the prices. DW examines the global oil market.
“A year ago, the price of a barrel of Brent North Sea crude stood at around $110. It is currently hovering at about half that price - around $55,” recalled Alexander von Gersdorff of the Berlin-based Association of the German Petroleum Industry (MWV). The price of West Texas Intermediate (WTI) crude has even dipped to below $50 a barrel recently. This slump in prices came even before Iran scaling up its oil exports………………………………………..Full Article: Source

Oil Market Embraces Lower-for-Longer Price View as Futures Sink

Posted on 31 July 2015 by VRS  |  Email |Print

The global oil surplus increasingly looks like a problem that’ll take years rather than months to solve — and the market is pricing that in. U.S. crude futures for delivery in five years have broken below levels seen during the financial crisis. With leading OPEC members pumping at a record, supplies from elsewhere holding up and Iran close to reviving exports, the market is signaling the glut will persist.
The global oversupply has already prompted oil companies to warn that the price rout will continue. Royal Dutch Shell Plc said Thursday it’s braced for a “prolonged downturn,” echoing a forecast from BP Plc Chief Executive Officer Bob Dudley that prices will stay “lower for longer.”……………………………………….Full Article: Source

Prepare for gold prices to plunge…as low as $350

Posted on 31 July 2015 by VRS  |  Email |Print

A prominent gold forecaster predicts the yellow metal will drop to a mere $350 an ounce, a level unseen since 2003. It’s dramatically lower than what most experts are currently calling for. But Claude Erb’s prediction might have merit. Back in 2012, Erb, a former commodities trader at TCW Group, co-authored a landmark research paper with Duke University professor Campbell Harvey that was early to predict gold’s downfall.
At the time, gold was fetching north of $1,600 an ounce. Now it’s trading below $1,100. The paper used historical analysis to show that if gold is an inflation hedge — as many people believe — then it’s extremely expensive at current levels………………………………………..Full Article: Source

Gold has potential to plummet to $700: Strategist

Posted on 31 July 2015 by VRS  |  Email |Print

Gold got little respite from all the bad news surrounding it Thursday, with the price of the precious metal crunching to near a five-and-a-half-year low and two separate analysts telling CNBC that there was little reason to add it to an investment portfolio.
Shaun Port, the chief investment officer at the online investment management company Nutmeg, highlighted that central banks were no longer thirsty for bullion and predicted a hefty fall in price. “I think there’s much further downside for gold from here, potentially through the $1,000 (level) and back to the pre-crisis levels of the sort of $700 or $800 (level),” he told CNBC Thursday………………………………………..Full Article: Source

Study predicts gold could plunge to $350 an ounce

Posted on 31 July 2015 by VRS  |  Email |Print

Gold bugs, who have just begun to digest bullion’s more than $100 drop over the past month, need to prepare for the possibility of an even bigger decline. That, at least, is the forecast of Claude Erb, a former commodities manager at fund manager TCW Group, and co-author (with Campbell Harvey, a Duke University finance professor) of a mid-2012 study that forecast a plunging gold price.
They deserve to be listened to, therefore, since — unlike many latter-day converts to the bearish thesis — they forecast a long-term gold bear market when it was only just beginning. You might think that, with gold now trading more than $500 lower than when the study was released, Erb would declare victory and leave well enough alone. But Erb is doing nothing of the sort. Earlier this week, he told me that the gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce………………………………………..Full Article: Source

Gold could sink to $800: Yamada

Posted on 31 July 2015 by VRS  |  Email |Print

Gold just can’t get a bid. The precious metal fell near 5½-year lows on Thursday after the second-quarter GDP number showed the U.S. economy is growing at a steady rate and comments from Fed Chair Janet Yellen on Wednesday pointed to the notion of a September rate hike.
Gold is now down 13 out of the past 15 trading sessions, and according to one highly regarded technician, it’s about to get even worse. “I think we have to recognize that gold is in a structural bear market,” Louise Yamada, managing director of Louise Yamada Technical Advisors, said Thursday on CNBC’s “Futures Now.”……………………………………….Full Article: Source

The Real Reason Gold Prices Are Falling

Posted on 31 July 2015 by VRS  |  Email |Print

Gold is in the news for all the wrong reasons at the moment. The price of the metal tumbled this month, maintaining its downward trend for the year. In fact, bullion had its worst month in over two years in July. At US$1,092, an ounce of gold is now worth what it was back in 2010.
Its future prospects, if analysts are to be believed, are worse still. A recent Bloomberg survey suggested that prices could drop to US$984 an ounce by January. That would represent a 10% decline from its present price point. A separate Bloomberg survey highlighted that over half of respondents believe gold is heading for its third consecutive annual loss in 2015………………………………………..Full Article: Source

World Gold Council recommends retaining India’s current hallmarking model

Posted on 31 July 2015 by VRS  |  Email |Print

World Gold Council on Thursday recommended that India’s current hallmarking model, built around independent hallmarking and assay centres, should be retained. In addition it recommended six key actions should be taken to improve the efficiency and effectiveness of the current system:
WGC recommended that the governance around the hallmarking process should be strengthened and there should be a customer awareness drive about hallmarking.There is a need to incentive and facilitate targeted expansion of hallmarking centres. It has also suggested to use BIS data to develop a ratings system for jewellers………………………………………..Full Article: Source

Here’s Why Silver Prices are About to Soar

Posted on 31 July 2015 by VRS  |  Email |Print

If you’re looking to get rich in precious metals, this might be the most important message you’ll ever read. Because today, I’m going to show you why silvers prices could soon soar through the roof. If you want to get in on this opportunity, then you have to act fast.
Let me explain. If you take a look at what has been going on in the silver futures market, you’ll see that the grey metal is being oversold. At the beginning of this year, open interest in silver futures was around 150,000 contracts. Open interest refers to the number of futures contracts that are not closed or delivered. By July 28th, open interest in silver futures increased to around 190,000. That was a 26.7% increase in a less than seven months!……………………………………….Full Article: Source

Forget whether $100 silver is possible, how about $1000?

Posted on 31 July 2015 by VRS  |  Email |Print

I don’t know of many charts out there that a bullish investor since 2011 would look at with more disgust than the silver chart. It has been an exceptionally painful experience for those bullishly inclined since 2011. In fact, silver has dropped 70% from its 2011 heights to its recent lows, and it is still not done. But this story certainly has a “silver lining” for those who are willing to be a bit more patient.
On Aug. 30, 2011, I wrote my first public column about silver, which called for a market top in silver with a shorting target of 42.90, and that it must remain below 44.30 for the downside to ensue. Within the same column, I provided a downside target of 26.80 in the futures………………………………………..Full Article: Source

Molybdenum: Minor Metal Is Major Headache for Investors

Posted on 31 July 2015 by VRS  |  Email |Print

The biggest casualty of the malaise affecting global steel markets isn’t iron ore, or even coal. Instead, an often-overlooked metal that is produced in countries including the U.S. and traded in London has experienced the steepest price falls: molybdenum.
The commodity, used to increase the hardness of steel and help protect it from corrosion, is piling up at ports and storage facilities around the world because of too much supply and listless demand from steelmakers………………………………………..Full Article: Source

3 Energy ETFs With Juicy Yields

Posted on 31 July 2015 by VRS  |  Email |Print

Energy stocks may be the most-cursed securities since the last one-year period, but not all is repulsive in this corner of the investment world. Investors should note that energy stocks are known for warm dividend payouts.
Energy companies normally emphasize higher capital expenditure for production growth, and focus less on profitability. However, these companies started to focus more on profitability generation and dividend distribution since the recession in order to ensure more stable cash inflows, per CNBC……………………………………….Full Article: Source

State Street Starts Global Macro Hedge Fund in Alternatives Push

Posted on 31 July 2015 by VRS  |  Email |Print

State Street Corp. is starting a hedge fund that will bet on macroeconomic events, part of an effort to expand its $2.37 trillion money-management arm beyond lower-paying passive strategies.
The strategy, which will be run by Michael Ho and Lisa O’Connor, will mostly make directional bets on and against stocks, bonds, currencies and commodities globally, confirmed Anne McNally, a spokeswoman for State Street. The bank seeded the fund with $50 million, and Hartford HealthCare’s pension and endowment added $33 million………………………………………..Full Article: Source

Is Now the Time to Invest in Agriculture?

Posted on 31 July 2015 by VRS  |  Email |Print

Do today’s agricultural equity opportunities offer a parallel to the bull market of 2010? During the last significant El Niño cycle in 2010, Chicago corn futures rallied 78%.
We are currently living in an exciting time for the agricultural equity market that has yet to be widely recognised by investors. In particular, we do not believe the market has adequately discounted the potential impact of El Niño – a band of warm air that comes off the ocean, which can cause tropical storms – on agricultural commodity prices and what it could mean for upstream producers………………………………………..Full Article: Source

Bitcoin: Commodity or Currency?

Posted on 31 July 2015 by VRS  |  Email |Print

Electronic payment system Bitcoin is garnering praise, attention, and scrutiny in equal measure amidst claims the cryptocurrency could disrupt the entire global financial system. The future of Bitcoin has never looked so important to so many people, as countries in the grips of financial difficulties turn to Bitcoin, while those with an interest in stocks and shares observe the growth of this new currency-commodity hybrid with intrigue.
Bitcoin garnered huge interest in 2014, which led the likes of Paypal co-founder Peter Theil to set up his own Bitcoin payment solutions company. Cameron and Tyler Winklevoss, of Facebook fame, also created the Winklevoss Bitcoin Trust to invest and trade in Bitcoin, which received more than $200 million in publicly disclosed 2014 VC investments………………………………………..Full Article: Source

Australian dollar steady as commodities bounce offsets weak data

Posted on 31 July 2015 by VRS  |  Email |Print

The Australian dollar held steady on Thursday after the US Federal Reserve failed to surprise overnight and a lift in commodity prices offset soft domestic data. In late local trade, the Aussie was fetching US73.09¢, compared with US73.16¢ at the same time on Wednesday.
The local unit had spiked to US73.46¢ when the US Fed announced its decision to hold rates where they’ve been for the last 6½ years. The language around the decision was also less hawkish than expected, leaving traders wondering if lift-off would even materialise this year………………………………………..Full Article: Source

Calpine expects CO2 rule to help gas fleet

Posted on 31 July 2015 by VRS  |  Email |Print

Calpine says the US Environmental Protection Agency’s (EPA) forthcoming Clean Power Plan will provide a strategic advantage for its natural gas fleet given the likely retirement of baseload coal-fired capacity. Calpine is bullish in its outlook for gas dispatch throughout its markets, especially if the EPA plan creates a carbon price for coal generators. The company operates a merchant fleet in California, Texas and the PJM Interconnection totaling 27,00MW,
“We are hopeful the [EPA] rule and the federal implementation plan will have the option of a market-based approach to CO2 reductions, which will effectively put a price on carbon in many of our markets,” Calpine chief executive Thad Hill said today. “The shift away from baseload [coal] continues and we are on the right side of history.”……………………………………….Full Article: Source

Investors prepare for a carbon-constrained world

Posted on 31 July 2015 by VRS  |  Email |Print

The upcoming global climate change summit in Paris and falling coal prices offer the latest reminder for investors to start thinking about the potential impact future carbon policy changes will have on where they park their money.
While the issue has not received a lot of public attention, fund managers have been thinking for years about ways to take advantage of future climate change policies such as the introduction of a carbon price. It is a more nuanced debate than the contentious issue of ethical investing, which grabbed a lot of headlines last year when the Australian National University blacklisted seven companies including Santos and Oil Search………………………………………..Full Article: Source

July slaughter sends commodities to 13-year low

Posted on 30 July 2015 by VRS  |  Email |Print

The downward slide in commodity prices is accelerating, surpassing the low reached during the financial crisis in 2008 and reaching a 13-year low. “This is one of the worst months in history for commodities,” said Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices.
The S&P GSCI index, a measure of a basket of 24 commodities, lost 14 percent of its value this month, with nearly every single component trading in negative territory. Indeed, the magnitude of the losses is shaping up to be the seventh worst in 45 years, data from S&P Dow Jones Indices show………………………………………..Full Article: Source

Don’t confuse commodities hoarding as a sign of a market turnaround

Posted on 30 July 2015 by VRS  |  Email |Print

Canadian investors did pretty well during the rising tide of commodities prices a decade ago, but they are looking for signs of hope these days. With the S&P/TSX energy index down 20 per cent on the year, and the metals and mining index down by nearly a quarter, they could certainly use one or two.
Maybe investors can simply put their faith in the old adage that the cure for low prices is low prices. What’s supposed to happen is that low prices will discourage production and encourage consumption. That will raise prices, eventually. Then demand will inevitably wane in response and producers will overdo production, as they always do. Prices will decline again. It’s the cycle. Rinse and repeat………………………………………..Full Article: Source

Get ready to cash in on the bottom for commodities

Posted on 30 July 2015 by VRS  |  Email |Print

A five-day rout was put to rest yesterday, with a 1% gain for the S&P 500 and other indexes. Dead-cat bounce? The Federal Reserve may chart out the fortunes for this market, depending on what’s in its statement later. Investors will comb through the Fed’s words for clues to a September hike, though they may get fewer hints than they’re hoping for.
But they may stay away from Internet stocks, after Twitter’s earnings call got messy and Yelp disappointed. Can Facebook rally the sector with results later? The pressure is on, as those shares have run up 15% in the last three months. At least the social-media group now has a what-not-to-say-at-your-conference-call blueprint to work off. Here’s what to expect from Facebook………………………………………..Full Article: Source

Oil Price Fluctuations at $50-$65 per Barrel ‘Normal’

Posted on 30 July 2015 by VRS  |  Email |Print

Oil price fluctuations between $50 and $65 per barrel are normal because the situation on the world market depends on the level of supply and demand, Russian Energy Minister Alexander Novak said Wednesday.
“I think that the diapason of fluctuations, of which we spoke about before, from $50 to $65 [per barrel] is a normal and expected process and there are no supra-fluctuations that we see. The global situation on the markets depends on supply and demand and in today’s case, this is how it’s unfolding,” Novak said………………………………………..Full Article: Source

Demand not enough to boost oil price

Posted on 30 July 2015 by VRS  |  Email |Print

Strong global demand for oil is insufficient to offset a robust supply outlook that has driven prices back below US$50 per barrel, and Saudi Arabia no longer appears to have the necessary market clout to change prices.
“This remains a supply-driven market,” said Michael Tran, a New York-based commodity strategist at RBC Capital Markets. “Supply drove us into this low price environment and supply will have to be what ultimately digs us out.” Tran thinks oil could retest the lows from earlier in 2015, but he thinks WTI prices will ultimately average somewhere in the low US$50s for the remainder of the year………………………………………..Full Article: Source

Russia has no plans to discuss oil output cuts with OPEC in Moscow

Posted on 30 July 2015 by VRS  |  Email |Print

Russia has no plans to discuss oil production cuts with OPEC during Secretary-General, Abdullah al-Badri, visit to Moscow on Thursday, Energy Minister Alexander Novak was quoted as saying.
Novak added that he saw no ‘abnormality’ on the oil markets, calling the oil price of between $50 to $65 per barrel as ‘expected’. OPEC decided to keep oil production unchanged, starting the battle to defend its market share. Russia, the world’s biggest oil producer, also refused to take any actions to support oil prices which more than halved since last year………………………………………..Full Article: Source

Understanding the Oil Market’s New Supply Dynamic (Video)

Posted on 30 July 2015 by VRS  |  Email |Print

Bloomberg’s Vincent Piazza explains the new supply dynamic in the oil market as producers continue increasing output while prices fall. He speaks on “Bloomberg Surveillance.”.………………………………………Full Article: Source

Here’s what the rout in gold prices means for the market

Posted on 30 July 2015 by VRS  |  Email |Print

Lots have been said about the recent decline in gold prices. Most of it deals with the fundamentals of gold itself, such as mine closures, supply and demand, and the like. The rest involves the technical side, such as long-term trends and moving averages. But there are other sides to this story.
For example, gold is usually sought when inflation starts to heat up. When the economy first emerged from the Great Recession, gold rose in price, figuring that inflation would eventually rise — not just from the greater demand for metals and other commodities that usually accompanies a stronger economy, but from all the liquidity that the Federal Reserve had to create in order to push the economy forward………………………………………..Full Article: Source

Deutsche: Gold price has another 30% to fall – and soon

Posted on 30 July 2015 by VRS  |  Email |Print

On Tuesday gold stabilized but hovered near five-and-half year lows struck last week after a closely watched report showed global gold demand at the lowest in six years , followed by a prediction of a 30% fall from today’s levels.
Futures contracts in New York with August delivery dates were exchanging hands for $1,095.10 an ounce in after hours trade on Tuesday and flat compared to yesterday’s close in another day of light trading as anxious investors look for fresh direction for the metal………………………………………..Full Article: Source

Gold price not being driven by fundamentals

Posted on 30 July 2015 by VRS  |  Email |Print

Since around mid-June, gold prices have come under substantial selling pressure. One of the main drivers behind this fall has been the on-going debate about interest rates. While the general narrative supposes that higher interest rates will have a negative impact on gold, I have often stated that this assumption is not correct.
The historical record shows that gold tends to rise with nominal interest rate rises – as was seen from 2004 to 2008 and in the 1970s – and the Fed is unlikely to raise rates in any meaningful way while deflationary forces persist. According to the WGC, although higher interest rates would make the dollar more attractive to investors looking for higher-yielding assets, the current narrative that this scenario would be bearish for gold is incorrect………………………………………..Full Article: Source

HSBC downgrades 2015 gold price forecast

Posted on 30 July 2015 by VRS  |  Email |Print

HSBC has significantly downgraded its 2015 average gold price forecast, following the brutal sell-off seen in the market one week ago. HSBC now predicts that gold will average $1,160 per ounce in 2015 from $1,234 previously. The bank has also lowered its 2016 forecast by five percent from $1,275 per ounce to $1,205.
Nonetheless, the bank still believes that in the end, gold will recover from current levels, it said. Gold recently slumped to levels not seen since March 2009 at $1,077 per ounce, following a bear-raid on the market during early trading hours in Asia and what was the most illiquid period of business in the week………………………………………..Full Article: Source

Warren Buffett once said that Gold is a way of going long on fear. Do you agree?

Posted on 30 July 2015 by VRS  |  Email |Print

The world market was awash with a swarm of gold bugs after the financial crisis of 2008. Gold bugs are advocates of investments in Gold as a safe haven and a guard against financial Armageddon, hyperinflation, currency collapses and geopolitical troubles.
A few years ago, gold bugs argued the precious metal was a can’t-miss investment given the ultra-loose monetary policies around the world and the prospect of higher inflation. However, you can’t find many gold bugs as the metal prices have taken a big tumble. The cumulative returns since 2010 for gold HAS almost BEEN nil compared to a return of 70 per cent by Dow Jones Industrial Average and 57 per cent by BSE S&P Sensex………………………………………..Full Article: Source

Why Gold Will Fall to $1,020

Posted on 30 July 2015 by VRS  |  Email |Print

After a relatively uneventful few months for the gold market, prices broke out of their six-month range in dramatic fashion last week. Gold’s fall below the crucial USD1,130/oz level has seen the metal trade to a fresh five-year low of USD1,078/oz in recent days. While the market has since gained some composure, we expect further downside to ensue given the significant shift in market positioning.
Market positioning is reflecting a renewed negativity towards gold. While our short-term forecast of USD1,100/oz was met recently, we were surprised at the manner in which it occurred, having previously expected a gradual grind lower………………………………………..Full Article: Source

Zinc market could be facing concentrate supply deficit: Investec

Posted on 30 July 2015 by VRS  |  Email |Print

The zinc market could run into a concentrate shortfall in the coming months, leading to upward pressure on prices, Investec said Wednesday. “We see the zinc market as one of the few bright spots in the metals market right now given the natural attrition from old mines closing down,” Investec said in a research note, commenting on the decision by Australia’s MMG to push ahead with its Dugald River mine project.
“The development of Dugald River has long been expected but a considerable deficit of concentrate could yet emerge in the market in the next few months — a situation that in our view could lead to a squeeze on the zinc price,” Investec said. On Tuesday, MMG announced approval of an updated development plan for the Dugald River project in Queensland, Australia………………………………………..Full Article: Source

Goldman says Chinese metals in for a ‘hard landing’

Posted on 30 July 2015 by VRS  |  Email |Print

China’s statistics pose multiple difficulties for analysts, especially since they were called “man-made” by the current premier, Li Keqiang, in a US diplomatic cable. The country grew at 7 per cent in the second quarter of this year according to Beijing, but commodity prices, especially metals, have fallen to some of their lowest price levels in six years.
That is leading analysts to take a new stab at working out just how large the slowdown in commodity demand really is in the world’s biggest consumer. Working out China’s demand is not easy, however. In many cases, data are obfuscated by imports from Hong Kong, a Chinese territory, and the practice of importing metal as collateral to obtain bank loans………………………………………..Full Article: Source

Iron ore price surges 6%

Posted on 30 July 2015 by VRS  |  Email |Print

While other metals markets continue to be mired in negativity, the price of iron ore surged on Wednesday as the market for the steelmaking raw material in top consumer China show signs of a bottom. The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin raced ahead $3.10 or 5.9% to $53.30 a tonne, capping three days of gains according to data provided by The SteelIndex.
The advance in the Metal Bulletin’s benchmark 62%-index at the ports of Qingdao-Rizhao-Lianyungang in China was $2.44 or 4.6% to $55.89 for an 8.7% gain since Friday to a four-week high. The latest move higher was inspired by a bounce back in Chinese steel prices with the most-traded rebar contract on the Shanghai Futures Exchange touching $340 on Wednesday. That’s up from record low of $305 at the start of the month………………………………………..Full Article: Source

Oil ETFs Jump on Unexpected Inventory Drop

Posted on 30 July 2015 by VRS  |  Email |Print

An unexpected dip in U.S. crude oil inventories helped fuel a surge in energy prices and commodity-related exchange traded funds Wednesday. On Wednesday, the United States Oil Fund, which tracks West Texas Intermediate oil, was up 2.7% and the United States Brent Oil Fund, which tracks Brent crude oil futures, was 1.4% higher. USO has declined 22.2% and BNO has decreased 17.5% year-to-date.
Oil prices were rallying Wednesday after the U.S. Energy Information Administration revealed crude inventories fell by more-than-expected 4.2 million barrels last week, or over twenty times expectations for a drawdown of 184,000 barrels, Reuters reports………………………………………..Full Article: Source

Despite bumpy June/July, CTAs hold on

Posted on 30 July 2015 by VRS  |  Email |Print

To say that things have been rocky in managed futures recently is putting it mildly. In June, the industry saw its worst month on a performance basis in the past four years. Then yesterday, S&P’s Jodie Gunzberg came out with the following data: “The S&P GSCI has lost 13.6% month-to-date through July 27, 2015, bringing its level to the lowest since February 25, 2002. It has now exceeded the bottom of the 2008 global financial crisis.”
That makes July the seventh worst performing month for the GSCI since 1970. In fact, it’s pretty bad across the board - again Gunzberg: “Every single one of the 24 commodities is negative for the month except lean hogs, which is just barely positive by 18 basis points BUT only when taking into account the positive roll yield; otherwise that is negative too, by 14.5%………………………………………..Full Article: Source

Russia Ends Foreign Currency Purchases in Boost for Easing

Posted on 30 July 2015 by VRS  |  Email |Print

Russia’s central bank halted purchases of foreign currency to replenish the country’s international reserves, a move that may lay the groundwork for a fifth interest-rate cut this year at a meeting on Friday.
The operations were suspended on July 28 as a result of “growth in volatility on the domestic currency market,” the regulator said in a statement on its website Wednesday. It said currency purchases were reduced to $160 million on Monday from $200 million a day last week. The ruble appreciated as much as 1.4 percent after the announcement, before paring gains………………………………………..Full Article: Source

Australian dollar may hit US50¢ as commodities prices fall

Posted on 30 July 2015 by VRS  |  Email |Print

Despite its rise in recent days, the Aussie is now seen as close to fair value, but should continue to track the price of key commodities such as iron ore and coal. According to most modelling, the currency’s present level near US73¢ – it was fetching US73.21¢ – clearly reflects the country’s terms of trade, along with the difference in bond yields between Australian and the United States.
When the US Federal Reserve finally lifts its target rate, the local unit is expected to depreciate further, moving closer to US70¢. Any further declines in commodity prices will have the same effect………………………………………..Full Article: Source

Climate change: On the economics of the end of the world as we know it

Posted on 30 July 2015 by VRS  |  Email |Print

Climate change puts humanity at risk. The Pope’s celebrated encyclical letter on the subject released last month emphasised this risk “for our common home”, arguing that “doomsday predictions can no longer be met with irony or disdain”. But apocalyptic predictions are often made by religious groups. So, how serious is this claim?
Perhaps for the first time in history, there seems to be a broad consensus among scientists. They claim that our planet might face a frightening future if we cannot agree to take decisive actions here and now. Changes to how seawater circulates in the Atlantic, the melting of glaciers on Greenland and in the Antarctic, and rising sea levels might all result from inaction. Accounting for these catastrophic scenarios is a huge challenge for scientists and economists alike………………………………………..Full Article: Source

Carbon Trading Part of Late Push for Obama Power Plant Limits

Posted on 30 July 2015 by VRS  |  Email |Print

Some businesses that back President Barack Obama’s plan to curb greenhouse gases are making a late lobbying push to add an element similar to a cap-and-trade program. With the administration set this week or next to unveil its final rules to cut emissions from coal and natural gas plants, groups for companies such as Johnson Controls Inc., Alstom SA and AES Corp. have pressed officials to include a carbon market so that costs don’t surge.
Those programs — a slimmed-down version of a plan Congress debated and failed to pass early in Obama’s tenure — would apply to states that balk at putting rules in place………………………………………..Full Article: Source

Investors fret over falling commodities

Posted on 29 July 2015 by VRS  |  Email |Print

Investors’ expectations are for more falls in commodity prices amid worries about the Chinese economy and interest rates. Speculators have confirmed what everyone else has been thinking: expect more falls in commodities, as worries about China and higher interest rates combine with waning sentiment to suggest markets are heading further south.
But while more losses are certain, their scope could be limited because many speculators have already made bets that prices will fall. Commodities from iron ore, to oil, grains and gold have shed value as the current extended price boom or “super-cycle” wanes………………………………………..Full Article: Source

China paves a silk road for commodities

Posted on 29 July 2015 by VRS  |  Email |Print

The Silk Road may conjure up images of Marco Polo and ancient Chinese empires, but its infrastructure-driven 21st century version could be a long-term saviour for commodity prices. China’s plan to spend billions on transportation links to Europe via western Asia - primarily railways and highways but also ports - is finally underway and starting to attract international attention.
“The Silk Road initiative announced by Chinese President Xi Jinping in 2013 and implemented, beginning this year, contemplates so vast an investment in highways, ports and railways that it will transform the ancient Silk Road into a ribbon of gold for the surrounding countries,” said Yale Professor Valerie Hansen, writing in The Indian Express earlier this month………………………………………..Full Article: Source

How bad is July proving for commodities?

Posted on 29 July 2015 by VRS  |  Email |Print

Concerns about a slowdown in China, renewed strength in the US dollar and persistent supply concerns have combined to make it an ugly July for commodities. But just how bad has it been? The S&P GSCI total return index, which tracks the price of 24 commodities, has fallen through the bottom it reached during the the financial crisis and is at its lowest level since February 2002, writes Mamta Badkar.
Its 13.6 per cent decline this month makes July the seventh worst month on record for the index which dates back to 1970, according to data from S&P Dow Jones Indices. All of the 24 commodities in the index are down for the month, with the exception of lean hogs. Losses for the commodities in the index have only been so widespread once before - in September 2008………………………………………..Full Article: Source

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