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Commodities Briefing - Archive | September, 2015

China has burst the commodities superbubble

Posted on 30 September 2015 by VRS  |  Email |Print

Commodity prices could well have further to fall, now China’s business model has changed. It is no longer aiming to achieve high levels of economic growth by operating an export-focused development model, supported by vast infrastructure spending. Instead, its New Normal policies aim to boost domestic consumption, by creating a services-led model based on exploiting the opportunities created by the power of the internet.
The only problem is that markets have failed to notice this change. They have fallen victim to the phenomenon of “anchoring” as identified by Nobel Prizewinner Daniel Kahneman, and assume the New Normal is similar to the Old Normal. Thus, much analysis on commodity markets still focuses on guessing “when will the rally begin?”……………………………………….Full Article: Source

World stocks hit two-year lows as commodities stay pressured

Posted on 30 September 2015 by VRS  |  Email |Print

Global stocks slid to their lowest in more than two years on Tuesday as raw materials prices and emerging markets stayed under pressure. Commodity prices edged up but held near multi-year lows on concern over an economic slowdown in major consumer China.
Mining and trading giant Glencore, whose shares fell by almost a third on Monday on investor concern over its debt levels, eked out gains of 4 percent in London but only after its Hong Kong-listed shares fell 29 percent. Asian commodity merchant Noble lost 11 percent, having at one point in the session fallen by 15 percent to levels last seen in October 2008………………………………………..Full Article: Source

Glencore Crash: Sharing in the Commodities Giant’s Misery

Posted on 30 September 2015 by VRS  |  Email |Print

Asian commodities house Noble Group has been under siege since critics began assailing its accounting in February. Now, the woes of trading peer Glencore are adding to the sense of peril regarding Noble.
The 29% plunge Monday in miner-cum-trader Glencore’s London shares triggered a 10% drop in Noble’s Singapore-listed stock Tuesday. Noble’s 2020 bonds at one point Tuesday also fell by 20 cents on the dollar to around 60 cents, according to traders………………………………………..Full Article: Source

Commodities Are Collapsing; Now is the Time to Buy

Posted on 30 September 2015 by VRS  |  Email |Print

Joe Kennedy once famously said that he knew it was time to exit the stock market when his shoeshine boy offered him a stock tip. That principle, that when financial news and opinions become mainstream, the move is over, can also be applied in reverse. The collapse in commodity prices and in the stock of companies in the associated industries is nothing new.
It started when oil began its dramatic fall over a year ago and has continued ever since, fueled by fears about slowing global growth and a relatively high dollar. In the last couple of weeks, however, it seems to have passed into the mainstream. It seems that every news bulletin and publication has a story about the death of commodities right now, which, to a contrarian with an understanding of history, suggest that now is a good time to be buying………………………………………..Full Article: Source

Investors: Get Ready for an Even Deeper Commodities Slump

Posted on 30 September 2015 by VRS  |  Email |Print

The sharp collapse in commodities continues to worsen. The Scotiabank Commodity Price Index for August 2015 has fallen by 10.5% month over month, and the bad news doesn’t stop there. The index is now 14% lower than it was in August 2009 at the height of the global financial crisis, and there are signs that commodity prices will sink even lower. Let me explain.
Now what? The key driver of the pessimism surrounding the outlook for commodities rests squarely with concerns over China’s economy. Not only is 2015 GDP growth forecast to be at its lowest level in over two decades, but a number of crucial economic sectors that support the demand for commodities appear to be caught in protracted slumps………………………………………..Full Article: Source

Trouble looms for developing countries as commodity revenues collapse: Kemp

Posted on 30 September 2015 by VRS  |  Email |Print

Slumping commodity prices pose a serious challenge to economic and political stability in developing economies across Latin America, Africa, the Middle East and Asia. According to the United Nations Conference on Trade and Development, 94 developing countries depended on commodities for more than 60 percent of their merchandise export revenues in 2012/13.
Sixty-three developing economies were considered “extremely commodity dependent” with commodities accounting for more than 80 percent of export earnings. Most commodity-dependent developing countries rely on raw material exports for more than 20 percent of their entire economic output, in some cases rising to more than 50 percent, according to UNCTAD……………………………………….Full Article: Source

Oil prices: Has black gold lost its shine?

Posted on 30 September 2015 by VRS  |  Email |Print

Royal Dutch Shell has halted oil exploration in the Arctic, after a $7bn (£4.6bn) quest failed to yield enough crude to justify continued spending. The venture has been a “very costly error” and will damage the company both financially and reputationally, according to Deutsche Bank analyst Lucas Herrman.
Shell said it is likely to take a further $4.1bn hit as it withdraws from searching the area, which is in the Chukchi Sea off the coast of Alaska. Its ill-fated explorations in the Arctic region were also put on hold in 2012 when a drilling rig broke free………………………………………..Full Article: Source

Saudis pull home $70bn as oil price bites

Posted on 30 September 2015 by VRS  |  Email |Print

Saudi Arabia has withdrawn as much as $70bn (€62.5bn) from global asset managers as OPEC’s largest oil producer seeks to plug its budget deficit after crude slumped, according to financial services market intelligence company Insight Discovery.
“Fund managers we’ve spoken to estimate SAMA has pulled out between $50bn to $70bn from global asset managers over the past six months,” Nigel Sillitoe, chief executive officer of the Dubai-based firm, said yesterday………………………………………..Full Article: Source

European high sulfur fuel oil market still eying Med-North arbitrage despite volatility

Posted on 30 September 2015 by VRS  |  Email |Print

The premium of high sulfur fuel oil FOB Med cargoes to FOB Rotterdam barges narrowed Monday from the previous week, although a tighter Mediterranean meant participants might still look for arbitrage opportunities between the two regions, despite a volatile spread, sources said Tuesday. FOB Med cargoes retraced to a premium of $0.50/mt against Rotterdam barges Monday, closing at $204/mt. Over the previous week they had reached a premium of as high as $3/mt.
“There is not a lot of product around in the Mediterranean,” a trader said Tuesday, adding that conversely stocks in Rotterdam were looking healthy and loadings for exports towards Singapore seemed to have slowed down, suggesting there might be more volumes coming into the Mediterranean moving into October………………………………………..Full Article: Source

Will Iranian Oil Hit The Market Before 2016?

Posted on 30 September 2015 by VRS  |  Email |Print

Iran is aggressively hyping its oil production capacity to the media, but its boasts are questionable at best. The National Iranian Oil Company’s (NIOC) chief of investment, Ali Kardor, bragged to the press at a recent business conference in Geneva that Iran will be putting an additional 500,000 barrels of oil a day on the market by December, 2015.
At this rate, Kador expects Iranian exports to top 1 million barrels per day by mid-2016. Currently, Iran produces a little under 3 million barrels of oil a day, almost all of which is consumed domestically. Currently, a small amount is exported to Asian customers. Is there any chance that Kador’s ambitious estimates could become a reality?……………………………………….Full Article: Source

What Oil Investors Can Learn From Gold

Posted on 30 September 2015 by VRS  |  Email |Print

Commodities investors had been riding on momentum for years and with a diminishing supply of the product coming from producers, prices seemed destined to keep rising for the foreseeable future. Then in the span of a few months, the commodity’s price crashed and billions upon billions in investment value and producer company market capitalization was wiped out.
For many energy investors, this story might sound familiar. But it’s not the story they are thinking of. In 2013, after a price run-up that had lasted for a decade, investors in gold found out that the precious metal was not as safe as many had assumed. Gold is supposed to be the ultimate safe-haven asset………………………………………..Full Article: Source

Gold Price Forecast for 2016: Optimistic Gold Price Outlook Ahead

Posted on 30 September 2015 by VRS  |  Email |Print

Gold prices haven’t really performed so far in 2015, and this phenomenon really has precious metal investors worried about what’s next. There are many questions about where gold prices could go next. If they are true believers in buying undervalued investments, then they shouldn’t be too concerned. The yellow metal is presenting a great opportunity. 2015 might be a little bumpy, but the gold price forecast for 2016 and onward looks very optimistic.
Don’t pay attention to the noise. It’s very misleading. What Mainstream Thinks Gold Prices Will Be in 2016. If you’ve been listening to the mainstream about where gold prices could be headed, you might very be disappointed. For example, not too long ago, Citigroup Inc. lowered its forecast for the precious metal………………………………………..Full Article: Source

Gold price: ‘safe haven’ busted by commodities rout

Posted on 30 September 2015 by VRS  |  Email |Print

Equities are in sharp reverse in yet another knock to investor confidence. And gold, once seen as a safe haven, is no exception to this downward slide. “This is when you know it’s bad,” says Business Insider‘s Myles Udland.
In truth, gold was not expected to rise substantially any time soon, given the widespread belief that a rates rise might be looming. But gold was expected to hold steady in a narrow range while wider markets swung wildly. Instead the precious metal slumped by around $20 on Monday to $1,127 an ounce. ……………………………………….Full Article: Source

7 Bullish Gold Price Indicators

Posted on 30 September 2015 by VRS  |  Email |Print

It is getting very exciting in the gold market! We have shown several bullish gold indicators in the last couple of weeks. Here is the thing: the number of bullish indicators keeps on growing. First, GLD ETF, the largest exchange-tradable gold ETF, has the lowest put-to-call ratio since 2012, right after the failed attempt of gold to break through its all-time high.
Second, the number of short positions in GLD ETF has reached long term lows. Although we are not able to show the long term chart, as it is protected material by shortsqueeze.com, we can pull up the following table. Note how the latest update from this week points to a 10% decrease of shorts compared to two weeks ago………………………………………..Full Article: Source

Supply cuts required to see price improvement in nickel market: Deutsche Bank

Posted on 30 September 2015 by VRS  |  Email |Print

Supply cuts are required if the global nickel market is to see any sign of a meaningful price improvement, Deutsche Bank said Tuesday in its fourth quarter commodity update. “Historically many of the producers have held on, hoping that demand and prices would come to their rescue. We think this is unlikely in the short-term, and curtailments will be required to see any meaningful price improvement,” the bank said.
Deutsche Bank estimates that around 50% of the industry is loss-making at current price levels and this includes most of the low cost Chinese nickel pig iron (NPI) producers………………………………………..Full Article: Source

Is Your ETF Too Fat?

Posted on 30 September 2015 by VRS  |  Email |Print

Apple Inc.’s recent product reveals had us exploring what happens when Apple makes up a large part of your exchange-traded fund. Namely, that kind of so-called “overweight” can have an outsized effect on how that ETF performs.
But here’s a heads-up: ETFs can get chunky off a whole lot more than Apple. Overweights can come in a variety of ways – a single stock, a handful of companies, an industry, a sector or even a part of the world. Regardless of how it occurs, you should be aware that it does happen, and take that into account before you buy a fund………………………………………..Full Article: Source

Can Goldman Dominate the Smart Beta ETF Industry?

Posted on 30 September 2015 by VRS  |  Email |Print

The ETF industry continues to grow and evolve. More than 200 exchange traded products have been launched in the US this year, taking the total number of products to 1,777 and assets under management to $1.96 trillion.
Last week, Goldman Sachs made their entry into the ETF industry with the launch of their Smart Beta ETF– ActiveBeta US Large Cap Equity ETF. The fund will charge 9 bps in annual expenses, same as that being charged by the most popular ETF in the world, the SPDR S&P 500 ETF and much lower compared to average fee of 38 bps for US Large Cap Smart Beta ETFs………………………………………..Full Article: Source

Is Glencore PLC The Next Lehman?

Posted on 30 September 2015 by VRS  |  Email |Print

Are we about to witness the most important global financial event since the collapse of Lehman Brothers in 2008? Glencore has been known as the largest commodities trading company on the entire planet, and at one time it was ranked as the 10th biggest company in the world.
It is linked to trillions of dollars of derivatives trades globally, and if the firm were to implode it would be a financial disaster unlike anything that we have seen in Europe since the end of World War II………………………………………..Full Article: Source

Currency woes hinder Egypt’s economy

Posted on 30 September 2015 by VRS  |  Email |Print

Finding new customers for his fitness and physiotherapy equipment business used to be the main challenge for Rawi Camel-Toueg. Now the Egyptian businessman’s biggest headache is securing the dollars needed to import the products he sells.
“We used to be able to import quite simply,” he says. “Now if we need $300,000 the bank asks us to deposit the full value in Egyptian pounds, then we have to take our turn until it can source the dollars. Most of the time they come back to say they can’t do it and they ask us to find half of the dollars ourselves.”……………………………………….Full Article: Source

Brazil Currency Advances as Policy Makers Seek to Restore Calm

Posted on 30 September 2015 by VRS  |  Email |Print

Brazil’s real rose after the government said it is ready to face any crisis while the central bank stepped up support for the currency following a rout that sent it to a record low last week.
The real advanced 1.2 percent to 4.0620 per dollar in Sao Paulo after earlier falling as much as 1 percent. The currency extended its gains after Treasury Secretary Marcelo Saintive said officials are working to shore up the budget and calm markets………………………………………..Full Article: Source

China’s 2017 Carbon Timetable May Be Hit by Slowing Economy

Posted on 30 September 2015 by VRS  |  Email |Print

A slowing Chinese economy threatens to undermine the deadline outlined last week by President Xi Jinping to introduce a nationwide carbon market by 2017. Companies ranging from coal-fired power plant operators to cement producers and oil and gas companies, faced with struggles to stay afloat, could be reluctant to participate in the cap-and-trade system the Chinese government has vowed to roll out on a national level, according to Tian Miao, an analyst at North Square Blue Oak Ltd., a London-based researcher.
“With slowing energy demand in a slowing economy, the last thing these companies want is an extra cost associated with a carbon emissions commitment,” Tian said by phone from Beijing………………………………………..Full Article: Source

Will China’s carbon-trading plan help curb climate change?

Posted on 30 September 2015 by VRS  |  Email |Print

To help reduce harmful emissions among its highest polluting industries, China will launch the world’s largest national carbon trading program in 2017. It announced the commitment on Friday in a joint statement with the United States, which also outlined plans to reduce industrial emissions by 32 percent by 2030.
This was welcome news from the world’s largest greenhouse gas producer, but many were left wondering whether the cap-and-trade incentive system, which has had mixed results around the world, will work there, particularly because of China’s precarious economy………………………………………..Full Article: Source

IMF: Commodities slump could hold growth rates lower for longer

Posted on 29 September 2015 by VRS  |  Email |Print

Australians might have to get used to slower growth rates as commodity price weakness persists and investment outside mining struggles to pick up the slack, says the International Monetary Fund.
The IMF, in its latest World Economic Outlook series, says the sharp decline in many metal and energy prices over the past few years will shave about 1 percentage point off gross domestic product growth rates between 2015 and 2017 in commodity-reliant emerging markets. According to its formula, growth rates in Australia could slip to 1.8 per cent over the next three years, from 2.8 per cent between 2012 and last year………………………………………..Full Article: Source

Commodities approach ‘peak pessimism’

Posted on 29 September 2015 by VRS  |  Email |Print

Is pessimism in the commodities sector reaching a peak? Take commodities trader Glencore, for example. Its shares are down over 20% at the open today. It’s never traded this low since it first floated on the stockmarket in 2011. And it could trade lower still.
It’s a life or death moment for the company. It may not survive lower commodity prices, according to a report by Goldman Sachs. The Goldman report cited lower coal (thermal and metallurgical) and copper prices. It cited the restructured $10bn in debt that has led to a lowering of its credit rating to BBB………………………………………..Full Article: Source

Commodities Are Collapsing

Posted on 29 September 2015 by VRS  |  Email |Print

There are two commodity stories today worthy of an investor’s interest: the collapse of shares at Glencore and the abandonment of Arctic drilling by Shell. Both are interesting as they point to a continuing collapse in the commodity space, and an even more serious worry about what that collapse means for global economies going forward.
Shell has invested almost $7 billion to date to gain permission and develop the first leases for deepwater drilling in the Arctic. This story of Shell’s second big foray north (after its first ignominious defeat with the Kulluk in 2012) gained wide media attention last month as President Obama visited Alaska — making his case for a global initiative on climate change while approving Shell’s leases………………………………………..Full Article: Source

Gartman: Time for bearishness on commodities behind us

Posted on 29 September 2015 by VRS  |  Email |Print

With oil dropping more than 2 percent Monday and platinum at a 6 1/2-year low, commodity prices are plummeting. One analyst says this might be the perfect time for commodities investors to pounce. “I think the time for being bearish for commodities is behind us, but I’m not sure the time for being bullish for commodities is upon us,” said Dennis Gartman, editor and publisher of The Gartman Letter.
Trading and mining giant, Glencore saw its shares tumble 26-percent Monday, underscoring the market’s pre-existing commodity concerns. The London-based company’s collapse could indicate that investors might not be taking a commodities plunge seriously enough………………………………………..Full Article: Source

Oil prices set to move ’sideways’, but still vulnerable

Posted on 29 September 2015 by VRS  |  Email |Print

Oil traders have started the week in a pessimistic mood on the back of a report pointing again to a slowdown in manufacturing output in China. International benchmark Brent crude is down by around 0.8 per cent to little more than $48 a barrel after an Asian trading session dominated by a nine per cent fall in Chinese industrial profits.
The news, which has hit wider markets, adds to evidence of a fall in consumption in the world’s second largest economy. Oil is vulnerable to any signs of waning demand from such a key market, as the supply glut that has weighed on prices in the past year continues……………………………………….Full Article: Source

Kuwaiti oil minister rejects proposal for OPEC to meet with nonmember countries

Posted on 29 September 2015 by VRS  |  Email |Print

Kuwait’s oil minister is rejecting the idea of a meeting between OPEC members and nonmember states as requested by financially struggling Venezuela. Oil Minister Ali al-Omair made the comments Monday in remarks carried by the official Kuwait News Agency. Al-Omair says since nonmember nations have no obligation to drop their production, an OPEC meeting with them wouldn’t make any sense.
He says that “even after OPEC states commit to decreasing production, other states increase their production. This makes us lose market share and opportunities that are hard to compensate.”……………………………………….Full Article: Source

Saudi Arabia feels pain of oil price war

Posted on 29 September 2015 by VRS  |  Email |Print

Saudi Arabia is estimated to have pulled tens of billions of dollars from western fund managers as it tries to cut its deficit amid a halving of the oil price. The world’s biggest oil exporter has been burning through its foreign securities investments, according to figures from the Saudi Arabian Monetary Agency, its central bank.
Investment in foreign securities fell by 65 billion riyals (£11.4 billion) to 1.74 trillion riyals in July, according to the latest figures from Sama, and are down by 320 billion riyals since the oil price began to fall last summer………………………………………..Full Article: Source

What it means: Shell abandons Arctic oil drilling

Posted on 29 September 2015 by VRS  |  Email |Print

Royal Dutch Shell is giving up on its expensive and controversial push to produce oil in Alaska’s Arctic waters, a decision that darkens the long-term oil prospects of the U.S. and brings relief to environmental groups that had tried desperately to block the project. Shell is abandoning the region “for the foreseeable future” because it failed to find enough oil to make further drilling worthwhile.
The company has spent more than $7 billion to explore for oil in Alaska’s Arctic, slogging through a years-long regulatory gauntlet and attracting spite from environmental groups who feared a spill in the Arctic’s harsh climate would be extremely difficult to clean up and devastating to polar bears, walruses, seals and other wildlife………………………………………..Full Article: Source

Gold price drops below $1,140/oz, platinum back at 6-yr lows

Posted on 29 September 2015 by VRS  |  Email |Print

Gold slipped below $1,140 early on Monday while the market continues to digest comments from Federal Reserve chair Janet Yellen last week that the central bank is still on track to raise interest rates by the end of the year. The spot gold price was last at $1,137.50/1.137.90 per ounce, down $8.50 on Friday’s close and back from last week’s one-month high of $1,156.70.
Yellen’s remarks, which lifted the dollar, came a week after the Fed delayed a long-anticipated rate rise due to worries about slowing global economic activity and excessively low inflation. Its decision had raised concerns about the economic stability of the US, China and rest of the world………………………………………..Full Article: Source

Swiss probe banks for ‘gold price fixing’

Posted on 29 September 2015 by VRS  |  Email |Print

Swiss competition authorities said they were investigating UBS, HSBC, Deutsche Bank and four other major banks for suspected price fixing in the trade of precious metals like gold and silver. The Swiss Competition Commission (COMCO) said it was looking into whether seven banks had colluded to manipulate prices in the precious metals market.
The watchdog said in a statement that it had “opened an investigation against two Swiss banks, UBS and Julius Baer, as well as against the foreign financial institutions Deutsche Bank, HSBC, Barclays, Morgan Stanley and Mitsui.”……………………………………….Full Article: Source

Swiss watchdog opens precious metals pricing probe

Posted on 29 September 2015 by VRS  |  Email |Print

A Swiss regulator launched an investigation into the possible manipulation of precious metals trading by a number of leading banks Monday, making it the latest global watchdog to look into the potential rigging of a major financial market.
Switzerland’s competition commission, known as WEKO, has opened an investigation following an initial probe into seven banks including Deutsche Bank, UBS, Julius Baer, HSBC, Barclays, Morgan Stanley and Mitsui. Spokespeople for HSBC, Morgan Stanley, Barclays and UBS declined to comment………………………………………..Full Article: Source

Copper Prices Hit by China, Glencore

Posted on 29 September 2015 by VRS  |  Email |Print

Copper prices were pushed lower by expectations of more data showing a slowdown in China, the world’s largest consumer of the metal. Investors were also unsettled by a slide in the share price of Swiss mining-and-trading company Glencore PLC, which fell to a new all-time low amid concerns about its debt burden.
Copper for December delivery, the most actively traded contract, sank 3.2 cents, or 1.4%, to $2.2515 a pound on the Comex division of the New York Mercantile Exchange………………………………………..Full Article: Source

Commodity Traders Face Higher Costs Under New European Rules

Posted on 29 September 2015 by VRS  |  Email |Print

Commodity traders and consumers are set for higher costs as the industry will for the first time be subject to similar regulations as stock and bond markets under European Union proposals to prevent market abuse.
Companies where speculative activity makes up more than 10 percent of their total commodity derivatives trading will need to get a financial license, comply with new disclosure rules and set aside additional capital to back trades, the European Securities and Markets Authority proposed Monday. ESMA also relaxed some previously proposed limits on the total open positions a trading firm can hold in a market………………………………………..Full Article: Source

India combines markets and commodities regulators

Posted on 29 September 2015 by VRS  |  Email |Print

India has merged its markets and commodities regulators, in a move that paves the way to opening up commodities markets to foreign investors and could also lead to the listing of the country’s main stock exchanges.
The decision to combine the regulators was prompted by the collapse of India’s largest commodities spot market two years ago, prompting a crisis of confidence in the Forwards Markets Commission, which regulates commodities derivatives trading. A government investigation in 2013 found irregularities at the National Spot Exchange Limited, which traded short-term contracts in agricultural goods such as sugar………………………………………..Full Article: Source

Commodity participants keep fingers crossed

Posted on 29 September 2015 by VRS  |  Email |Print

It was a packed gathering at the Trident, Nariman Point, at an event to mark the subsuming of the commodity markets regulator, the Forward Markets Commission, with its capital markets counterpart, the Securities and Exchange Board of India (Sebi).
Finance Minister Arun Jaitley, economic affairs secretary Shaktikanta Das and Sebi chairman U K Sinha all made exhortation to “not worry about development of commodity futures, including agricultural futures”. That was in response to the worry of players in the commodity markets………………………………………..Full Article: Source

How the Global Commodities Crash Continue to Crush Caterpillar

Posted on 29 September 2015 by VRS  |  Email |Print

The fall of giant equipment manufacturer Caterpillar is downright shocking when you look at the stock’s performance versus the Dow Jones Industrial Average in 2015. But if you look deeper into the company’s operations, the fall isn’t so surprising.
Beneath the stock’s performance and the disappointing earnings results that have sent investors fleeing is a long-term deterioration in Caterpillar’s end markets. That, more than anything, is what’s causing a rough 2015 for the stock, and it may not be over anytime soon………………………………………..Full Article: Source

IMF currency study shows power of devaluation

Posted on 29 September 2015 by VRS  |  Email |Print

A 10% fall in the value of a nation’s currency can boost exports by an average 1.5% of GDP, according to a study by the International Monetary Fund that reveals the benefits of a cut in the exchange rate for foreign trade. Heightening fears that the global economy is likely to suffer a new round of currency wars, the report said global trade was still dominated by the export of goods such as cars and fridges that sold better after a cut in the exchange rate made them cheaper.
The report forms a key element of the IMF’s world economic outlook, which is due to be published next week when the global lender of last resort holds its biannual meeting in Lima………………………………………..Full Article: Source

China Signs Currency Swap Deal With Georgia

Posted on 29 September 2015 by VRS  |  Email |Print

China has signed a framework agreement for a currency swap deal with Georgia, the Chinese central bank said Sunday. The head of the People’s Bank of China, Zhou Xiaochuan, signed the deal with his Georgian counterpart in Tbilisi, the Georgian capital, while attending a meeting of central bank governors of Central Asia, the Black Sea region and the Balkan countries, according to a statement on the PBOC website.
Both sides expressed willingness to establish the swap arrangement to strengthen cooperation on currency matters, promote settlement in local currency, and enhance trade and investment, the PBOC said………………………………………..Full Article: Source

China carbon trading not all bad news for commodities: Russell

Posted on 29 September 2015 by VRS  |  Email |Print

China’s planned national cap-and-trade carbon emissions system may at first appear to be yet another bearish factor for commodity demand in the world’s largest consumer of natural resources. In theory, limiting the amount of carbon emissions by setting a price per tonne and then making polluters pay for permits above their allocated limits will serve to raise costs for carbon-intensive industries, such as steel, aluminum, power generation, copper smelting and oil refining.
A cap-and-trade system is only effective when it raises the cost of polluting to the point where the polluter limits output or invests in new technology or takes other steps to reduce emissions………………………………………..Full Article: Source

New carbon trading market unlikely to come in December -IEA

Posted on 29 September 2015 by VRS  |  Email |Print

Major talks on climate change this December are unlikely to yield an agreement to create a new global carbon trading market, the head of the International Energy Agency (IEA) said on Monday. Speaking at an event in Mexico City, IEA Executive Director Fatih Birol said he did not expect a breakthrough during the Paris talks on efforts to establish a global carbon price.
“And without it being truly global, it doesn’t make a lot of sense,” Birol said, explaining that “different countries have different views” when asked to account for his skepticism. Nonetheless, Birol was optimistic that the Nov. 30-Dec. 11 conference would agree to measures that would make businesses less inclined to use carbon-based pollutants………………………………………..Full Article: Source

Carbon Pricing Schemes Have Almost Doubled Since 2012

Posted on 29 September 2015 by VRS  |  Email |Print

The World Bank has concluded that carbon pricing schemes globally have almost doubled since 2012, and are now worth about $50 billion. In a new Feature Story on its website, The World Bank Group have praised the efforts of nations, cities, and businesses the world over, for implementing carbon pricing schemes.
The Feature Story was also accompanied by a new report, published by the World Bank Group and Ecofys, in conjunction with the OECD and with input from the International Monetary Fund (IMF), which claims that the number of implemented or planned carbon pricing schemes globally has almost doubled since 2012, and is now worth about $50 billion………………………………………..Full Article: Source

Commodities are Battered among the Asset Classes

Posted on 28 September 2015 by VRS  |  Email |Print

Commodities, one of the most important asset classes, have received a beating since 2014, largely due to global oversupply. This downtrend is seen in all the commodity sectors, including energy, industrial metals, precious metals, and agriculture. Commodity mutual funds have also followed this trend.
Commodities movement historically does not correlate with any other asset class like equities or bonds. They generally have a positive correlation with inflation. Hence, they are considered to be an attractive investment option from a diversification point of view. But investing in commodities involves higher risk compared to equities or bonds. So, exposure to commodities using mutual funds reduces the risk………………………………………..Full Article: Source

India: FMC to merge with Sebi Today

Posted on 28 September 2015 by VRS  |  Email |Print

In the first ever merger of two regulators, over 60-year-old Forward Markets Commission (FMC) will merge on Monday with the younger but much bigger capital markets watchdog Securities and Exchange Board of India (Sebi) to create a unified regulatory body. Sebi was set up in 1988 as a non-statutory body for regulating the securities markets, while it became an autonomous body in 1992 with fully independent powers.
FMC, on the other hand, has been regulating commodities markets since 1953, but lack of powers has led to wild fluctuations and alleged irregularities remaining untamed in this market segment. The commodities market has been known to be more prone to speculative activities compared to the better-regulated stock market, while illegal activities like “dabba trading” have also been more frequent in this segment………………………………………..Full Article: Source

Commodity nations must deal with the demise of a supercycle

Posted on 28 September 2015 by VRS  |  Email |Print

The recent collapse in oil prices is part of a larger drama — the last act in the commodity “supercycle” that began more than a decade ago. That is why the 50 per cent fall in oil prices means not only hard times for the petroleum industry but also portends distress for commodity-exporting nations and the world economy.
The commodity boom took off in late 2003 and 2004 with the transformation of China’s role in the world economy. Following its accession to the World Trade Organisation in 2001, China was no longer just the traditional source of cheap goods, tough competition and a lid on inflation………………………………………..Full Article: Source

Oil Traders May Look to the Sea for Profit Amid Price Collapse

Posted on 28 September 2015 by VRS  |  Email |Print

The global oil glut may soon expand to the ocean. While traders are already cashing in on the surplus by housing oil in onshore tanks across the globe — including on the tiny Caribbean island of St. Lucia– expanding the storage to tankers at sea may near a point where it becomes profitable, according to Citigroup Inc., Goldman Sachs Group Inc. and IHS Maritime & Trade.
A structure called contango, when the price of a commodity to be delivered in the future is higher than if it was sold today, has been moving in the right direction. Vessels laden with oil, parked offshore from Singapore to the Gulf of Mexico, became a feature after the global financial crisis as the widening contango allowed traders with access to storage to lock in a profit………………………………………..Full Article: Source

Hedge Funds Primed for Oil Rebound With Increase in Bullish Bets

Posted on 28 September 2015 by VRS  |  Email |Print

The momentum behind wagers on rising oil prices picked up steam as U.S. drilling slows and producers face potential credit line cuts. Money managers’ long position in West Texas Intermediate crude climbed by 6.1 percent in the week ended Sept. 22, the most since January, according to data from the Commodity Futures Trading Commission. The jump in longs and a decline in shorts boosted their net-long position by 15 percent.
U.S. crude output is down 470,000 barrels a day from a four decade high of 9.61 million in June, data from the Energy Information Administration show. Explorers idled U.S. oil rigs for a fourth week, Baker Hughes Inc. said Sept. 25………………………………………..Full Article: Source

Iran to regain position in OPEC

Posted on 28 September 2015 by VRS  |  Email |Print

Iran’s deputy oil minister has said that the period of stealing Iran’s share in the oil market is over and Iran will regain its 14-percent share in OPEC by doubling oil export in the post-sanction era. Outlining Iran’s plans to increase crude oil production and export in the post-sanction era, Mansour Moazemi said that, “due to cruel sanctions, Iran’s share in the market has been occupied by other countries over the past few years and our top priority after the removal of sanctions will be raising oil export.”
Announcing that at the first opportunity Iran will increase oil export by 500 thousand barrels, the official asserted that, “after a short period of time, another 500 thousand barrels will be added to our export volume.”……………………………………….Full Article: Source

When will the fall in oil prices come to an end?

Posted on 28 September 2015 by VRS  |  Email |Print

For more than a year now global crude oil prices have been falling dramatically, reaching its lowest point in several years. At the time of writing trading at around US$44.10 per barrel, many countries across the world which are heavily oil import dependent have seen massive reductions in gas prices at the pumps and many industries in these countries have experienced huge savings as a result.
Jamaica is somewhat an exception in this respect, as we are one of few countries which continue to experience relatively high gas prices at the pumps as well as relatively high domestic and industrial fuel prices………………………………………..Full Article: Source

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