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Commodities Briefing - Archive | November, 2015

Get set for a commodity crunch

Posted on 30 November 2015 by VRS  |  Email |Print

Markets are betting that China’s currency is headed for another fall with commodity markets likely to suffer collateral damage. The International Monetary Fund board meets today to consider whether to include the yuan in the basket of currencies that makes up the fund’s benchmark currency called Special Drawing Rights.
It is expected to award it the status that the People’s Bank of China has been seeking, symbolising China’s emer­gence as a global financial power. The PBOC vice-governor Yi Gang commented last week that the currency would remain stable after its inclusion in the IMF basket, implying that the central bank is prepared to intervene to make sure that is the case………………………………………..Full Article: Source

Rio Tinto And Vale Killed The Commodities Supercycle, Not China Or The Fed

Posted on 30 November 2015 by VRS  |  Email |Print

That the commodities supercycle is over is obvious: we can see that just by looking at the falling values of pretty much all of the commodities. However, there’s a number of implications of this being bandied about which are wrong. It’s not, for example, slowing growth in China which has killed it, nor will it be the Federal Reserve raising interest rates which gives it the final death blow.
It’s much more accurate to say that the producing companies, like say Rio Tinto or Vale in iron ore, which have killed off the cycle. And as a result of that we can’t quite say that falling commodity prices are symptoms of the global economy about to fall over into depression………………………………………..Full Article: Source

Commodities set to tumble if yuan gains benchmark SDR status

Posted on 30 November 2015 by VRS  |  Email |Print

Markets are betting that China’s currency is headed for another fall with commodity markets likely to suffer collateral damage. The International Monetary Fund board meets today to consider whether to include the yuan in the basket of currencies that makes up the fund’s benchmark currency called Special Drawing Rights.
It is expected to award it the status that the People’s Bank of China has been seeking, symbolising China’s emer­gence as a global financial power. The PBOC vice-governor Yi Gang commented last week that the currency would remain stable after its inclusion in the IMF basket, implying that the central bank is prepared to intervene to make sure that is the case………………………………………..Full Article: Source

The $30 Oil Cliff Threatening Russia’s Economy

Posted on 30 November 2015 by VRS  |  Email |Print

For Russia, $30 is the number to watch. Crude prices at that level will push the economy to depths that would threaten the nation’s financial system, according to 63 percent of respondents in a Bloomberg survey. Lower prices for the fuel are next year’s biggest risk for Russia, which is unprepared to ride out another shock on the oil market, most economists said.
Other dangers for 2016 include geopolitics, strains in the banking industry and the ruble, according to the poll of 27 analysts. “If oil prices fall lower and stay at that low level for longer, risks of fiscal and financial destabilization increase significantly,” Sergey Narkevich, an analyst at PAO Promsvyazbank in Moscow, said……………………………………….Full Article: Source

Opec set to stand firm on oil price

Posted on 30 November 2015 by VRS  |  Email |Print

The oil price stand-off is set to rage on after Opec’s forthcoming meeting on Friday, when lead member Saudi Arabia is expected to maintain the group’s high production target despite its detrimental effect on revenues. This time last year, the oil-producing cartel sent the markets into overdrive with its decision to maintain output, putting immense pressure on the price.
Brent crude fell from its heady highs of $115 a barrel in the summer of 2014 to a six-and-a-half year low of $42.69 in August and is currently languishing at around $45 a barrel. It has wiped half a trillion dollars off the collective revenues of Opec’s 12 members, which include Iran, Iraq and Libya………………………………………..Full Article: Source

OPEC Is Ready to Rumble Over Saudi Output

Posted on 30 November 2015 by VRS  |  Email |Print

Pressure is building on Saudi Arabia to rein in its oil output after a year of pumping full tilt, setting up the most contentious OPEC meeting in years. A year ago, the Organization of the Petroleum Exporting Countries surprised markets with a Saudi-led strategy of keeping output high to win market share and squeeze presumably weaker rivals in the U.S. and elsewhere out of the market.
But with those rivals proving resilient and prices falling to new lows, members including Iran have decided the effort was a failure and are preparing to press Saudi Arabia directly to pull back on production at the group’s meeting this week………………………………………..Full Article: Source

Gulf unwilling to tighten oil taps alone: analysts

Posted on 30 November 2015 by VRS  |  Email |Print

Saudi-led Gulf OPEC members will reject pressure to shoulder the cost of cutting oil production alone despite warnings that prices risk sliding further, officials and analysts say. Saudi Arabia, Kuwait, the United Arab Emirates and Qatar, which pump more than half of OPEC’s 32 million barrels of daily output, want a solid commitment from all other producers, especially non-OPEC member Russia, to agree to production cuts across the board.
“Gulf states will not undertake a unilateral output cut. They need strong cooperation from other producers, mainly Russia, to cut,” Kuwaiti oil analyst Kamel al-Harami told AFP. The Organization of the Petroleum Exporting Countries is to hold a crucial meeting on December 4 to study prices, which have fallen around 60 percent since mid-2014………………………………………..Full Article: Source

Gold price plummets to almost 6-year low

Posted on 30 November 2015 by VRS  |  Email |Print

Here’s what people aren’t buying right now: Gold. The yellow metal traded as low as $1,051.60 an ounce on Friday, the cheapest price in nearly 6 years. Gold prices haven’t been this depressed since February 2010 — before the popular show “Downton Abbey” was even on television — when gold fell under $1,045 an ounce.
This week marked the sixth straight week that gold has lost value. Normally, investors run to buy gold when they are nervous, but that’s not happening now. Recent events such as the stock market sell-off in late August and the Paris terrorist attacks have not halted gold’s fall………………………………………..Full Article: Source

Australian dollar prompts gold miners to dig deep despite price drop

Posted on 30 November 2015 by VRS  |  Email |Print

Gold miners in Australia, emboldened by a weakening currency, have been increasing production in the face of a global rout in the precious metal, figures released on Sunday showed. Output by the world’s No.2 producer behind China climbed to 72 tonnes in the third quarter, up 1 per cent up on the previous quarter and 2 per cent higher than the same period a year ago, according to a survey by sector consultants Surbiton Associates.
“The declining value of the Australian dollar has once again been the great saviour of our gold sector and of the local resources industry in general,” Surbiton director Sandra Close said………………………………………..Full Article: Source

A Black Friday for Gold Prices

Posted on 30 November 2015 by VRS  |  Email |Print

Black Friday is a big and usually good trading day for the retail sector; however, for gold prices it was a punch on the nose. Gold suffered a loss of $14.30 to close at $1056.10/oz, its lowest level since early 2010.
It’s been almost 50 months since the gold traded at the dizzy heights of $1900/oz back in August 2011, to the delight of every gold bug on the planet. However, since then it has been a slow grind south with rally after rally proving to be just another head fake. Gold has now lost $845.00 or 44.47% of its value in dollar terms, since peaking back then………………………………………..Full Article: Source

Half of gold output may not be profitable: miner

Posted on 30 November 2015 by VRS  |  Email |Print

Half of the gold coming from mines may not be viable at current prices, underscoring the industry’s need for consolidation and output cuts, according to the best-performing producer of the metal in the past decade.
“The more we continue to produce unprofitable gold, the more pressure we put on the gold price,” Randgold Resources chief executive officer Mark Bristow said in an interview in Toronto on Friday. “In the medium term, it’s a very bullish outlook for the gold industry. The question is, how long are we going to supply it with unprofitable gold?”……………………………………….Full Article: Source

Relief on lead is temporary

Posted on 30 November 2015 by VRS  |  Email |Print

It was a manic Monday in the metals complex last week as most of the metals fell to multi-year lows. The London Metal Exchange’s (LME) Metal Index declined to its six-year low of 2,097.4. Aluminium and copper also tumbled to their six-year lows. The worst hit among them all was nickel, which tanked to a 12-year low of $8,154 per tonne.
Fears about a surprise Fed rate hike, due to an unscheduled meeting, added to concerns about China, and undermined all metals. However, panic prevailed only for one day and metals have managed to reverse sharply higher thereafter to recover their losses. Lead prices also followed the other metals and fell to a six-year low of $1,554 per tonne on Monday last week………………………………………..Full Article: Source

Nickel tumbles as metals, bar tin, fall

Posted on 30 November 2015 by VRS  |  Email |Print

Nickel has tumbled despite a group of Chinese producers saying they planned to cut output, on scepticism about whether the cuts would be implemented. Eight Chinese producers including state-owned Jinchuan Group Co Ltd have said they would cut output by 15,000 tonnes in December and by at least 20 per cent in 2016.
Nevertheless, three-month nickel slid 5.5 per cent to an intraday low of $US8,685 a tonne. It pared losses to close 4.5 per cent weaker at $US8,775. Nickel had slumped to $US8,145 on Tuesday, the lowest in more than a decade, and has been the worst performing LME base metal in 2015, sliding 42 per cent………………………………………..Full Article: Source

November ETF Asset Report

Posted on 30 November 2015 by VRS  |  Email |Print

The month of November was all about heightened Fed lift-off bets and geo-political flare-ups on the Paris terror attacks. While the first confirms the U.S. growth momentum, more so after the upward revision in the Q3 GDP numbers (from 1.5% to 2.1%), the second points to lingering geopolitical threats in the coming months.
Investors seem to have reacted along the headlines. At least, the asset flow pattern says that. Let us explain the trend below. After nagging speculations on the rate hike timeline, direct hints from the Fed this time were well digested by the market. Investors appeared to have paid more attention to the improving economy than to the fears that cheap money will now call it quits………………………………………..Full Article: Source

Undone by the commodity rout

Posted on 30 November 2015 by VRS  |  Email |Print

If you put money in India-based global commodity and energy funds, there’s reason to be glum. The three funds in this category — Birla Sun Life Global Commodities Fund, DSP BR World Energy Fund and Mirae Asset Global Commodity Stock Fund — suffered deep cuts last year, losing 16-26 per cent.
These funds essentially bet on global commodities, which have been routed since mid-2014. Crude oil and natural gas have more than halved, while the prices of copper, tin, lead and zinc are down 20-30 per cent. A combination of factors — weak demand from a slowing China, economic troubles in Europe, oversupply of many commodities, and a strong dollar, thanks to impending rate hike in the US — is to blame. No surprise then that the funds’ performances don’t paint a pretty picture………………………………………..Full Article: Source

IMF to make Chinese yuan reserve currency in historic move

Posted on 30 November 2015 by VRS  |  Email |Print

The International Monetary Fund is to give the yuan a historic vote of confidence on Monday when it includes the Chinese currency in its elite club of major currencies. The yuan, also known as the renminbi, is widely expected to be added to the IMF’s group of international reserve currencies after an IMF meeting held by its managing director Christine Lagarde.
It comes after lengthy efforts by Chinese officials to legitimise the yuan, which critics say has been kept artificially cheap to artificially boost exports in the world’s second-largest economy. China has lobbied hard for the currency to be included in the list, which at present is made up of just the dollar, the euro, the pound and the Japanese yen. The list has not been altered since 2000, when the euro replace the franc and deutschmark………………………………………..Full Article: Source

Did the Yuan Really Pass the IMF Currency Test? You’ll Know Soon

Posted on 30 November 2015 by VRS  |  Email |Print

International Monetary Fund Managing Director Christine Lagarde and some two dozen officials on the fund’s executive board will gather Monday at headquarters in Washington for one of the most-anticipated decisions outside of actually approving loans for nations in crisis.
The question inside the 12th-floor, oval boardroom: whether to grant China’s yuan status as a reserve currency by adding it to the fund’s Special Drawing Rights basket. The SDR, created in 1969, gives IMF member countries who hold it the right to obtain any of the currencies in the basket — currently the dollar, euro, yen and pound — to meet balance-of-payments needs………………………………………..Full Article: Source

Global action needed to protect agriculture sector from climate change

Posted on 30 November 2015 by VRS  |  Email |Print

On the final day of the National Consultation on Crop Loss Estimation, Relief and Compensation, NGO Centre for Science and Environment (CSE) called for global action to develop safety nets to shield farmers from the consequences of extreme weather events.
The negotiators at the climate talks, starting shortly in Paris, need to be mindful of the impact of changing climate on agriculture, and the devastating consequences it has on farmers as well as the food security prospects of the world,” said CSE’s Deputy Director General Chandra Bhushan who is leading a delegation of CSE specialists and Indian media to Paris……………………………………….Full Article: Source

The Paris climate summit is a real test of humanity

Posted on 30 November 2015 by VRS  |  Email |Print

The best and worst in our natures are rising to meet a critical point in our history, but there is no cause for despair. This morning I visited the place de la République, in many ways the beating heart of Paris. It’s where people here chose to place their memorial to the victims of the attacks two weeks ago, and there is still a huge crowd, gathered round the central monument in intense, almost ritual silence, taking in the thousands of pictures, candles, flowers and messages left by wellwishers.
Just a few steps away, a different ritual was taking place. Thousands of Parisians, denied by police security concerns the chance to hold what might have been the largest single climate change march in history, are bringing their shoes, one by one, to be lined up symbolically along a march route through République. An eloquent expression of their determination to be heard………………………………………..Full Article: Source

China to launch scheme to curb CO2 emissions in 2017

Posted on 30 November 2015 by VRS  |  Email |Print

China is launching a national cap-and-trade scheme in 2017 to curb emissions. While the details still need to be worked out, observers say it shows China’s commitment to fight climate change. China consumes more than half of the world’s coal and emits twice as much carbon dioxide as the United States. However, in 2017, Beijing aims to launch the world’s largest national cap-and-trade scheme, one that is expected to exceed the European Union’s.
The scheme would limit the amount of pollution that companies can emit and let them pay competitive prices for a share of the quota. Businesses that do not use up their quota can sell the remainder, while those that need more than their quota have to buy additional permits. The aim is to induce companies to find ways to reduce greenhouse gas emissions………………………………………..Full Article: Source

Maximum pain for commodities. Are we there yet?

Posted on 27 November 2015 by VRS  |  Email |Print

The dominant theme of commodity markets in recent months, in virtually every article or conversation at events, has been how much lower can prices possibly go. The answer is simple, they will stop falling when the point of maximum pain is reached.
With the prices of many commodities at multi-year lows and the broad Bloomberg Commodity Index close to its weakest in more than 16 years, many commodity producers, investors and traders are becoming desperate for any positive signs. But any bottoming of prices, or indeed the start of a rally, requires more than desperation, it needs fundamental re-alignment of the existing supply-demand balances………………………………………..Full Article: Source

Rio Tinto sees commodity prices subdued in short term

Posted on 27 November 2015 by VRS  |  Email |Print

Commodity prices are likely to remain subdued in the short term as markets come to terms with oversupply and slower Chinese growth, the head of global mining giant Rio Tinto’s copper and coal divisions said on Thursday.
Jitters about China’s fiscal and monetary responses to the slowdown there had rattled markets, but Rio still expects China to grow at around 7 percent this year, Rio Tinto copper and coal chief executive Jean-Sebastien Jacques said in Sydney. “I believe these supply-side issues, combined with certain macro-economic conditions, and the action of some industry players such as hedge funds, mean that some market distortions exist.”……………………………………….Full Article: Source

China’s march from commodities to cosmetics and karaoke

Posted on 27 November 2015 by VRS  |  Email |Print

There has been great concern regarding the slowdown of growth in China and its impact on commodity demand and, therefore, commodity prices. Crude oil’s price gyrations tend to get the most attention, but China’s share of global oil consumption is about 12%, which is significant but less than that of the United States.
One could argue that Chinese demand patterns likely have played an even greater part in influencing prices of many other commodities where China holds an even larger share of global consumption. China’s share of global grain consumption was around 22% in 20142 and its share of global metal consumption tripled from 13% in 2000 to 47% in 2014………………………………………..Full Article: Source

When bank balance sheets become scarce commodities

Posted on 27 November 2015 by VRS  |  Email |Print

Distortions are occurring in collateralised funding and swap markets meaning secured funding is weirdly costlier than unsecured. Bankers are blaming post-crisis leverage ratio regulation for the anomaly. But what really does the aberration in the collateralised Fed-funds spread reflect?
Credit Suisse’s FI team puts it relatively simply this Thursday: it’s all about the cost of balance-sheet rental, which is now as scarce a commodity as oil: Not only have intermediating dealers not yet fully priced in balance sheet costs, but we also expect that they won’t do so in the near future as well………………………………………..Full Article: Source

OPEC to keep supply intact despite fears of $20 oil

Posted on 27 November 2015 by VRS  |  Email |Print

OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy’s chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20.
Any policy U-turn would be possible only if large producers outside the exporters’ group, notably Russia, were to join coordinated output cuts. While Moscow may consult OPEC oil ministers before their six-monthly meeting next week, the chances of it helping to halt the price slide remain slim………………………………………..Full Article: Source

Few surprises expected from OPEC despite cracks over policy

Posted on 27 November 2015 by VRS  |  Email |Print

With this in mind, it would probably be foolish to rule out some kind of deal between OPEC and non-OPEC producers to manage supply. But, right now, there’s nothing to suggest that any such pact is even a remote possibility, and few OPEC watchers expect the oil producer group to do anything other than rubber-stamp current output policy at talks in Vienna next week.
Leading non-OPEC producer Russia will send its energy minister, Alexander Novak, to OPEC’s ministerial meeting on December 4. And, who knows, Novak and Ali Naimi, oil minister of OPEC powerhouse Saudi Arabia may even sit down together for a chat about the market………………………………………..Full Article: Source

HSBC analyst: China holds the key to an oil rebound

Posted on 27 November 2015 by VRS  |  Email |Print

The jury’s still out on whether last year’s oil slump was a deliberate Saudi move, aimed at killing U.S. shale production. Whatever the case, engineering a rebound won’t be as simple, says HSBC Holding Plc’s Senior Economic Adviser Stephen King.
Oil prices have slumped 40 percent since OPEC embarked on a strategy last November to keep pumping and drive out higher-cost competitors. But cutting production is unlikely to trigger a sustainable recovery because China’s economic growth is slowing, King said in an interview in Dubai on Wednesday………………………………………..Full Article: Source

Oil prices fall as expert predicts ’super contango’

Posted on 27 November 2015 by VRS  |  Email |Print

Oil prices have struggled amid ongoing anxiety over an excess of supply. In New York, light, sweet crude oil futures due for delivery in January surrendered small gains in Asia to move 24 cents lower, or 0.5 per cent, to $42.80 a barrel in the Globex electronic session. On London’s ICE Futures exchange, January Brent crude dipped 49 cents, or 1 per cent, to $45.68 a barrel.
These developments followed the Energy Information Administration’s announcement yesterday that US crude inventories grew by 1m barrels last week, reports MarketWatch. The figure was below the 2.6m-barrel growth forecast by the industry group American Petroleum Institute………………………………………..Full Article: Source

Gold investors become sellers

Posted on 27 November 2015 by VRS  |  Email |Print

Gold prices continue to fall as the declining cost for oil assuages investors’ fears of inflation. Growing anticipation that U.S. interest rates will start rising soon is also adding to gold’s woes. Venezuela snapped the gold market to attention earlier this year with its liquidation of 6.6 tons of the yellow metal.
Under former President Hugo Chavez, the country’s central bank accumulated gold as a part of its foreign currency reserves. With plunging oil prices knocking the country’s economy for a loop, Venezuela found itself with little ability to earn foreign currencies. So it said goodbye to those 6.6 tons………………………………………..Full Article: Source

Gold close to lowest in nearly six years on stronger dollar

Posted on 27 November 2015 by VRS  |  Email |Print

Gold was trading near its lowest in nearly six years on Thursday, as the dollar held at multi-month highs after U.S. economic data reinforced expectations of an interest rate rise this year.
The U.S. currency was also supported against the euro, weighing on dollar-denominated gold, as European Central Bank officials told Reuters they were considering options such as whether to stagger charges on banks hoarding cash or to buy more debt. The ECB meets next week. Spot gold was up 0.2 at $1,072.86 an ounce by 1153 GMT, not far off $1,064.95 hit last week, the lowest since February 2010………………………………………..Full Article: Source

Commodities Slump Defies Miners’ Cuts

Posted on 27 November 2015 by VRS  |  Email |Print

For commodities, the first cuts weren’t the deepest. If anything, they have proved feeble. Prices for copper and zinc continued to fall after announced production cuts by miners. Glencore in September said it would close two African copper mines, removing about 400,000 metric tons of copper annually from the market.
That came after cuts from others like Freeport-McMoRan. Glencore followed that with October’s plans to cut a third of its annual zinc production, or 500,000 tons. The moves prompted short-term rallies, only for them to dissipate within days………………………………………..Full Article: Source

The year of the Chinese metal bear: Andy Home

Posted on 27 November 2015 by VRS  |  Email |Print

The collapse in metal prices this year is all about China. That much is now common knowledge. Chinese demand growth fuelled the boom years. Chinese slowdown, particularly the slowdown in construction activity, has caused the bust. But China is also the source of an entirely new driver of lower prices in the form of massive speculative short selling.
Open interest and volumes have surged across all the industrial metals contracts traded on the Shanghai Futures Exchange (SHFE). Indeed, such has been the intensity of the bear attack that the country’s own producers are now calling for the authorities to investigate what is going on………………………………………..Full Article: Source

Copper Prices Rise on Reports That China Will Start Buying Metals

Posted on 27 November 2015 by VRS  |  Email |Print

Copper prices hit an eight-day high in London on Thursday, rebounding from recent multiyear lows on reports that China will start buying industrial metals to stock up its strategic reserves. The London Metal Exchange’s three-month copper contract was up 2.3% at $4,656 a metric ton in midmorning European trade, having hit an intraday high of $4,741 a ton.
All other major base metals were also up. On Thursday, analysts highlighted that several media reports saying that the Chinese government may buy large quantities of nickel, zinc and aluminum for its own reserves and to alleviate a domestic oversupply………………………………………..Full Article: Source

Metals rally on output cut hopes

Posted on 27 November 2015 by VRS  |  Email |Print

Metal prices have rebounded from their lowest levels since the financial crisis on hopes Chinese producers will start to cut output. Copper, nickel and zinc all rose more than 2 per cent on the London Metal Exchange on Thursday.
Chinese nickel producers are expected to meet on Friday to decide on output cuts after a group of 10 zinc smelters last week announced they would cut production. As commodity prices rose over the past decade, China rapidly built out its mining and smelting capacity in metals. High-cost mines and producers are feeling the squeeze………………………………………..Full Article: Source

Precious metals funds post biggest outflow in 17 weeks -BAML

Posted on 27 November 2015 by VRS  |  Email |Print

Precious metals funds posted their biggest net outflow last week in around four months, while investors kept up the rapid pace of inflows into money market funds, Bank of America Merrill Lynch said on Thursday.
Investors pulled $1.0 billion out of precious metals funds in the four trading sessions to Tuesday, a period in which the dollar rose to its strongest level against a basket of major currencies in seven months. Gold fell to its lowest since early 2010, moving closer towards a break below $1,000 an ounce, and platinum fell to a seven-year low below $850 an ounce………………………………………..Full Article: Source

Commodities ETP round-up: Investors abandon gold but favour oil and PGM

Posted on 27 November 2015 by VRS  |  Email |Print

Investors’ patience with gold ETPs wore thin last week as further price declines prompted the first net outflow from gold ETPs in ten weeks, signalling a change in investor sentiment in the yellow metal. Meanwhile, despite slight price declines in oil-based and platinum-group-metals (PGM), significant net inflows were recorded across all ETPs tracking these commodities, as investors who were bargain hunting placed bets on upcoming price reversals.
Despite global demand for gold receiving boosts from Chinese imports (currently at a 7 month high) and Diwali celebrations, whereby gifts of golden jewellery are commonplace, the gold price has failed to rally; the ETFS Physical Gold fell by 0.4% last week………………………………………..Full Article: Source

Call for fund platforms to integrate ETFs

Posted on 27 November 2015 by VRS  |  Email |Print

Financial advisers are increasingly outsourcing the management of their client’s investments to discretionary fund managers (DFMs) and this, in turn, is driving the demand for exchange-traded funds. Improving access and providing a greater variety of ETFs on UK fund platforms is imperative to foster this demand.
Speaking at a media event held by BlackRock, experts from investment service providers Fidelity, Novia and Brewin Dolphin advised that fund platform providers that can provide DFMs with cost effective and granular exposures through ETFs possess a competitive advantage………………………………………..Full Article: Source

World ready for Chinese yuan’s inclusion into SDR

Posted on 27 November 2015 by VRS  |  Email |Print

On Nov. 30, the executive board of IMF will convene to decide whether the RMB should be included in its Special Drawing Right (SDR) basket, currently comprised of the euro, U.S. dollar,Japanese yen and British pound. Inclusion is now just a formality, according to J.P Morgan China Chief Economist Haibin Zhu, an opinion shared by many.
A number of members in the IMF have explicitly supported RMB inclusion. U.S. treasury secretary Jacob Lew will support the yuan’s bid if the currency meets IMF criteria. Britain has also backed inclusion and IMF managing director Christine Lagarde issued a statement recommending the move on Nov. 13. Four days later, she reiterated her support on the sidelines of the G20 summit in Turkey………………………………………..Full Article: Source

Important Level Breached In The Currency War

Posted on 27 November 2015 by VRS  |  Email |Print

Can you still remember what happened on 15th January this year? I’m talking about in the currency markets. At the time, it was a huge shock, certainly the biggest bombshell to hit the financial markets in 2015.
Fans of Tom Tragett will recall. He covered it in detail at the time in his excellent Forex Insider Daily newsletter. At the time, I remember him saying that 15.01.15 would be a date burned into the memory of forex traders, especially those who had a position in the Swiss franc – long or short. That may have jogged your memory………………………………………..Full Article: Source

The way forward: Second-best solutions

Posted on 27 November 2015 by VRS  |  Email |Print

If the best method for tackling climate change is not on offer, try something else. Economists like to argue, about climate change as much as anything else. Some of the fiercest rows are over the discount rate—how to weigh the likelihood that future generations will be richer than the current one when deciding how much to spend on averting climate change today—and over how to price catastrophic but unlikely events such as the collapse of the Greenland ice sheet.
But on the biggest issue of all they nod in agreement, whatever their political persuasion. The best way to tackle climate change, they insist, is through a global carbon tax. Politicians tend to assume that subsidising clean energy has the same effect as taxing carbon, says Ottmar Edenhofer, an economist at the Potsdam Institute for Climate Impact Research. It does not………………………………………..Full Article: Source

China’s carbon footprint grows

Posted on 27 November 2015 by VRS  |  Email |Print

China’s ruling Communist Party bases its claim to legitimacy on delivering better lives to the world’s most populous country, and since it embraced the market it has overseen a boom that created a burgeoning middle class, now 300 million strong.
Average incomes remain far below those of the United States, but China — now the world’s second largest economy — is already the biggest international market for both cars and smartphones. It is also the worst polluter on the planet, pouring an estimated nine to 10 billion tons of climate-warming carbon dioxide into the air in 2013………………………………………..Full Article: Source

If China killed the commodities boom, the Fed is about to bury it

Posted on 26 November 2015 by VRS  |  Email |Print

For commodities, it’s like the 21st century never happened. The last time commodity investor returns were this low, Apple’s best-selling product was a desktop computer, and you could pay for it with francs and deutsche marks.
Bloomberg’s Commodity Index tracking the performance of 22 natural resources has plunged two-thirds from its peak, to the lowest level since 1999. That shows it’s back to square one for the so-called commodity super cycle — a hunger for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade until 2011………………………………………..Full Article: Source

Fed to blame for commodities rout, not China

Posted on 26 November 2015 by VRS  |  Email |Print

Blame China. A global glut of commodities has emerged because China suddenly decided it no longer wants mineral ores. Prices are now collapsing, which threatens the worldwide supply chain. It’s all China’s fault. I have one problem with this story. Look at the first chart on the quantity of China’s iron ore imports and you see scant sign that iron ore is no longer in demand. That demand curve has flattened out but this is after a 16-fold growth over the past 15 years. A breather was due at some point.
And what you see in iron ore you can also see in other major minerals and in petroleum. In some cases there has been no slowdown at all. Imports of copper ore and concentrates, for instance, are still growing at double digit rates………………………………………..Full Article: Source

Banks turning their backs on Chinese commodities

Posted on 26 November 2015 by VRS  |  Email |Print

Banks are sceptical of and reluctant to lend to the commodities trade in China, due to the downturn in price and the risk of fraud and default. Over the course of a day-long conference in Beijing, commodity traders, bankers and lawyers all signalled that banks have been forced to re-evaluate their lending practices in China.
While many banks have been scaling back on commodities lending globally, the situation is aggravated in China, where a number of high-profile fraud and document-keeping scandals have ebbed away at trust in the sector. It’s led to consolidation in the market, where banks are focusing on their core business, leaving fewer willing to dabble in perceived higher-risk markets, and leaving producers and traders scrambling for the little finance available to them………………………………………..Full Article: Source

As commodities swoon, neighbors find a need for each other

Posted on 26 November 2015 by VRS  |  Email |Print

After two years of playing diplomatic tit for tat, the South Pacific’s two major powers are now pushing to restore close relations, especially on the economic front. Their newfound bond can be traced to the commodities markets, which have served both nations well but are now tanking.
Australian Prime Minister Malcolm Turnbull earlier this month demonstrated the importance his government places on Indonesia by visiting the country — before making trips to major trading partners like Japan and China. Turnbull took office in September………………………………………..Full Article: Source

Back to square one for commodity super cycle

Posted on 26 November 2015 by VRS  |  Email |Print

The last time the Bloomberg Commodity Index of investor returns was this low, Apple’s best-selling product was a desktop computer, and you could pay for it with francs and Deutschemarks.
The gauge tracking the performance of 22 natural resources has plunged two-thirds from its peak, to the lowest level since 1999. That shows it is back to square one for the so-called commodity super cycle - a hunger for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade until 2011………………………………………..Full Article: Source

Oil prices have moved into ’super contango’

Posted on 26 November 2015 by VRS  |  Email |Print

It looks to be a volatile final few weeks for crude oil prices. So far, the low for WTI oil prices in 2015 of $37.75 a barrel set in August stands as the low price point - but not for long.
There is a global supply glut, not just of crude oil, but, increasingly, refined products that will likely break the back of price support in the market, sending oil prices into a holiday plunge. So much so, land based storage tanks are filling up and increasing numbers of volumes are being stored on tankers………………………………………..Full Article: Source

The surprising case for $100 oil

Posted on 26 November 2015 by VRS  |  Email |Print

One of the biggest stories over the past year and a half has been oil’s epic tumble, which has reduced the price of a barrel of crude from nearly $110 to just more than $40. But one strategist says the commodity is set to stage a striking turnaround.
According to Emad Mostaque, a strategist at consulting company Ecstrat, crude oil is now trading at what is known as “half cycle costs”; that is, roughly the cost of getting the oil out of the ground. His point is that $42 oil does not account for other important costs like that of finding the oil or purchasing the land in which the crude is situated. That would imply that the supply of oil will dry up over time………………………………………..Full Article: Source

Oil price plunge to $30 per barrel unlikely

Posted on 26 November 2015 by VRS  |  Email |Print

Russia’s Finance Ministry considers oil price plunge to $30 per barrel very unlikely, Deputy Minister Maxim Oreshkin said on Wednesday. “We’re facing oil (price) at around $40 per barrel while prices should go down to around $30 per barrel for the current situation to worsen. But this scenario is only likely in case of a sharp slowdown of the global economic growth and a sharp slowdown of the US economy,” Deputy Minister said.
Speaking about capital outflow from the Russian Federation Oreshkin said that it has been substantially decreasing. Thus, at the beginning of the year the Ministry forecasted capital outflow to reach around $70-80 bln though now the forecast stands at $60-65 bln………………………………………..Full Article: Source

Don’t expect Saudi Arabia to back down when OPEC meets

Posted on 26 November 2015 by VRS  |  Email |Print

Despite a nearly 30% fall in oil prices since a June meeting, don’t expect the Organization of the Petroleum Exporting Countries’ top exporter, Saudi Arabia, to back down from its strategy of fighting for market share.
Instead, on Dec. 4 in Vienna, members of the oil-producing group are likely to spend their final meeting of 2015 much like they’ve spent the entire year so far: complaining about low prices but doing nothing about them. “Saudi Arabia will say no change,” Brian Youngberg, senior energy analyst at Edward Jones, told MarketWatch………………………………………..Full Article: Source

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