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Commodities Briefing 25.May 2015

Posted on 25 May 2015 by VRS |  Email |Print

A recent entrant in Asia’s commodities markets, Australia’s Westpac Banking Corp is ramping up to take advantage of a commodities “supercycle” that it says has at least another 30 years to run. While some global banks have exited commodities due to more stringent regulations, Westpac is setting itself to support a deeper push into the region by its corporate customers, a senior executive told Reuters.
“The commodity cycle is still in the supercycle phase. The urbanization of Asia has not stopped - all we’re getting at the minute is a correction,” said Paul Gardner, the bank’s Singapore-based Global Head of Structured Commodity Finance………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

Commodity prices can be very volatile and change without notice. In the past year alone the key commodities of oil, natural gas, iron ore, silver, and gold have all dropped by double-digits at some point in the year. Looking out even farther all of these commodities are down by at least a third from the peak price over the past decade.
Huge price drops like these can sink commodity stocks, especially those already weighted down by a lot of debt. However, despite this downward volatility commodity prices can go higher as well, minting a fortune for investors. The key is to be invested in a company that can make it through the low point of the cycle to cash in when prices rebound. Here are three safe commodity investments that are very likely to be there when a future uptick in commodity prices finally arrives………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

When Islamic State fighters in Iraq captured the town of Ramadi this week, just 80 miles (129 kilometres) from the capital of the Middle East’s second-largest oil producer, crude markets shrugged.
Rather than the spikes that have historically accompanied geopolitical disturbances, oil prices actually fell that day. Elsewhere, Libya is on the verge of becoming a failed state and Saudi Arabia is waging an air war against rebels in neighbouring Yemen. Again, the markets seem blissfully indifferent………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

The oil price plunge has triggered a string of bankruptcies, debt defaults and rescue measures to save companies nearing collapse, with almost two dozen oil and gas groups now under stress. A 40 per cent slide in Brent crude prices from a peak of $115 a barrel last June, has put smaller, cash-strapped producers in financial trouble, according to City analysts, with up to a quarter of a million barrels a day of oil supply at risk of being curtailed.
Even after a rebound in prices from January’s lows to about $66 a barrel, there have been “numerous small corporate casualties” across the globe, and especially in the US and Canada, says a report by Bernstein Research………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

OPEC is unlikely to change its production ceiling when the group meets in June, Iran’s Oil Minister Bijan Zanganeh said on Sunday, according to the semi-official Mehr news agency. “Lowering OPEC’s production ceiling requires consensus between all members … under current conditions it seems unlikely that the OPEC production ceiling will change,” Zanganeh was quoted as saying.
Last month, Zanganeh said the producing group should cut its target daily crude production by at least 5 percent, or approximately 1.5 million barrels per day. The Organization of the Petroleum Exporting Countries will meet on June 5. At its last meeting in November, OPEC, led by oil kingpin Saudi Arabia, decided against cutting output to defend its market share, resisting calls by some members such as Iran and Venezuela to reduce production to shore up prices………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

Saudi Arabia’s rapid transition into one of the world’s largest oil refiners has added an extra dimension to the oil exporter’s role as the driver of Opec (Organization of the Petroleum Exporting Countries) policy, say experts.
When it attends Opec’s next meeting in two weeks, it does so with major new state-of-the-art oil refineries that can profit from cheaper crude and reviving world fuel demand - exactly as international oil firms have over the past six months………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

An increasing number of professional money managers think gold will be where the retail punters go to next and it’s true gold has been trading more like a currency than a commodity recently. If the dollar is no longer king, then gold looks like a worthy successor.
For a start, gold is at the bottom of a correction of more than three years and attractively priced for an upward move. It topped out at $1,923 in October 2011 and seems to have bottomed out around $1,140 an ounce. Gold has actually already held up very well with the rise of the US dollar and came second only to the dollar last year in performance against all other currencies………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

Gold, which neared the keenly-watched $1,400 (Dh5,138) an ounce in 2014, had been an investor’s darling, but the yellow metal has mostly been curtailed in a range so far in 2015. But analysts are painting a bearish picture on gold over the short to medium term.
On Thursday, international spot gold traded at $1,200 an ounce level, after having traded in range of $1,163-$1,306.2 so far in 2015. Gold moved around $1,200 an ounce as bullish catalysts, such as signs of faster inflation, were offset by speculation the Federal Reserve will soon raise interest rates. While the weaker dollar usually draws buyers to gold, there’s also less demand for haven assets with equities near all-time highs………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

Gold mining stocks have been in the headlines lately as their share prices have moved significantly higher. Between early March and mid-May the Market Vectors Gold Miners ETF (GDX) increased over 17%. The Market Vectors Junior Gold Miners ETF (GDXJ), which tracks smaller-capitalization miners, ticked up over 25% in the same period. Both funds’ result dwarfed the underlying metal’s return of roughly 6.4% during that time.
Historically, advisors and fund investors have used gold miners as one of the few ways to get exposure to the precious metal, says John Gabriel, ETF strategist with Chicago-based Morningstar. That’s changed over the past 10 years or so with the arrival of physical-gold ETFs, which provide direct exposure to the commodity’s price movement………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

Banks are increasingly combing through portfolios heavily ­exposed to mining regions as the fallout from the collapse in commodity prices raises concerns that pain is spreading across loan books. While mining companies make up a small portion of the major banks’ total lending, industry sources said loans to other business customers in cities such as Perth were showing greater stress as the flow-on effect of lower commodity prices took its toll.
Last week, listed Perth contractor Macmahon advised that a 90-day review with nine lenders that had provided a $317.5 million ­facility — of which $159m has been drawn — had been ­extended by one month………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

China, the world’s biggest gold producer, has set up a gold sector fund involving countries along the ancient Silk Road which is expected to raise USD 16.1 billion. The fund, led by Shanghai Gold Exchange (SGE), is expected to raise an estimated 100 billion yuan (USD 16.1 billion) in three phases, state-run Xinhua news agency reported. It is said to be the “largest fund” set up by China.
The fund has been set up in northwest Xi’an city during an ongoing forum on investment and trade. China is the world’s largest gold producer, and also a major importer and consumer of gold………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

After the multi-year rally, broad U.S. benchmarks look fairly valued if not pricey. Nevertheless, investors can still find potential opportunities in energy sector exchange traded funds. “Most sectors appear to be either fairly or modestly overvalued at present,” writes Ben Johnson, director of global ETF research for Morningstar.
“However, the late-2014 downdraft in oil prices appears to have created a potential opportunity in the energy sector. ” When comparing the energy sector’s price-to-earnings, price-to-book and yields to historical averages, oil-related stocks are trading at the lowest valuations in the current market………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

Currently in the commodity world there are three main types of ETFs available: first generation, next generation (sometimes referred to as second/third generation), and physically-backed products. These are ETFs that are backed by the physical commodities.
For now, this only applies to the precious metals space, as all four have their own physically-backed products (as well as a few that invest in baskets of physical metals). These are by far the most popular commodity ETFs on the Street, accounting for the lion’s share in AUM. But the distinction that we want to focus on is that of first-generation and next-generation commodity ETFs………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

The African Development Bank, AfDB, said it has invested N14.78 billion (N2.91 trillion) in the agriculture sector of its Regional Member Countries (RMC) in 46 years to grow their economy. Chiji Ojukwu, the Director of Agriculture and Agro-Industry Department of the bank, stated this in a statement published on the bank’s official website.
In the statement, retrieved by the News Agency of Nigeria on Sunday in Lagos, the director said that between 1968 and 2014, the bank group approved 876 operations. These operations had commitments valued at approximately $14.78 billion that provide support to agriculture and rural development………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

Imagine a world where global investors can access Chinese commodities markets through established global exchanges and Chinese investors can trade through their local bourses. It’s more than just an attractive proposition, it’s the great hope for finally integrating the world’s largest commodity producer, consumer and importer with the rest of the world.
It’s also the prize being sought by Charles Li, the chief executive of Hong Kong Exchanges and Clearing (HKEx), which bought the venerable London Metal Exchange (LME). But there is a long way to travel before the dream becomes a reality, and there is always the danger that the market will have moved on by the time HKEx manages to pull something together………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

The Reserve Bank of Australia is set to win more room to weaken its currency after lenders started doing their bit to cool the housing market. Australia & New Zealand Banking Group Ltd. said last week it will stop giving discounts on mortgage rates to investors, while National Australia Bank Ltd. also said it would respond to calls from regulators and limit such offers.
The RBA’s monetary easing has added fuel to a property boom, with house prices in Sydney rising about 40 percent over the past three years. While the central bank says the economy needs a weaker exchange rate, the Aussie has climbed 2.2 percent in the past month against the greenback even after the RBA cut its cash rate to a record low 2 percent………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

The Belarussian central bank will lift a ban on trading currency outside the official currency exchange, it said in a statement Friday, as it seeks to ease restrictions on the financial and currency markets. The ban was introduced last year along with other currency controls, as the bank sought to protect the Belarussian ruble from economic turmoil in neighboring Russia prompted by sliding oil prices and Western economic sanctions.
Belarus’ currency has stabilized since weakening 25 percent against the dollar at the start of the year, and the central bank has eased the majority of its restrictions, including cutting the rate of mandatory sales of foreign currency income to 30 percent from 40 percent………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

At first, the numbers and company names flashing on a big board in Beijing’s financial district suggest a booming market. A closer look indicates otherwise: The scrolling list rotates the same dozen or so trades, all from last year.
The lights from the Beijing Environment Exchange - one of seven pilot markets in China for trading carbon - raises questions for the country as it prepares for next year’s roll-out of a nationwide system that could help the world’s biggest emitter of heat-trapping carbon dioxide rein in its emissions. A successful carbon offset, or “cap-and-trade,” market could play a big part in cutting China’s emissions - and help the world tackle global warming………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

German carbon dioxide (CO2) equivalent emissions regulated under the European emissions trading scheme (ETS) in 2014 fell by 4.1 percent to 461.2 million tonnes, according to official national data released on Friday.
The number was published by Germany’s carbon registry DEHSt and underscored the general trend of lower pollution in the EU last year. The bloc’s ETS emissions fell 4.5 percent, helped by the rise of renewable energy and mild weather, which lowers energy demand………………………………………..Full Article: Source

Posted on 25 May 2015 by VRS |  Email |Print

As part of the EU Emissions Trading System (EU ETS), it is estimated that emissions of greenhouse gases from more than 11,000 power plants and manufacturing installations in 2014 were 4.5 percent lower year on year. The latest results, released in the union registry, cover all participating installations across the member states of the European Union, as well as Iceland, Norway and Liechtenstein.
Together, these countries form the European Economic Area. The results showed a very high level of compliance with the EU ETS rules across the board. Airlines showed an increase in verified carbon emissions from their activities between airports located in the EEA. In 2014 this amounted to 54.9 million tons of CO2, an increase of 2.8 percent compared with 53.4 million tons in 2013………………………………………..Full Article: Source

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