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Commodities Briefing 30.Nov 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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