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Commodities Briefing 07.Apr 2016

Posted on 07 April 2016 by VRS |  Email |Print

Commodity salesmen used to have a simple pitch: “China hasn’t fully urbanized.” But when asked Wednesday why he is hopeful about China’s long term when its underlying steel demand is contracting, Australian iron-ore miner Fortescue’s chief executive Nev Power led with a different reason. “China has been able to supplement domestic demand with very strong exports,” he said.
In 2015, China’s steel exports jumped 20% from the year before. Exports equated to 14% of China’s crude steel production. But this hardly seems like a sturdy source of demand. Trade politics could slow Chinese steel exports………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

Goldman Sachs predicts rise back to $70 a barrel by the end of decade will drive improved growth. A steep and prolonged fall from grace for the international oil price, from around $115 a barrel in the summer of 2014 to as low as $27 earlier this year, was expected by the International Monetary Fund (IMF) to be a “shot in the arm” for the global economy, reports the Financial Times.
Oil has been stuck around $40 a barrel in recent weeks and was a little shy of $39 this morning. Last year, the IMF predicted a 0.5 per cent boost for every $20 drop. Instead, the fund this week warned that the already underwhelming global economic recovery is running out of momentum………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

Russia believes an oil price at $45-$50 per barrel is acceptable to allow the global oil market to balance, as it prepares to meet leading oil producers in Doha later this month, sources familiar with Russian plans said on Wednesday.
Leading oil producers plan to meet in Doha on April 17 to cement a preliminary deal reached between Russia, Venezuela, Qatar and Saudi Arabia in February to freeze oil output at levels reached in January, to curb a surplus on the oil market. “Now there is discussion of how long production will be frozen and ways to monitor the agreement,” one of the sources said………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

How long it will take the oil market to bounce back is a frequently asked question by energy investors. According to one equity analyst, the answer is looking beyond the coming months. “I think [there's] very little visibility over the next six months,” Kris Kelley of Janus Capital Group said Wednesday on CNBC’s “Power Lunch.”
“But I think that if you step out beyond six months, it actually gets very visible.” He contends that as supply comes off the U.S. market, if production reaches 8 to 8 ½ million barrels a day, oil will balance out by the end of the year………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

A gauge of price swings in gold fell to the lowest in almost two months as the prospect of a strengthening U.S. economy damped investors’ interest in the metal. Gold’s 30-day historical volatility dropped to the lowest since Feb. 10 and prices fell for the third time in four days amid signs the U.S. economy is improving.
Minutes of the Federal Reserve’s last meeting released Wednesday showed policy makers debated an April interest-rate hike, with several officials leaning against such a move and others saying it might be warranted. Gold advanced 17 percent last quarter, the largest such gain since 1986, on speculation that the Fed would delay raising interest rates amid a slowdown in global economic growth………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

A year before Navy SEALs stormed his compound and put an end to Osama bin Laden, the al Qaeda leader was puzzling over a question with which every investor is familiar: where to put his cash. The decision made was to put the money into gold and coins. Osama bin Laden — the gold bug.
“The overall price trend is upward,” the terrorist leader wrote in a letter to Atiyah Abd al-Rahman, the al Qaeda general manager, according to the New York Times. “Even with occasional drops, in the next few years the price of gold will reach $3,000 an ounce.”……………………………………….Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

It looks there may be trouble ahead for copper. This goes well beyond the falling copper price and annual surpluses. Chinese investors have been buying copper to finance trades. Thus, they have been warehousing one heck of a lot of copper to finance these trades This has kept demand artificially higher, causing mining companies to add more copper production.
Why is this good for silver? As global base metal supply, especially copper, starts to decline, it will drastically impact global silver mine supply. Again, 55% of world silver mine supply comes from copper, zinc and lead production………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

The precious metals have been on a southward journey in the last couple of days. The fall of the precious metals has likely been due to the diminishing safe-haven appeal of the bullions. Initially, investors were likely sticking to gold as most of the other assets in the economy were underperforming.
However, the recent fall in the bullions has curbed the fund flows in gold. The SPDR Gold Shares ETF (GLD) had seen remarkable fund infows since the begining of 2016. However, the consistent inflows turned into outflows as the metal started to fall………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

Platinum and palladium are drawing limited attention from investors right now, with price moves tending to be driven by external forces such as gold and broader risk sentiment, says UBS.
For instance, these metals have “barely” reacted to news reports of auto sales — important since PGMs are used for catalytic converters – and instead more likely to move on the back of gold and changes in equities. “Interest is lackluster and liquidity conditions are poor,” the bank says………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

Australian investors will continue to flock to exchange traded funds (ETFs) over the next twelve months, new research reveals. Data from the annual BetaShares/Investment Trends ETF Report revealed that the number of investors using ETFs jumped 37 per cent in 2015, exceeding previous forecasts.
BetaShares managing director, Alex Vynokur said ETFs were becoming mainstream in Australia, “just like they are in global markets”, with the report predicting that more than 256,000 Australians will hold an ETF by the end of 2016………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

A lot is being said about the future of solar companies with one stalwart, SunEdison Inc. , rumored to be going bankrupt. In fact, shares of the company tumbled almost 45% in Friday’s after hours trading. The company has been on a southward trend for some time now. The company’s market value has dropped to a mere $136 million as compared to July last year, when it was valued at almost $10 billion.
Per The Wall Street Journal report , SunEdison is expected to file for bankruptcy in the coming weeks. The report goes on to say that with the company preparing chapter 11 filing and in talks with creditor groups, it is likely that creditors will take control of the company and its power projects………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

A weaker dollar accompanied by a strikingly more dovish Federal Reserve is feeding the notion that global policy makers reached some sort of soft agreement to at least call a truce in the “currency wars” that saw the world’s central banks competing to weaken their respective currencies in a bid to steal export business from each other.
But don’t get too comfortable. “Can policy makers clutch defeat from the jaws of a currency ‘truce’ victory? Of course they can,” wrote Alan Ruskin, macro strategist at Deutsche Bank and a high-profile proponent of global policy coordination………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

Many said the U.S. dollar would rise against the Japanese yen this year. Instead it has fallen, baffling investors and leading to fierce speculation on when it could reverse.
The dollar dropped below ¥110 on Wednesday for the first time since 2014 after rising above ¥125 in June. It’s down 8.3% this year through Tuesday, compared with a 4.6% fall against the euro. That’s despite a decision by the Bank of Japan to adopt negative interest rates this year, which was aimed in part at trying to weaken the currency………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

One of the finer ironies of this extraordinary U.S. election is that Donald Trump is a former star of a reality show. Much of what he says is far removed from anything that objectively would be deemed as reality.
Leave aside the bizarre episodes of a tweet insulting an opponent’s wife; the assault charges against his campaign manager for allegedly manhandling a reporter; the notion of cutting off remittances to Mexico to force that nation to pay for his vaunted border wall; or that of a woman’s culpability in an abortion, to name just the most recent ones………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

European Union carbon-dioxide prices rebounded as the German environment ministry said it is willing to consider measures that would strengthen the European Union’s emissions trading system.
Prices in the world’s biggest cap-and-trade carbon program rose as much as 2.1 percent to 5.35 euros a metric ton, the highest level in six weeks. They are still 34 percent down this year amid a persistent oversupply of permits to pollute. The market failed to draw support from the global climate deal reached in Paris and and EU agreement to introduce in 2019 the Market Stability Reserve, a tool which will help limit the glut of allowances………………………………………..Full Article: Source

Posted on 07 April 2016 by VRS |  Email |Print

For the latest sign of how solar and wind is crowding out fossil-fuel generation at Europe’s utilities, take a look at the region’s carbon market. Aggregate open interest, a measure of open trading positions, dropped a record 36 percent as of March 31 from when the annual benchmark contract expired on Dec. 14, according to data from the ICE Futures Europe exchange.
Since utilities typically sell power in advance and buy carbon allowances at the same time, the decline may indicate slowing sales as renewable electricity typically has priority access to grids………………………………………..Full Article: Source

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