Commodities - General News 01 (May 08 - Apr 10)

[winston]

DJ MARKET TALK: Base Metals Outlook Brighter In 1H - BarCap

0311 GMT [Dow Jones] Base metals likely to transcend near-term volatility to make gains in 1H0, says Barclays Capital commodities analyst Yingxi Yu; "overall we think the demand recovery will trump concerns over monetary tightening."

Bank says that unless China's CPI suprises to upside in January, February, hitting 3%, PBOC unlikely to raise its benchmark interest rate in 1H; China's CPI up 1.9% in December from a year earlier, surging from a 0.6% rise in November, which followed 9 months of declines.

Yu says "shaky" start to year for base metals "concealing improvements in metals fundamentals" being seen in the channel including higher premiums. Tips start of monetary tightening and end of initial restocking boost in OECD to pressure prices in 2H; "we would seek to move towards the short side in the second half." LME 3-month copper at $6,669/ton, up $79 with heavy 2,155 lots traded, after dropping 3.3% in London overnight.(JAC)

Source: Dow Jones Newswire

[millionairemind]

US commodities market under attack
The US commodities market should be freed from "reckless speculation" and abusive trading practices, a leading US senator has urged, as she attempts to stop the price of everyday items like petrol and food from being impacted by financial traders.

By James Quinn
Published: 7:34PM GMT 03 Feb 2010
http://www.telegraph.co.uk/finance/mark ... ttack.html

[-dol-]

All populist statements just to appease the masses.

How did TARP money end up being used to speculate in the markets? Profits goes to bumper bonuses and losses get slapped on the taxpayers' bill.

Bank holding companies - a convenient hiding place for distressed investment banks, to be discarded at the first signs of opportunities for proprietary trading. Very convenient indeed.

When banksters can use TARP money to charter tankers to store oil offshore and thus artificially help prop up oil prices, when the economy just came back from the abyss and is not exactly in the pink of health... ==> Taxpayers are bailing out banksters and they get slapped with a higher petrol bill.

People vote in govts and they get squeezed by the people they vote in.

So who are the suckers?

[winston]

A Wave of Steel

China is the key to the metals markets today. And there are some important signals about this market registering in the last few weeks.

Last month, I wrote about diverging global shipping indexes. The Baltic Dry Index, which tracks global shipping rates, has been falling the last several weeks. While the China Containerized Freight Index, tracking solely Chinese shipping prices, has been on a tear. The CCFI is up 12% since the beginning of January.

This could indicate an increase in goods being shipped out of China these days. And those goods might be metals. A few weeks ago, odd shipments of aluminum started showing up at ports in northwest Japan. Speculation is these sailed from Shanghai.

If China is indeed starting to re-export its vast stockpiles of metals built over the last year, there are major implications for prices. There is a lot of supply that could "hit the street" in a hurry.

Some more evidence of re-exports emerged last week.

The European Commission reported that Chinese applications for steel imports into Europe were up 50% in January, as compared to December 2009. Chinese exporters applied to send 244,000 mt of steel into Europe.

Overall, China accounted for 16% of total import applications during the month. The first time in over a year that China represented the largest volume of import orders.

These applications don't guarantee shipments will be made. Exporters are under no obligation to actually send the amount of capacity they apply for.

But this is a development to watch. If these exports do materialize, they represent a large wave of steel breaking over world markets. Running contrary to the conventional wisdom that rampant development in China is sucking up any raw materials the nation can get its hands on.

If China isn't using as much steel as we thought, what's happening to stockpiles of copper, coal and iron ore?

http://www.oilprice.com/article-a-wave-of-steel.html

[profittaker]

Back in January, NYTimes reported similar article. China can produce steels at much lower price that Koreans, Japanese and even Indonesian. Dunia, an indonesian nail market has its market share drop by 40% due to cheep nails from China.

http://thisisnoble.blogspot.com/2010/01 ... uture.html

[kennynah]

i wonder if the quality of the finished steel from china is in question...

i used to physically trade aluminum and i recall that the finished quality varied from producing countries even with the same chemical specs...

[winston]

Wednesday, February 24, 2010
WSJ: India Joins China in Global Hunt for Commodities

A few weeks ago we noted the world's largest coal producer, Coal India, was on the hunt for global assets to expand their reach. [Feb 12, 2010: WSJ - World's Largest Coal Producer Has $6 Billion in the Bank and is on the Prowl for Assets] It appears this is now part of a broader national strategy mimicking what China has been doing the past half decade+.

Via WSJ:

* India wants to join the club of global energy giants. Some of the country's largest private and state-run firms are in hot pursuit of oil and gas assets overseas as they seek to take advantage of depressed asset prices during the downturn and break free of burdensome regulations at home.

http://www.fundmymutualfund.com/2010/02 ... -hunt.html

[winston]

Commodities Attract $3.98 Billion, Barclays Estimates (Update1) By Stuart Wallace

March 18 (Bloomberg) -- Investors put $3.98 billion into commodities last month, almost 29 times the amount in January, favoring investments linked to indexes over exchange-traded products, Barclays Capital said.

Total commodity assets under management, which were also bolstered by gains in prices, expanded to $255 billion in February, after dropping $12 billion to $245 billion in January, the bank said. Inflows in January were $139 million.

“Commodity investments have resumed in February, primarily from institutional investors employing commodity indices to gain broad-based exposure, as retail investors still remain jittery,” Barclays said in a report, distributed today.

The S&P GSCI Enhanced Total Return Index of 24 commodities rose 4.8 percent last month, rebounding from a 7.5 percent decline in January. Prices climbed partly on concern that supply will revert to falling short of demand as the global economy expands.

Investments in exchange-traded products shrank $1 billion and those tied to indexes expanded by $4.5 billion, Barclays said. Medium-term notes, or products customized for investors, attracted $494 million.

Energy got $2 billion of the additional investments, agriculture $1.18 billion, industrial metals $481 million and precious metals $251 million. A year earlier, gold exchange- traded products alone attracted $6 billion of investment, Barclays said.

http://www.bloomberg.com/apps/news?pid= ... vEmN10W8Hc

[winston]

Rising dollar hits prices of many commodities

Most commodities fall after concern about Greece, India rate hike boost dollar

A rising dollar hit prices of many commodities Friday after concerns about the global economy pushed up demand for safe assets.

More questions about the Greek government's financial problems and a surprise interest rate increase in India increased demand for the dollar.

Most commodities are priced in dollars, so when the dollar rises everything from oil to corn becomes more expensive for foreign buyers. That cuts into demand for commodities and hurts their prices.

Greece warned that it might have to go to the International Monetary Fund if European Union countries can't agree on a plan next week to help the country, which is facing huge budget gaps. Meanwhile, India's central bank raised interest rates to combat inflation.

Uncertainty over when other central banks might raise rates boosted demand for the dollar. The ICE Futures US dollar index, which measures the dollar against a basket of six other currencies, rose 0.6 percent.

Gold for April delivery fell $19.65 to settle at $1,107.60 an ounce. May silver fell 39 cents to $17.032 an ounce. Meanwhile, May copper fell 2.3 cents to $3.3725 a pound.

Grain prices were mixed. The May wheat contract fell 5.5 cents to settle at $4.8375 a bushel. Corn, also for May delivery, fell 1.5 cents to $3.745 a bushel. Soybeans rose 2.25 cents to close at $9.6175 a bushel.

Crude oil fell $1.52 to settle at $80.68 per barrel on the New York Mercantile Exchange.

In other Nymex trading, natural gas rose 8.4 cents to $4.169 per 1,000 cubic feet. Heating oil fell 4.24 cents to $2.0767 per gallon. Gasoline fell 4.53 cents to settle at $2.2556 a gallon.

Source: AP News

[winston]

Beware a Commodities 'Melt Up' By Alan Farley

The crude-oil breakout may induce sympathetic rallies in other commodities, triggering a broad "melt up," like the one we saw in 2008.

Unfortunately, the world economy is far more fragile now than it was two years ago and could suffer badly if raw-material prices go through the roof.

http://www.thestreet.com/story/10720067 ... ooyah_html