Commodities Buzz: Mining Giant Cuts Jobs On Falling Coal Prices, Weak Demand Outlook

Glencore Xstrata has unleashed a massive job cuts in its coal mining operations in Australia as falling coal prices, higher costs, oversupply and subdued demand take their toll. The mining giant said today that it was cutting back coal production at its Newlands and Oaky Creek mines, which would lead to a loss of about 450 jobs by the end of the year. Against a backdrop of lower coal prices, high input costs and the strong Australian dollar, the decision to cut production at the mining operations has been taken to maintain viability in a challenging market, Glencore Xstrata said in a statement. This is a difficult decision, but one that needs to be taken in the current challenging economic conditions,'' Glencore Xstrata said. A lot of jobs have been lost across the country in past weeks as resource companies respond to weaker commodity prices and high costs. Australian Thermal coal prices have slipped sharply in last few months and currently linger around $90 per tonne, down around 9% on the year. Source by Commodity Insights

Indian Copper Opened Lower, China Demand Uncertainty Continues

Copper......

Copper opened lower on MCX as was expected. The markets continued to remain trading in disparity from its foreign counterpart LME. The LME three month prices were trading at $ 6727 per tonne, up from $ 6715 per tonne. Meanwhile, MCX Copper June contract was seen trading at Rs 407.7 per kg, down 0.27 percent. The rise of Rupee is the cause of decline in Copper. Indian Rupee was last seen exchanging hands at 60.53 against the Dollar, up from 60.72 on Wednesday. Dollar was at 1.3022 against the Euro. Excessive credit growth in China has made markets nervous and calls of reassurances from Peoples Bank of China have been taken lightly by the traders. Chinese premier bank said this week that it was providing short term assistance to institutions that were facing cash crisis. Source by Commodity Insights

Economic Buzz: German Consumer Confidence Forecasts Higher For July

German consumers continued to be in an optimistic mood at the onset of  summer.Economic and income expectations increased further, but willingness to buy fellslightly at an extremely high level. Following a value of 6.5 points in June,the overall indicator is forecasting 6.8 points for July. Optimism appears to beunbroken. The income outlook of Germans has improved further from an alreadyhigh level on account of the stable employment situation and good collectivebargaining agreements, which have also benefited economic expectations . Incontrast, willingness to buy dropped slightly this month, but still remained atan extremely good level. The upward trend in the consumer climate is alsoenhanced by the continually falling propensity to save, which has reached arecord low.
Source by Commodity Insights

Oil Slippery Ahead Of EIA Report

Oil......
Crude oil futures were trading on a slippery note ahead of the Energy Information Administration report to be released later today. The sentiments were also weakened after the strong US data yesterday increased the chances of early windup of the US monetary stimulus program.
Crude for August delivery is trading down 66 cents at $94.65 a barrel on New York Mercantile Exchange. Oil futures finished Tuesday’s regular session higher by 14 cents, or 0.1%, to settle at $95.32 a barrel, after better-than-expected reports on the housing sector. Also, durable-goods orders in May rose 3.6%.
The contract lost ground after the American Petroleum Institute, in its weekly report on U.S. commercial crude-oil inventories, said supplies were unchanged in the week ended June 21. A Platts survey of analysts had forecast a decline of 2 million barrels.
A more widely watched report from the Energy Information Administration is slated for release at 10:30 a.m. U.S. Eastern time. Last week, the EIA reported an unexpected increase of 300,000 barrels in oil stockpiles to 394.1 million barrels. At that level, the EIA said, inventories were above the upper limit of the average range for this time of year.
The U.S. dollar rose against rivals on Tuesday after a string of strong economic data reinforced expectations the Federal Reserve will move to slow its program of asset purchases later this year.
Strength in the US dollar also pressurized oil futures. The ICE dollar index which measures the U.S. unit against six other major currencies, rose to 82.553 from 82.412 late Monday in North America.
MCX July crude oil futures may open today’s session near Rs 5650 levels with support around Rs 5600 levels. The U.S. Commerce Department is due to release its third estimate of gross domestic product for the first quarter today.
Source by Commodity Insights

Gold Gets Hammered On Strong US Data

Gold.........

Gold futures got hammered further in the Asia electronic session today on strong US economic data which strengthened the US dollar and also supported the early tapering of U.S. monetary stimulus measures.
The U.S. dollar rose against rivals on Tuesday after a string of strong economic data reinforced expectations the Federal Reserve will move to slow its program of asset purchases later this year.
Several housing reports flowed in on Tuesday. U.S. home prices rose 2.5% in April, the biggest monthly increase ever, according to S&P/Case-Shiller data. A home-price report by the Federal Housing Finance Agency showed a gain, albeit more modest, of 0.7% in April adjusted for seasonality. New-home sales rose 2.1% in May to an annual rate of 476,000, their highest rate since mid-2008.
Additionally, durable-goods orders increased in May for the second month in a row, rising 3.6% to a seasonally adjusted $231 billion. Consumer confidence in June surged to a reading of 81.4, its highest level in more than five years.
The ICE dollar index which measures the U.S. unit against six other major currencies, rose to 82.553 from 82.412 late Monday in North America. The euro— which makes up more than half of the comparative basket used for the ICE dollar index by weighting — fell to $1.3095 from $1.3122.
Gold for August delivery slipped to as low as $1242.6 an ounce so far in the session today. Yesterday, it ended lower by $2 to close at $1,275.10 an ounce.
MCX Gold futures have however been cushioned by the extra soft Rupee. The August bullion futures may open today’s session near Rs 26200 levels with support around Rs 26000 levels. So far in the month of June the Indian Rupee has tumbled by more than 5% whereas the gold futures have shed just 3%.
Source by Commodity Insights

Economic Buzz: Core U.S Durable Good Orders Rise 0.70%

New orders for manufactured durable goods in May increased $8.0 billion or 3.6 percent to $231.0 billion, the U.S. Census Bureau announced today. This increase, up three of the last four months, followed a 3.6 percent April increase. Excluding transportation, new orders increased 0.7 percent, after surging 1.50% in the previous month. Excluding defense, new orders increased 3.5 percent.
Source by Commodity Insights

Bargain Buying Lifts Gold

Gold.........

Gold futures gold a lift in the Asia electronic session today as the investors jumped to buy the commodity after it tumbled another $15 to below $1280 an ounce yesterday following the tightening credit conditions in China.
U.S. and global equities sold off Monday, taking their cue from a sharp drop in Chinese equities following a rise in Chinese money-market rates. The sell off continued in the Asia today on concerns about a Chinese liquidity squeeze which had sparked a global selloff the previous day. Shanghai shares extended losses on worries about the impact from high money-market rates.
The Shanghai Composite Index fell 0.8%, recovering a little after falling more than 1% in the opening minutes. The Shanghai benchmark plunged 5.3% on Monday for its worst finish in nearly four years.
Adding more pressure on gold prices, analysts at Goldman Sachs cut their outlook on the metal for 2013 and 2014, citing growing price risks from a brightening U.S. economic picture. The bank now expects gold to end this year at $1,300 a troy ounce, down 9.4% on its previous forecast. It sees gold ending 2014 at $1,050 an ounce, down 17.3% on its earlier outlook.
"Medium term, we expect that gold prices will decline further given our U.S. economists' forecast for improving economic activity and a less accommodative monetary policy stance," the bank said. "Further, with quantitative easing tapering likely to start soon, perhaps even a bit sooner than previously anticipated, we are fast forwarding on our real rate path."
The price of gold plunged 6.3% in a single session last week after U.S. Federal Reserve Chairman Ben Bernanke said the U.S. central bank could start winding down its $85-billion-a-month bond-buying program later this year.
Gold for August delivery is trading up $1 at $ 1278.1 an ounce in the electronic trades today. Yesterday, fell $14.90, or 1.2%, to close at $1,277.10 an ounce, after having surrendered almost $100 over the course of last week’s trading.
MCX August bullion may open today’s session near Rs 26850 levels with resistance near Rs 26930 levels and support near Rs 26740 levels.
Source by Commodity Insights

Inventories of Copper Are Now At 10 Years High

Copper........

Copper inventories ticked to 10 year high on Monday reaching 678225 tonnes. This is a cause of worry for the markets which is already carrying the burden of slack Chinese demand. Three-month copper futures turned lower on the London Metal Exchange, with losses in Shanghai shares Tuesday fueling selling, as concerns about China's cash crunch rattle investors.
LME three month prices of Copper were seen at $ 6625 per tonne, compared to $ 6675 per tonne. Indian Copper prices suffered the same fate as its International counterpart. The prices declined to Rs 400.8 per kg, down Rs 8. Supports for the contract are at Rs 395 and 393 per kg.
Last week, COMEX Copper fund managers, Commitment of traders (CoT) report showed heavy rise in short positions while there was minor increase of long positions by hedge fund managers. The total short positions increased by 11209 contracts taking total short contracts number to 55896 contracts against 44687 contracts in the previous week.
In US economic news, the Federal Reserve Bank of Philadelphia said late last week that its manufacturing index rose to 12.5 in June from -5.2 in May, well above expectations for a -2.0 reading.
A separate report showed that U.S. existing home sales climbed 4.2% to 5.18 million units in May from April's total of 4.97 million, far surpassing market calls for a 0.6% increase. Bank Of Japan said that Japan's corporate services price index rose by a seasonally-adjusted 0.3% last month following a -0.3% reading in April.
Source by Commodity Insights

Commodities Buzz: Mining Slowdown To Affect Australian Housing Market

The slowing of the mining boom and public sector cuts in Australia will lead to a dramatic drop in the number of new homes being built in parts of the country, according to a new report. However, localised population increases mean some pockets are set for a building boom, the report also found.

The BIS Shrapnel Regional Building 2013-2015 report identified the Coffs Harbour-Grafton area on the north coast of NSW as the No.1 growth area for new dwellings next year with a forecast increase of 52% for 2013/2014.

Alice Springs will experience the biggest slow-down in new buildings, with annual commencements expected to drop by 43% over the same period. Western Australia's Pilbara and Kimberley region will also slow significantly by 36% and 22% respectively.

Major investment in the Pilbara had driven strong employment and population growth until recently, the report found, however it said this was unsustainable. Building activity in the Pilbara and Kimberley regions is expected to remain high by pre-mining boom standards.

In Victoria, areas hit by recent factory closures such as Geelong and Hume will sustain a drop of a projected 11% each. The Australian Capital Territory (ACT) will see a 32% reduction in new dwellings as public sector jobs are cut, the report said.
Source by Commodity Insights

Copper Goes Down Begging For Mercy From Sellers

Copper.............
LME and MCX prices of Copper have come down begging for some respite as selling pressure mounted after a series of bad data from world markets last week. The rise in ICSG Copper surplus and fall in Chinese imports was already been handled by the markets but the news of money managers sharply increasing their short positions killed all chances of bottom fishing.
After the week ending 11 June 2013 the second week in the row turned out to be in favor of bears. The week ending 18 June 2013 highlighted that the short positions were increased significantly.
COMEX Copper fund managers, Commitment of traders (CoT) report showed heavy rise in short positions while there was minor increase of long positions by hedge fund managers. The total short positions increased by 11209 contracts taking total short contracts number to 55896 contracts against 44687 contracts in the previous week.
CoT report showed that long contracts increased by 914 contracts and were at 26887 contracts from 25973 contracts a week before. Total net short positions therefore moved up by 55 percent to 29009 contracts from 18714 contracts a week before.
LME copper three month prices was trading below $ 6800 per tonne on account of worries on Chinese demand outlook. Most active Copper contract on MCX was trading at Rs 401.2 per kg, down 1.6 percent from last week. Resistance for the contract is at Rs 405 per kg. Downtrend can take copper towards Rs 398 per kg.
Source by Commodity Insights