A view on commodities

[Dax Devil]

Saudi Arabia cuts oil prices amid OPEC price war

http://www.marketwatch.com/story/sa...rices-amid-opec-price-war-2015-10-04-10485293

Saudi Arabia on Sunday made deep reductions to the prices it charges for its oil, hard on the heels of cuts last month by rival producers in the Gulf. With U.S. production still increasing despite lower oil prices, members of the Organization of the Petroleum Exporting Countries are battling to keep their share of the last growing markets in Asia.

In a list of official prices sent to customers, state-oil company Saudi Aramco cut the price of its light-crude deliveries to Asia by $1.7 a barrel. As a result, it switched to a discount of $1.6 a barrel against the rival Dubai benchmark from a premium of 10 cents a barrel previously. The company also cut its prices for heavy oil by $2 a barrel to the Far East and by 30 cents a barrel to the U.S.


The move come as Iran, Iraq and other countries in the Middie East made deeper cuts in their official prices than Saudi Arabia last month. Saudi Arabia has vowed to keep pumping at high levels as it hopes lower oil prices will stimulate Asian demand and hit rival production in the U.S. that is expensive to produce. But while Chinese economic growth is slowing, U.S. production rose by about 68,000 barrels a day in July, according to the U.S. Energy Information Administration.

I think opec is bent on taking the price to below $36. That would be the last straw that broke the camel's back, full pun intended. :lol:

 

[DSM]

Agree DD,

The Saudi/OPEC strategy is to make use of their financial clout and drive away marginal producers, even if it means pain in the short term, to protect their long term interest and market share.

The Gulf nations and OPEC producers find themselves in a catch22 situation. The only alternative would be for them to cut their own production to maintain higher crude prices, but this would mean ceding ground to smaller and alternative energy producers, and helping them to grow their balance sheets and reserves - which in the long run is counterproductive. So the current strategy of taking pain now. The scenario will continue till global economic engine starts chugging again.... But this may be long way
off....

I think opec is bent on taking the price to below $36. That would be the last straw that broke the camel's back, full pun intended. :lol:

 

[Dax Devil]

Agree DD,

The Saudi/OPEC strategy is to make use of their financial clout and drive away marginal producers, even if it means pain in the short term, to protect their long term interest and market share.

The Gulf nations and OPEC producers find themselves in a catch22 situation. The only alternative would be for them to cut their own production to maintain higher crude prices, but this would mean ceding ground to smaller and alternative energy producers, and helping them to grow their balance sheets and reserves - which in the long run is counterproductive. So the current strategy of taking pain now. The scenario will continue till global economic engine starts chugging again.... But this may be long way
off....

Actually you hit the nail on the head. It is not the smaller crude producers they are worried about. It is the alternative energy fellows. If crude remains cheaper than bottled water in rich countries, who will bother to fund the research? Third world countries never bothered about research as they are ages behind from having tasted the fruits of materialism first, so cheaper crude, more cars on the road, hell with enviroment. Vicious circle is complete.
Just like the pharma companies-doctors mafia nips any serious research in alternative medicine by media hounding or false litigation or by sheer money power.

 

[headstrong007]

Now a days Crude is Gold.

 

[Aman1]

Now a days Crude is Gold.

black gold:rofl:

 

[DSM]

Zinc prices explode after Glencore takes 500,000 tonnes off the market - Oscar Williams-Grut

http://www.businessinsider.com/zinc-price-jumps-as-glencore-cuts-zinc-production-by-a-third-2015-10

Mining giant Glencore is cutting its zinc production by a third in order to boost the price of the metal — and the move is doing exactly that. Zinc is mainly used for galvanizing (rust-proofing) other metals. Like nickel, it is also used in alloys to create more durable metal products and is a primary component of brass and bronze. Glencore announced the cuts in a statement to the market on Friday. The reduction in its operations in Australia, Kazakhstan, and South America will reduce global zinc supply by 500,000 tonnes per year.

As a result, the price of zinc is jumping — zinc futures are up over 9% at 10.18 a.m. Glencore says the "reason for the reduction is to preserve the value of Glencore's reserves in the ground at a time of low zinc and lead prices, which do not correctly value the scarce nature of our resources." Glencore controls a huge chunk of global zinc production so reducing its output by a third will have a big impact. Citi estimates in a note on Friday that the global zinc market is 14.5 million tonnes a year, so a 500,000 tonne annual reduction is not trivial. Glencore shares are jumping on the news, up over 6% at 10.15 a.m. BST But the production cuts, which Glencore says are temporary, are going to mean job cuts. Glencore doesn't specify how many but says it will "engage with all employees and put in place support services to assist people who may be affected as a result of these changes."

Glencore shares have been on a wild ride in recent weeks as investors fretted about how the commodity trading and mining giant will cope with its massive $100 billion (£64 billion) debt pile in a low copper price environment. Shares collapsed 29% in one day after Investec warned investors could lose everything but Glencore reassured the market that it was doing fine and shares bounced back. Boosting zinc prices while at the same time cutting costs is another move to reassure investors that it is doing its best to put itself on a sure footing. Citi says in its note Friday: "We believe Glencore is showing industry discipline by cutting unprofitable tonnes and saying it is worth more value to leave the tonnes in the ground."

 

[Dax Devil]

Glencore did the right thing to let it remain in the ground. We are talking limited mineral wealth here, not printing of paper money to cover the world's debt tumour.

Zinc prices explode after Glencore takes 500,000 tonnes off the market - Oscar Williams-Grut

http://www.businessinsider.com/zinc-price-jumps-as-glencore-cuts-zinc-production-by-a-third-2015-10

Mining giant Glencore is cutting its zinc production by a third in order to boost the price of the metal — and the move is doing exactly that. Zinc is mainly used for galvanizing (rust-proofing) other metals. Like nickel, it is also used in alloys to create more durable metal products and is a primary component of brass and bronze. Glencore announced the cuts in a statement to the market on Friday. The reduction in its operations in Australia, Kazakhstan, and South America will reduce global zinc supply by 500,000 tonnes per year.

As a result, the price of zinc is jumping — zinc futures are up over 9% at 10.18 a.m. Glencore says the "reason for the reduction is to preserve the value of Glencore's reserves in the ground at a time of low zinc and lead prices, which do not correctly value the scarce nature of our resources." Glencore controls a huge chunk of global zinc production so reducing its output by a third will have a big impact. Citi estimates in a note on Friday that the global zinc market is 14.5 million tonnes a year, so a 500,000 tonne annual reduction is not trivial. Glencore shares are jumping on the news, up over 6% at 10.15 a.m. BST But the production cuts, which Glencore says are temporary, are going to mean job cuts. Glencore doesn't specify how many but says it will "engage with all employees and put in place support services to assist people who may be affected as a result of these changes."

Glencore shares have been on a wild ride in recent weeks as investors fretted about how the commodity trading and mining giant will cope with its massive $100 billion (£64 billion) debt pile in a low copper price environment. Shares collapsed 29% in one day after Investec warned investors could lose everything but Glencore reassured the market that it was doing fine and shares bounced back. Boosting zinc prices while at the same time cutting costs is another move to reassure investors that it is doing its best to put itself on a sure footing. Citi says in its note Friday: "We believe Glencore is showing industry discipline by cutting unprofitable tonnes and saying it is worth more value to leave the tonnes in the ground."

 

[DSM]

DD,

Glencore is 10th ranked in Global Fortune 500, but it has a BIG problem. Cash on hand is $3 Bil. and $100 Bil. in liabilities..... In the current weak global economic scenario, if there is any Lehman Brothers moment, companies such as Glencore, and thousands others will be wiped off, impacting banks and other financial institutions on a scale that is hard to imagine. And then it will require the Fed to come up with 'Mother of all QE's' as the alternative will be to face the reality of long term economic pain that no political entity will agree to..... And so the game will continue.

Glencore did the right thing to let it remain in the ground. We are talking limited mineral wealth here, not printing of paper money to cover the world's debt tumour.

 

[Catch22]

Zinc has closed at 1,846.25 +172.75 +10.32% !!!!
http://www.investing.com/commodities/real-time-futures.

 

[gurudevji]

what should be next side in zinc trading,