Etikett: Nick

Industrial Metals Rally on Chinese Data and Stimulus

Industrial Metals Rally on Chinese Data and StimulusIndustrial Metals Rally on Chinese Data and Stimulus

Industrial Metals Rally on Chinese Data and Stimulus – ETF Securities Commodity ETP Weekly

•    Third consecutive week of inflows into long oil ETPs.

•    ETFS Nickel (NICK) sees largest outflows since January on profit taking.

•    Rising US dollar and Greece’s survival in the currency union weigh on precious metal prices

Download the complete report (.pdf)

China’s better than expected GDP reading for Q2 helped industrial metals (with the exception of copper) gain. Policy stimulus in the country is likely to see demand continue to remain solid, while cuts to mining capex will help tighten the supply-demand balance further in the months ahead. The Chinese central bank announced its gold holdings for the first time since 2009 last week, revealing a 57% increase from its last announcement. It confirms that China’s official sector demand for the metal is strong and forms part of its US dollar diversification programme. A mixture of profit-taking and performance disappointment in the case of gold drove outflows from commodity ETPs this week.

Third consecutive week of inflows into long oil ETPs. Bargain-hunting continued with WTI and Brent slipping a further 3.5% and 1.9% respectively. A landmark deal struck between Iran and world superpowers to lift sanctions against the country opens the prospect of increasing oil supply from Iran. While it will take time for Iran to build the infrastructure to materially increase production, according to the IEA Iran has 17 million barrels of oil ready to ship and further 22 million of condensate that will weigh on prices in the short-term. An antagonized Saudi Arabia will also continue to pump oil at a break-neck pace to protect its market share and make it difficult for Iran to rebuild. The upshot is that high cost producers elsewhere will have to accelerate their plans to cut back on production. Prices should eventually rebound when supply is cut, and that is what ETP investors have positioned for. We saw US$16.3mn of inflows into long WTI ETPs and US$2.8mn of inflows into long Brent WTI ETPs. At the same time we saw US$6.3mn and US$3.1mn outflows from WTI and Brent short oil ETPs, respectively.

ETFS Nickel (NICK) sees largest outflows since January on profit taking. US$14.1mn outflows from nickel followed the 1.2% gain in price as Chinese data lifted the industrial metals complex.

Rising US dollar and Greece’s survival in the currency union weigh on precious metal prices. Greece managed to pass an austerity budget through parliament, satisfying its creditors’ condition for more bailout money. Meanwhile the ECB confirmed it will be dolling out a further €900mn in Emergency Liquidity Assistance (ELA) to its troubled banks, a step which will help its banks reopen. The new support increases the chances Greece be able to pay the €3.49bn it owes ECB today. Gold, historically a hedge against worst-case scenarios materialising, fell 1.7% last week, and slumped a more than 1.5% today. However, it had failed to gain any traction even when Grexit risks were at their highest. Meanwhile Federal Reserve Chair Yellen’s confirmation that the US central bank is keen to raise interest rates at a measured pace this year led to US dollar strength, weighing on all commodities – particularly the precious metals complex. Investor faith in gold as a haven asset faded further with US$175.6mn of outflows from long gold ETPs last week. However, with German finance minister Wolfgang Schäuble putting Grexit back on the political agenda on Friday, we fear that we are not out of the woods yet on the Greek debt saga.

In contrast to gold, the 2.9% fall in silver prices (0.5% further today) was seen as a bargain hunting opportunity as the metal’s industrial qualities bode well for demand in an environment of continued cyclical growth (the precondition for interest rate increases). US$3.3mn flowed into long silver ETPs.

Video Presentation

Nitesh Shah, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Oil Bargain Hunting Continues as Investors Shun Gold on Greek Deal

Oil Bargain Hunting Continues as Investors Shun Gold on Greek Deal

Oil Bargain Hunting Continues as Investors Shun Gold on Greek Deal- ETF Securities Commodity ETP Weekly

•    Bargain hunting drives inflows into long WTI oil ETPs to highest in 16 weeks, totaling US$44mn.

•    Investors see value in ’industrial’ precious metals, continuing to shun gold.

•    ETFS Wheat (WEAT) outflows hit six-month high.

•    Long copper and nickel ETPs buck the trend of outflows from industrial metals sector.

Download the complete report (.pdf)

Cyclical assets are benefiting in early trading on the newly agreed Greek deal, while defensive assets are currently out of favour. Gold in particular has lost ground as positive sentiment grips investors, but there remain hurdles for the Greek government to implement and adhere to the arrangements. Commodity markets are likely to begin to trade in line with fundamentals, now that the uncertainty surrounding the Eurozone is beginning to fade. However, the relative stability in sentiment will need to be sustained. Chinese economic data (GDP, industrial production and retail sales) will be the main focus for investors this week, after better-than-expected trade data showed that commodity demand remains solid.

Bargain hunting drives inflows into long WTI oil ETPs to highest in 16 weeks, totaling US$44mn. The second consecutive weekly build in crude stockpiles, alongside a rising rig count, indicated that supply is likely to remain abundant, with prices still not low enough to dissuade production in the US. The issue of ‘massive oversupply’ has been reiterated by the International Energy Agency, which noted that there is further potential price falls in the pipeline. Meanwhile, OPEC supply is another concern, and if Iranian nuclear negotiations are successful, the 3-year high production levels could rise further. Indeed, while bargain hunters are looking at current prices as attractive entry points, some near-term softness could result until excess supply can be absorbed by rising demand.

Investors see value in ‘industrial’ precious metals, continuing to shun gold. The sentiment driven sell-off in precious metals has begun to draw investors, with silver and platinum the most favoured. Investors are looking at the depressed price levels of precious metals with significant industrial demand as attractively valued, as the global economic recovery continues, despite negative sentiment currently pervading markets. Long silver ETPs recorded the fourth consecutive week of inflows, with US$18mn received over the period. Meanwhile, platinum posted the third consecutive week of inflows, totaling US$17mn over the period.

ETFS Wheat (WEAT) outflows hit six-month high. Wheat prices have pared recent strong gains, and investors have reduced positions for the second consecutive week. WEAT outflows totaled US$a4.3mn, alongside the recent USDA report showing rising US output this year. Soybean output was also revised higher but the report showed declining corn production.

Long copper and nickel ETPs buck the trend of outflows from industrial metals sector. ETFS Long Copper (COPA) recorded the largest inflow in 10 weeks, totaling US$8.6mn. Meanwhile ETFS Nickel (NICK) has recorded the fourth successive weekly inflows, with deposits of US$15.7mn over the period. Although negative Chinese sentiment coming from sharemarket uncertainty has had an adverse impact on industrial metals prices, we believe that once fundamentals reassert, prices will be broadly supported.

Key events to watch this week. Once concern over Greece’s situation has subsided, focus will move back to economic fundamentals and a raft of Chinese data including GDP, industrial production and retail sales will be key to price direction for commodity markets. The ECB meeting will be a contributor, mainly for the impact that a potentially stronger US Dollar could have on commodities, particularly the precious metals sector.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Commodities Looking Increasingly Attractive At Current Levels

Commodities Looking Increasingly Attractive At Current Levels

Commodity ETP Weekly Commodities Looking Increasingly Attractive At Current Levels

Long gold and silver ETPs see US$88mn and US$46mn of outflows on negative sentiment.
Nickel bucks the trend as price drops to a six-month low.
Profit taking drives US$7mn of outflows from long coffee ETPs.

 

Download the complete report (.pdf)

 

Negative sentiment towards commodities prevailed last week, prompting some investors to cut their losses. While the striking improvement in the US economy and labour market has prompted the Fed to reduce stimulus and the market to consider an earlier than originally foreseen rate hike, a stronger US economy should benefit cyclical assets. With most commodities trading at multi-year lows and investors mostly short-positioned, we believe most commodities are looking increasingly attractive at current levels.

Long gold and silver ETPs see US$88mn and US$46mn of outflows on negative sentiment. US non-farm payrolls surprised the market on the upside last week, with 248k new jobs added. While the striking improvement in the US economy and labour market has prompted the Fed to reduce stimulus and the market to consider an earlier than originally foreseen rate hike, a stronger US economy should benefit silver. Over 50% of silver demand comes from industrial applications, with China and the US accounting for over 40% of fabrication demand. We believe silver is looking increasingly attractive at current levels. With the US policy finally normalising albeit alongside the better economic outlook, silver price is also expected to pick up momentum. PGMs (“Platinum Group Metals”) also saw outflows last week, as the sharp drop in price prompted investors to cut losses in their portfolio. However, we believe the current price weakness to be temporary as investors will return to focus on the positive fundamentals. Large deficits are already expected in both markets this year and the recent pick up in global auto sales is likely to exacerbate the situation further. With platinum marginal cost of production close to US$1,400oz (11% above current prices) and prices close to or below pre-strike levels, we see value in both metals.

Nickel bucks the trend as price drops to a six-month low. ETFS Nickel (NICK) received US$4.5mn of inflows last week, bucking the negative trend in industrial metals, as investors see the recent price correction as a buying opportunity. While LME stocks have increased by 37% since the beginning of the year, Indonesia, the biggest producer, is sticking to an ore export ban that has drastically reduced the expected surplus to 10,900 tons from 78,100 tons last year. Meanwhile, ETFS Aluminium (ALUM) and ETFS Copper (COPA) suffered US$130mn of combined outflows as negative sentiment towards industrial metals persisted. Although China’s official manufacturing PMI remained unchanged at 51.1 in September, fears of a slowdown in the economy have weighed on metals lately. With most commodities now trading at multi-year lows, we believe it is a good time to increase the exposure to this asset class.

Profit taking drives US$7mn of outflows from long coffee ETPs. Prices have been rising on the back of fears that continued dry weather in Brazil, the biggest producer, might negatively impact next year crop. Brazil’s worst drought in decades saw Arabica coffee prices soaring 88% since the beginning of the year.

Key events to watch this week. The release of the Fed minutes and Bank of England rate decision will be the centre of attention this week as the market judges the timing of the first rate hike in both countries. With US Non-Farm Payrolls surprising the market on the upside last week and the US economy continuing to strengthen, the Fed is likely to tighten earlier than originally anticipated.

Video Presentation

 

Simona Gambarini, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

 

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.