FMC pressurising MCX on FTIL stake sale

Business at the Multi Commodity Exchange of India (MCX) would be "seriously hurt" if no new contracts are launched beyond August, said Ramesh Abhishek, Chairman of the Forward Markets Commission.

Commodity markets regulator FMC today said it has not approved a proposal by MCX to launch new contracts beyond August as part of a strategy to put pressure on the exchange to comply with its order on reduction of the stake held by the former promoter. Business at the Multi Commodity Exchange of India (MCX) would be "seriously hurt" if no new contracts are launched beyond August, said Ramesh Abhishek, Chairman of the Forward Markets Commission. 

Also Read: Finmin issues show-cause notice to NSEL on exemptions In December, the FMC had declared MCX's erstwhile promoter Financial Technologies India Ltd (FTIL) as unfit to run any exchange after a Rs 5,600 crore payment crisis at group company National Spot Exchange Ltd (NSEL). The regulator asked FTIL to reduce its stake in MCX to 2 percent from 26 percent. The FMC had directed MCX to take concrete steps to comply with this order.

"We have not given any deadline but we are putting all kind of pressure on MCX to comply with the order. We have not approved new contracts beyond August and not approved new contracts to be launched in the 2015 calendar year as well," Abhishek told PTI. "MCX has to comply with the order by August. Otherwise, no new contracts will be approved. This will seriously hurt MCX's business," he said. FTIL is in the process of selling a 24 per cent stake in including  Reliance Capital  and Kotak Group. Bidders have sought more time to submit final bids in view of "adverse findings" in a special audit report by Pricewaterhouse Coopers on corporate governance issues at MCX. MCX is the country's leading commodity exchange. Its trading volumes have fallen significantly since the NSEL payment crisis came to the fore in July. Turnover on MCX declined 72 per cent to Rs 3,77,324 crore in April from Rs 13,26,155 crore a year earlier, according to FMC data.

Weekly Economic Data for the week 07-Jun-14 to 13-Jun-14

Avg. change of last 1 year:	Average Change in Actual data calculated for last 1 year.
Expected impact on price:	This indicator shows the effect of the anticipation of data on the prices of related country’s major indices. We have categorized it as below: Very Good Good Neutral Bad Very Bad
Actual:	Refers to the actual/latest figures after its release.

Data for the week 07-Jun-14 to 13-Jun-14

Date	Time (IST)	Country	Data	Exp.	Prior	Exp. chg today	Avg. chg of last 1 year	Exp. Impact on Price
08-Jun-2014	--	China	Imports (YoY)	6%	0.8%	5.20%	6.92	Neutral
08-Jun-2014	--	China	Exports (YoY)	6.7%	0.9%	5.80%	5.65	Neutral
08-Jun-2014	--	China	Trade Balance	22.6B	18.46B	4.14	13.34	Neutral
9-10 Jun-2014	--	Germany	Merkel, Cameron, Rutte, Reinfeldt Meet at Swedish Summit					Neutral
10-15 Jun-2014	--	China	Money Supply M2 YoY	13.1%	13.2%	-0.10	0.71	Neutral
10-16 Jun-2014	--	India	Exports YoY		-5.3%		4.06	Neutral
10-Jun-2014	07-00 AM	China	Consumer Price Index (YoY)	2.4%	1.8%	0.60%	0.43	Neutral
10-Jun-2014	07-00 AM	China	Producer Price Index (YoY)	-1.5%	-2.0%	0.50%	0.61	Neutral
10-Jun-2014	02-00 PM	United Kingdom	Industrial Production (MoM)	0.4%	-0.1%	0.50%	1.75	Neutral
11-Jun-2014	04-30 AM	United States	World Bank Releases New Global Growth Forecasts					Neutral
11-Jun-2014	02-00 PM	United Kingdom	ILO Unemployment Rate (3M)	6.7%	6.8%	-0.10%	0.07	Neutral
11-Jun-2014	02-30 PM	Germany	Merkel, Draghi Meet for Talks at Chancellery in Berlin					Neutral
11-Jun-2014	08-00 PM	United States	EIA Crude Oil Stocks change	--	-3.4		3.45	Neutral
12-Jun-2014	02-30 PM	European Monetary Union	Industrial Production w.d.a. (YoY)	0.9%	-0.1%	1.00%	0.59	Neutral
12-Jun-2014	05-30 PM	India	Industrial Production YoY	--	-0.5%		2.08	Neutral
12-Jun-2014	06-00 PM	United States	Retail Sales (MoM)	0.6%	0.1%	0.50%	0.63	Neutral
12-Jun-2014	08-00 PM	European Monetary Union	Merkel Briefs Reporters After Meeting German State Premiers					Neutral
12-Jun-2014	08-00 PM	United States	EIA Natural Gas Storage change	--	119	-119.00	33.60	Neutral
13-Jun-2014	--	Japan	BOJ 2014 Monetary Base Target		¥270T		0.00	Neutral
13-Jun-2014	--	Japan	Bank of Japan Monetary Policy Statement					Neutral
13-Jun-2014	11-00 AM	China	Industrial Production (YoY)	8.8%	8.7%	0.10%	0.67	Neutral
13-Jun-2014	11-00 AM	China	Retail Sales (YoY)	12.2%	11.9%	0.30%	0.78	Neutral
13-Jun-2014	11-30 PM	Japan	BOJ Governor Kuroda Press Conference After Rate Decision					Neutral
13-Jun-2014	02-30 PM	European Monetary Union	Trade Balance s.a.	--	€15.2B	-15.20€	2.05	Neutral
13-Jun-2014	07-25 PM	United States	Reuters/Michigan Consumer Sentiment Index	83	81.9	1.10	2.48	Neutral

The World’s Five Most Important Oil Fields

Here Are The World’s Five Most Important Oil Fields

Much has been made about the role that hydraulic fracturing – or fracking -- has played in revolutionizing the energy landscape, unlocking vast new reserves of oil trapped in shale rock. This “tight oil” is pouring into the global pool of oil supplies at a crucial time, preventing oil prices from spiking in an age of high demand and geopolitical turmoil.

But the world still relies overwhelmingly on conventional oil production from existing fields, many of which are in decline. The Middle East has dominated the world of oil for half a century and as the list below shows, it remains king. Here are the top five most important oil fields in the world.

1.  Ghawar (Saudi Arabia) The legendary Ghawar field has been churning out oil since the early 1950s, allowing Saudi Arabia to claim the mantle as the world’s largest oil producer and the only country with sufficient spare capacity to act as a swing producer. Holding an estimated 70 billion barrels of remaining reserves, Ghawar alone has more oil reserves than all but seven other countries, according to the Energy Information Administration. Some oil analysts believe that Ghawar passed its peak perhaps a decade ago, but Saudi Arabia’s infamous lack of transparency keeps everyone guessing. Nevertheless, it remains the world’s largest oil field, both in terms of reserves and production. It continues to produce 5 million barrels per day (bpd). 

2.  Burgan (Kuwait) Just behind Ghawar is another massive oil field located in the Middle East. The Burgan field was originally discovered in 1938, but production didn’t begin until a decade later. The field holds an estimated 66 to 72 billion barrels of reserves, which accounts for more than half of Kuwait’s total, and it produces between 1.1 and 1.3 million bpd. 

3.  Safaniya (Saudi Arabia) The Safaniya field is the world’s largest offshore oil field. Located in the Persian Gulf, the Safaniya field is thought to hold more than 50 billion barrels of oil. It is Saudi Arabia’s second largest producing field behind Ghawar, churning out 1.5 million bpd. Like Saudi Arabia’s other fields, Safaniya is very mature as it has been producing for nearly 60 years, but Saudi Aramco is working hard to extend its operating life. 

4.  Rumaila (Iraq) Iraq’s largest oil field is the Rumaila, which holds an estimated 17.8 billion barrels of oil. Located in southern Iraq, Rumaila was highly sought after when the Iraqi government put blocks up for bid in 2009. BP and the China National Petroleum Corporation (CNPC) are working together to develop the giant field along with Iraq’s state-owned South Oil Company. The field now produces around 1.5 million bpd, but its operators have plans to boost that production to 2.85 million bpd over the next couple of years. 

5.  West Qurna-2 (Iraq) Also located in southern Iraq, the West Qurna-2 field is Iraq’s second largest, holding nearly 13 billion barrels of oil reserves. The West Qurna field was divided in two and auctioned off to international oil companies. Russia’s Lukoil took control of West Qurna-2 and successfully began production earlier this year at an initial 120,000 bpd. Lukoil plans on lifting production to 1.2 million bpd by the end of 2017. The neighboring West Qurna-1 field – operated by a partnership of ExxonMobil, BP, Eni SpA, and PetroChina – holds 8.6 billion barrels of oil reserves. They hope to increase production from 300,000 bpd to more than 2.3 million bpd over the next half-decade.

It’s clear that the Middle East is still the center of the universe when it comes to oil. Despite their age, these supergiants remain the oil fields of tomorrow. And as the tight oil revolution in the U.S. plays out, these fields will remain, and the world will continue to depend heavily on the fortunes of a few countries in the Middle East

Submitted by Nick Cunningham of OilPrice.com

After scandal, copper price could follow iron ore over cliff

The copper price dropped 3.5% last week after a weaker than expected gauge on manufacturing activity in China together with a probe into the use of metals in trade finance deals rattled the market.

July copper futures in New York ended the week at $3.0585 a pound ($6,700 a tonne), down from $3.37 at the outset of 2014.

Chinese authorities have begun an investigation into allegations that several companies pledged the same copper and other industrial metals held at the port of Qingdao as collateral for loans to different banks.

Beijing is stepping up efforts to curb the country's vast shadow banking system and the revelations could see a further clampdown on this lending practice which have been a key part of the commodities trade – particularly in iron ore and copper – for years.

As these deals are being unwound it could lead the dumping of copper onto the market that would otherwise have been tied up in financing deals leading to sharply lower prices.

Down 20% over the past month, the process of unwinding is already playing itself out on the iron ore market

The process is already playing itself out in iron ore which has slumped 20% over the past month. Iron ore was hit first because apart from the credit clampdown China is also targeting the steel industry's chronic overcapacity and environmental impact as part of its "war on pollution".

While iron ore at the China's ports continues to be stockpiled at record levels, official copper inventories have been sharply reduced over the past couple of months.

However, while deliverable stocks held by the Shanghai Futures exchange has dropped to 92,000 tonnes it is estimated that China's unofficial copper stocks used in financing could be as high as 700,000 tonnes according to a new report by Capital Economics meaning the tightness in the market has been artificial.

While iron ore imports slowed to 77.4 million tonnes in May, down 7.2% and copper imports fell 15.6% from a month ago to 380,000 tonnes, year on year imports are still expanding at a rapid rate.

Should the stockpiles of iron ore of more than 110 million tonnes and the "off-market" copper warehouse inventories be released, both commodities have further to fall.

China's unofficial copper stocks used in financing could be as high as 700,000 tonnes

Iron ore has recovered somewhat after falling to a 21-month low of $92 a tonne end of May and copper is still trading well above near four-year lows of $2.92 hit in March.

Copper plummeted 8% over just three trading days during the March slump which was prompted by China's first ever corporate bond default and markets could now be entering a particularly rough patch as banks start to call in dubious loans.

Capital Economics sees the correction this way:

"If the historic relationship between copper and iron ore prices is to be restored, it is likely to take the form of a renewed fall in copper prices."

The research house predicts "another leg down in the copper price" to $5,800 per tonne ($2.63 per pound) by the end of the third quarter, while the iron ore price is forecast to end the year at $90 per tonne.

Now, electric car fit with aluminum-air battery that can travel 1,000 miles on a single charge

Battery developer Phinergy and metal manufacturer Alcoa have teamed up to demonstrate their aluminum-air battery in a small electric vehicle at Circuit Gilles Villeneuve in Montreal, which could make it travel 1,000 miles on a single charge.

The test car, which appeared to be using the body of a Citroen C1, used lithium-ion and aluminum-air batteries for the run. But the question of whether or not it makes sense to take this little EV on a 1,000-mile road trip is not quite that simple.

The aluminum-air battery is lightweight, and more energy dense than the lithium-ion batteries in use today. The product of the aluminum anode, ambient air (oxygen) cathode and water electrolyte is an electrical charge the power the car, and the resultant aluminum hydroxide byproduct is recycled to create more aluminum. When the aluminum-air battery is depleted, the modular aluminum "cartridges" can be swapped out for new ones at a service station.

The aluminum-air battery isn't something you can recharge at home.

So no, the aluminum-air battery isn't something you can recharge at home (or at all, really), but its simplicity of management and closed-loop life cycle are impressive. Furthermore, it offers a shelf life of 20 to 30 years. If used as a range extender in a car using a lithium battery as its primary energy source, like this particular vehicle, it could be quite practical, and give drivers a carbon-free option for backup power.

So, depending on the cost of the aluminum-air batteries, and the availability of service stations, vehicles like Alcoa-Phinergy car could be used for 1,000-mile trips. In all practicality, though, the aluminum batteries make the most sense when compared to gasoline-range extended vehicles, and there's nothing wrong with putting a much cleaner energy option on the table. If this aluminum-air tech gets legs - and demand - the idea of it becoming a primary source of power for long-range vehicles could be in our future, too. 

Copper Mining Giant, Newmont Invokes Force Majeure at Its Batu Hijau

Mining giant Newmont Nusa Tenggara in the U.S said during Thursday that it has notified the government that it was declaring force majeure at its Batu Hijau Copper mine, located in West Nusa Tenggara.

The company also decided to grant leave with reduced pay for most of their employees in the mine.

Newmont and its U.S partner Freeport Indonesia, which contributes about 97 percent of Indonesian copper production, is in arguments in the government recently for imposing an export tax on January.

The controversial export tax was imposed by the government on the miners that used to export semi-finished minerals in order to force to produce their own ores locally and thereby increasing the value for the country.

Martiono Hadianto, Newmont Nusa Tenggara CEO said that despite their best effort, they had not been export copper concentrate since January, and they still did not have an export permit. He added that they had no other option other than to declare force majeure.

The company will go on with the selling of copper concentrate to PT Smelting at Gresik, Indonesia’s only copper plant from its storage, throughout this year, based on the company report that came after a new government drive to force a breakthrough.

SocGen 10-Year Outlook: 100% Chance Of Recession; S&P To 4,000 Or 500

No matter what, SocGen sees US equity performance over the next 10 years as modest at best.They note that US equities face three headwinds: cyclically-adjusted valuations (CAPE, starting date 1881) have returned to very expensive territory, corporate margins stand at historically high levels, and after already five years of growth from the 2009 trough, we estimate that the probability of another recession kicking in is close to 100% within the forecast timeframe (the longest cycle ever was 120 months, or 10 years). While their central case is 'moderate growth and inflation', they project a possible high growth surge to 4000 for the S&P 500 and a deflation scenario which would put the S&P 500 at 500 (-12% per annum).

Via SocGen,

This is the second edition of our 10-year equity outlook. The first was published in July 2009, when the economic consensus was still weighing up deflation fears and valuations were depressed (read: an excellent entry point.). At the time we set an S&P500 target of 1300 under our central scenario (in mid-June 2009 it was 923).

[ZH: So in 2009 they forecast the S&P to be at 1300 in 2019... and we are now 50% higher than that already!!]

US equities

US equities face three headwinds:

cyclically-adjusted valuations (CAPE, starting date 1881) have returned to very expensive territory,

corporate margins stand at historically high levels, and

after already five years of growth from the 2009 trough, we estimate that the probability of another recession kicking in is close to 100% within the forecast timeframe (the longest cycle ever was 120 months, or 10 years).

A recession costs on average a 22% drop in US earnings

The most recent economic recession triggered by the collapse of Lehman Brothers caused an unprecedented wave of US earnings downgrades and was comparable in effect to the two previous oil shocks, the Gulf war and the Dot-Com bubble burst.

But US equities have supports as well, such as impressively strong balance sheets and the beginning of a new M&A cycle, backed by a highly reactive central bank.

Central scenario: moderate economic growth and inflation

Our central scenario projects moderate underlying economic growth of 5% per year over the next few years, i.e. below the long-term growth trend (8.6%). We have also adopted a scenario whereby inflation will gradually increase at a modest rate, until it pushes down the normalised 10-year moving P/E rate slightly, to below its long-term average of 20x. Based on these assumptions, we expect the S&P 500 to rise by +3% p.a. and reach 2500 points in 10 years.

But there are 3 Altnerative Scenarios...

Alternative scenario 1: sharp growth & high inflation +2%/yr

In a high inflation scenario, two opposing forces go head to head: on the one hand, inflation prompts an acceleration in (nominal) reported corporate profits and, on the other, it reduces equity valuations. The combined forces would be likely to have a positive impact on equity markets (+2%). In this scenario, while nominal returns are positive, real returns would be eaten up by inflation.

Alternative scenario 2: sharp growth & moderate inflation +8%/yr

In this scenario, the equilibrium between growth and inflation would be well managed by the central banks and /or the US gas shale revolution would help maintain inflation within a low range. This is a kind of continuation of the trend we have observed over the last couple of years in the US. On this assumption, equity market P/Es would remain high and corporate profits would accelerate rapidly. Our scenario would yield an annualised equity index slope of about 8%, pushing the S&P 500 to 4000 points at the end of the period.

Alternative scenario 3: depression -12%/yr

We have no doubt that a deflation scenario, like that of the 1930s in the US, would considerably damage corporate profits and the equity market valuation, eventually impacting the equity markets themselves. We saw this in Japan between 1995 and 2005, when the collapse in listed Japanese company ROEs severely cut into their equity valuations and thus the Nikkei index. We believe such a scenario would put the S&P 500 at 500 points in 10 years (-12% p.a.).