Singapore's gold futures contract on SGX to start trading September

THE world's first exchange-traded, wholesale 25 kilobar gold contract, to be listed on the Singapore Exchange, is scheduled to start trading as early as September 2014, Lim Hng Kiang, Minister for Trade & Industry, said on Wednesday.

In his opening address at the London Bullion Market Association (LBMA) Singapore Market Forum, Mr Lim said the World Gold Council (WGC), the Singapore Bullion Market Association (SBMA), the Singapore Exchange (SGX), and four leading bullion banks - JP Morgan, Scotia Bank, Standard Bank and Standard Chartered - will come together to create this physically deliverable contract.

"With strong support from the Singapore Government, we expect this contract to commence trading as early as September 2014,'' Mr Lim said.

He noted that the development was "timely" given the increased requirements for reference prices to be transparent.

From Polar Vortex To Solar Vortex: Globe Suffers Hottest May On Record

Just when you thought it was safe to leave your shelter and buy a car, buy a home, buy some Caterpillar trucks, and buy a Starbucks; NOAA reports the globe just experienced the hottest May on record...With El Nino looming, we can only imagine the excuses of 'extreme weather' that will rear its ugly head once again in Q2 earnings... though of course all this will be fixed in Q3?

Global Nickel surplus reached 12,600 tons in Jan-Apr '14: INSG

According to International Nickel Study Group (INSG), the surplus in global nickel market dropped significantly year-on-year during the month of April this year. The global nickel market surplus totaled 4,000 tons in April this year. This is 55.56% down when compared with the surplus data during April last year. The global nickel market surplus during April 2013 was 9,000 tons.

The nickel surplus in April increased when compared with the previous month. The global nickel surplus surged by 11% month-on-month during April. The production of Nickel during the month of March this year exceeded the monthly demand by 1,600 tons.

INSG notes that that the global nickel surplus during the four-month period from January to April this year dropped significantly over the previous year. The surplus narrowed by more than 75% during the initial four-month period of the year. The global surplus of nickel dropped from 51,000 tons during January to April 2013 to 12,600 tons during the corresponding four-month period this year.

The International Nickel Study Group (INSG) - an autonomous, intergovernmental organization established in 1990 and located in Lisbon, Portugal, is responsible for collection and publication of improved and latest statistics on world nickel market.

Copper Snaps Win-Streak As Imports Plunge 17% & Default Fears Reignite

Quietly behind the scenes, amid all the chaos of the Qingdao probe's contagion, copper has rallied modestly in the last seven days. That streak ended last night as the warehousing concerns we noted spreading to the entire sector, combined with a collapse in Chinese copper imports (down 17% in May), and yet another default (China Ting holdings said said two borrowers defaulted on entrusted loans). So it seems that not only are the commodities missing, but so is the money...as the slow motion train wreck gathers pace (no matter what PMIs or minis stimulus do to evade the tightening) as China's money-market rates (at 5 month highs) suggest liquidity demand is very high (and desperate).

We saw this kind of squeeze higher in early May, which collapsed back to 2014 lows quickly as reality restruck and perhaps the plunge in copper imports was that wake-up call...

As Bloomberg notes,

China’s imports of refined copper fell 17 percent to 282,969 tons in May, customs data showed yesterday, marking the first monthly drop since February. Inbound shipments could fall further as the Qingdao investigation may curb purchases from abroad by traders who use commodities as collateral to get loans, according to Ye Yonggang, an analyst with Jinrui Futures Co. in Shenzhen.

“China’s trade data showed a slowdown in the country’s demand for metals, clouding the demand outlook,” said Kazuhiko Saito, an analyst at Fujitomi Co., a commodities broker in Tokyo.

The country’s copper exports rose 31 percent to 28,149 tons, the highest since April 2013, customs data showed. Some copper may be moved from China to LME warehouses in South Korea, and possibly Singapore and Malaysia, according to Jeremy Goldwyn, head of business development in Asia at Sucden Financial Ltd.

China’s imports of zinc and lead also declined in May from a month earlier, customs data showed.

And then there's defaults...

China Ting Group Holdings, a garment maker, said two borrowers defaulted on entrusted loans it made through Ningbo Bank Corp. and Bank of Communications Ltd. The stock fell.

Zhongdou Group Holdings Ltd. and Hangzhou Zhongdou Shopping Centre Co. failed to make interest payments on schedule on loans worth 160 million yuan ($26 million), China Ting said in a Hong Kong exchange filing yesterday.

Entrusted loans, advances between companies arranged through banks, are part of China’s shadow banking system that regulators are seeking to rein in. Some of the entrusted funds, which totaled 8.2 trillion yuan as of the end of 2013, were being directed to industries that face lending curbs from the government, according to the People’s Bank of China.

“Ningbo Bank Corp. confirms that they have commenced legal proceedings in respect of their loan arrangements with Zhongdou Group,” and Bank of Communications is prepared to take action, China Ting said.

This is a problem because...

The number of entrusted loans made by publicly traded companies rose 43 percent from 2012 to 397 cases in 2013, the central bank said in its 2014 financial stability report.

It ain't over yet...

Despite the PBOC mini-stimulus, money market rates are on the rise again... as demand for liquidity is clearly on the rise...

LME Copper to struggle to sustain rallies much above $7,000 a ton in interim

In the interim, BNP Paribas believes that LME copper will struggle to sustain rallies much above $7,000 a ton and that the fundamentals are sufficiently weak to drag it back down to at least the March low and perhaps to $6,000 a ton.

BNP Paribas looks for a small copper-market surplus in 2014-2015 and doubts rallies above $7,000 per metric ton will be sustained. 

The bank says it looks for demand to grow above trend, with refined copper demand projected to increase by 5.5% to 6.0% in 2014 and by 4.0% to 4.5% in 2015. However, copper output is also rising sharply. 

BNP Paribas forecasts that world mine production will rise by about 10% over 2014-15, albeit with the growth skewed heavily towards 2015. 

The bank forecast a further modest global supply surplus of refined copper over 2014-15 of 450,000 metric tons, skewed toward 2015.

While the faltering in early June of copper’s recovery from the March low was largely due to the Qingdao scandal, BNP Paribas thinks there are structural reasons to expect it to remain more under downward than upward pressure. 

This may persist until mid-2015, when the market may start to look to the increasingly positive longer-term story.

Guess Who Is Propping Up The US Housing Market

A month ago we showed a chart that, in our humble opinion, summarized all that is wrong with the US housing market. The chart in question showed the April breakdown of existing home sales on a Y/Y basis by pricing bucket.

Needless to say, what the chart showed was the symptomatic, and schizophrenic, breakdown of US housing into two camps: the housing market for the 1%, those costing $750K and above, where the bulk of transactions are mostly between non-first time buyers, and typically take place as all cash transactions, and the market for "everyone else" which continues to deteriorate.

Moments ago the NAR released its May data, which on first blush was widely lauded as bullish: the topline print came at a 4.9% increase, rising from 4.65MM to 4.89MM, above the 4.74MM expected. Great news... if only on the surface. So what happens when one drills down into the detail? As usual, we focused on the last slide of the NAR breakdown, located at the very end of the supplementary pdf for good reason, because what it shows is hardly as bullish.

So how does this "housing recovery" in which the NAR has proclaimed the "sales decline is over" look on a granular basis.

The answer is below, and it is even worse than the April data. It also explains why first time buyers have dropped to even further cycle lows of just 27%, down from 29% both a month and year ago.

This is bad because while in April there was a modest increase sales in house buckets from $250 all the way up to $1MM +, in May the only bucket that had an increase in sales from a year ago was that exclusively reserve for the ultra-richest, i.e., those who benefit the most from the Fed's non-trickle downing wealth effect policies. In fact, on a price bucket basis, the May data was unformly worse than April!

The logical follow up question: what is the total percentage of sales by given price bucket? The answer, once again, below.

Housing recovery? Maybe for the richest, and even they are far less exuberant about purchasing $1MM+ mansions. For everyone else, enjoy "plunging" hedonically-adjusted LCD TV prices. Everything else is, well,noise.

Source: NAR

Copper Market in 83,000 Tonnes Deficit in Mar 2014 - ICSG

The global world refined copper market showed a 83,000 tonnes deficit in March, compared with a 2,000 tonnes surplus in February, the International Copper Study Group (ICSG) said in its latest monthly bulletin.

For the first 3 months of the year, the market was in a 205,000 tonnes deficit compared with a 206,000 tonnes surplus in the same period a year earlier, the ICSG said.

World refined copper output in March was 1.87 million tonnes , while consumption was 1.95 million tonnes.

Bonded stocks of copper in China showed a 27,000 tonnes deficit in March compared with a 32,000 tonnes surplus in February.