#Metals don’t shine @Trafigura

While Trafigura's metals business accounted for an average of 40% of the company's total profit in the period 2012 to 2019, that share fell to 23% between 2020 and 2022, and in the 12 months to March 2023 it has been just

What Really Happened the Night the #Nickel Market Broke

Hundreds of pages of legal filings describe how the LME sleepwalked into a crisis, "that the LME was largely in the dark about Tsingshan's role as the major driver of the price spike until after it had decided to cancel billions of dollars of nickel trades; that the exchange's top decision makers were asleep as the market spiraled out of control; and that Chamberlain made the key decision that the market was disorderly in about 20 minutes after he woke up on March 8 – unaware until much later that the LME's staff had allowed prices to move more rapidly by disabling its own automatic volatility controls."

…

Jane Street alleges the very fact that the LME's key decision makers were asleep was a breach of the exchange's regulatory duties, since it meant that "no-one had been monitoring transactions in order to assess whether there were disorderly trading conditions." The LME disputes that it was in breach.

What oversight there was came from the exchange's trading operations team. They were in charge of operating the LME's price bands, a form of speed bump designed to limit extreme price moves, such as in the case of "fat finger" trades.

But in the early hours of March 8, the operations team received numerous complaints from market participants that the price bands were preventing them from booking trades. At 4:49 a.m., they suspended them altogether.

Dizzying Ascent

It was soon after this that nickel prices started the most dizzying part of their ascent. By the time Chamberlain woke up, at 5:30 a.m., the price was already $60,000 a ton. In the next 38 minutes, it rose another $40,000.

"The abandonment of price bands caused or at least materially contributed to the speed and scale of the increase in prices," Jane Street said in its court filing. "Without price bands in place, the LME could not control price volatility at all."

Chamberlain wasn't aware that his operations team had suspended the price bands, as he made his pivotal decision to suspend the nickel market. 

The exchange still didn't have a handle on the scale or the importance of Tsingshan's position — the real reason behind the runaway rally.

…

Brokers on the LME would normally need to pay their first margin call of the day by 9 a.m., based on prices prevailing at around 7 a.m. If that had happened on March 8, the LME would have needed to request $19.75 billion from 28 banks and brokers – an unprecedented sum that was more than 10 times the previous daily record before March 2022.

See the whole article on Bloomberg here:

https://www.bloomberg.com/news/articles/2023-06-21/nickel-market-chaos-how-the-lme-sleepwalked-into-last-year-s-crisis?

______________________________

MasterMetals

@MasterMetals

#Nickel Market #Telenovela

Last week was a tumultuous market in the Nickel market, to say the least Some unprecedented moves were seen not only in terms of price- $100'000/Ton before trading was halted-,  but in terms of actions--  LME saving the banks and Brokers by canceling all trades.

Everyone wants to know what this week will bring.  Trading is set to resume tomorrow wednesday march 16:

-- Trading in LME Nickel Contracts will resume at 08:00 London time on Wednesday 16 March 2022 (“Resumption Date”) on all LME Execution Venues; 

-- 15% daily upper and lower price limits to all outright Contracts in all Base Metals on all Execution Venues;

-- deferral of delivery to Wednesday 23 March at level for all Nickel Contracts entered into prior to Wednesday 16 March and due for delivery between Wednesday 16 and Tuesday 22 March inclusive; 

 See the complete notice here: https://www.lme.com/api/sitecore/MemberNoticesSearchApi/Download?id=c71fdcfc-0340-4a05-9f9d-371361f1c9e9

Here is a recap of the week's events:

#LME Halts #Nickel Trading After Unprecedented 250% Spike

#Nickel Chaos Recalls #LME's Darkest Days

How Chinese #Nickel tycoon Xiang Guangda and his #Tsingshan Holding Group Co. got short squeezed

Chinese Nickel Giant Tsingshan Faces $8 Billion Trading Loss as Ukraine War Upends Market

____________________________________________________

MasterMetals

@MasterMetals

“I used to go with 500,000 pounds to London…” #Commodities Traders’ Long History of “Commissions” to Seal Deals

"I used to go with 500,000 pounds to London," said former Glencore exec. 

"In those days paying so-called "commissions" was both legal and even tax-deductible for a Swiss company…"

"The old-style traders, the Marc Rich diehard breed, some of them don't quite get it. Until they're sitting and talking with the FBI. Then they get it."

Excerpts  from The World for Sale, a book on the history of the commodity trading industry by Javier Blas and Jack Farchy from Bloomberg. 

See the article online here: 

Former Glencore Exec Details Suitcase of Cash He Used to Seal Deals - Bloomberg

https://www.bloomberg.com/news/articles/2021-02-24/former-glencore-director-says-he-flew-the-world-with-bag-of-cash

Dislocation of #Gold Markets Continues

The disconnect has remained wide as some of the world's largest banks, which are also the top gold dealers, have grown wary. Even though there is now plenty of time to get metal to New York for June delivery, the wild moves of recent weeks, and the potential for coronavirus-induced logistical headaches, have increased the perceived riskiness of trading the two markets.

"I would guess that the risk managers are not allowing these big positions to be run," said John Reade, chief market strategist at the World Gold Council. "It's moved from a concern about availability and transferability of metal to one of risk appetite."

See the whole article on Bloomberg here: https://www.bloomberg.com/news/articles/2020-04-17/gold-s-two-biggest-markets-are-still-stubbornly-disconnected

bit.ly/MasterMetals

There Are 316 Men Leading #Commodities Houses and Only 14 Women - Bloomberg

"Historically, fewer women have studied subjects like engineering that funnel people toward the oil industry."

"We haven't reached a critical mass of women in the industry, we're not there yet," said Claire Tomlin, who is now a managing director at commodities headhunting firm Clarion Search. "Once we get there, working practices will change.

See the whole report here : https://www.bloomberg.com/news/articles/2018-03-19/there-are-316-men-leading-top-commodity-houses-and-only-14-women 

#Gold #ETF's (Canada & US) 2019 Performance $GDX $XGD.to

XGD +39.88%

GDX +39.79% 

#Gold was a stealthy performer during 2019. Although there was not a full fledged Bull Market all-around, some of the Gold Mining equities did handsomely well. 

#Gold worth $37BN traded in London each day, new data shows

Gold worth $37 billion traded in London each day, new data shows

Peter Hobson

3-4 minutes

---

LONDON
(Reuters) - Members of the London Bullion Market Association (LBMA) traded at least 30.2 million ounces of gold worth $36.9 billion each day last week, the LBMA said on Tuesday, presenting new data that gives the most accurate picture yet of the London market.

FILE
PHOTO: Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London, Britain July 21, 2015. REUTERS/Neil Hall

London is a global gold trading hub but most transactions are made in over-the-counter trades  between banks, brokers and dealers who have been reluctant to reveal their activity.

With regulators pushing for greater transparency, LBMA members have begun reporting trades that
settle in London and Zurich, another trading center closely connected to London.

“For the first time in the long history of the London gold market its size is not guesswork but a reliable measurement,” Macquarie analyst Matthew Turner said in a note accompanying the LBMA
figures.

According to the LBMA, its members last week traded 95 million ounces of gold in spot contracts, 46.5 million ounces in swaps and forward contracts, 4.1 million ounces in options and 5.4 million
ounces in leases, loans and deposits.


That gives a daily average total of 30.2 million ounces - or 939 tonnes, the equivalent of 74 London double-decker busses.

MainStreet is Super Bullish On #Gold. What Happened Last Time they were this Bullish?

Sentiment among traders has turned openly bullish on gold, Anna Golubova writes.

Kitco’s latest Wall Street versus Main Street gold survey revealed that Main Street might be overly bullish on gold prices this week, with nearly 80% of individuals polled saying they expect gold prices to rise after briefly hitting the $1,300 mark last week.

Last time Main Street was this bullish was April 12, when 84% of individuals polled called for higher prices.  That was one day after gold prices had peaked on April 11 at $1,385.40, with futures beginning their prolonged decline that lasted roughly until mid-October. February Comex gold futures were last trading at $1289.60, up 0.30% on the day.

“Most veteran market watchers know the old saying that most of the  general investing public is wrong on their notions of markets’ price  direction most of the time. The fact that ‘Main Street’ is so bullish on gold prices at present does suggest the gold market has the potential a significant downside correction soon,” Kitco’s senior technical analyst Jim Wyckoff said.

Other analysts pointed out that such bullish sentiment coming from Main Street is a sign that gold is finally looking ready to break through its psychological resistance of $1,300 an ounce.

Are we in store for another decline in gold just around the corner?

See the article on Kitco:  Is Main Street Overly Bullish On Gold? And What Does That Mean For Prices? | Kitco News


MasterMetals

@MasterMetals

Impending retirement of #Glencore’s #copper chief Mistakidis marks start of generational shift at the world’s most powerful commodity trader

Glencore begins the changing of the old guard

Departure of trader's head of copper signals break-up of 'billionaire boys' club'

December 11, 2018

Some of Glencore's senior lieutenants, from left to right: Tor Peterson, Ivan Glasenberg, Alex Beard and Telis Mistakidis © FT montage / Bloomberg

The impending retirement of Glencore's copper kingpin Telis Mistakidis marks the start of a generational shift at the top of the world's most powerful commodity trader.

While some senior executives have left the Swiss-based group since its 2011 stock market flotation, none of the inner circle surrounding the company's workaholic boss Ivan Glasenberg have left — until now.

The departure later this year of 56-year-old Mr Mistakidis signals the break-up of the so-called billionaire boys' club, which built risk-hungry Glencore into the commodity industry's dominant and most talked-about company, according to analysts, bankers and investors.

The leadership changes come as Glencore faces a string of legal challenges, including a US Department of Justice investigation into possible corruption and bribery that has put its business model under the microscope. 

…

"He's decided to retire and pass on the baton to the next generation," Mr Glasenberg said. "None of us expect to stay here forever," he added. 

But analysts have questioned the management changes.

"It's one of those where you don't know whether this is being done to appease the regulators, and has been done with their consultation, or if they're just trying it out hoping to get them off their backs," said Ben Davis, an analyst at Liberum.

Others say Glencore, which has an appetite for risk that few of its peers can stomach, is doing what it always does and moving quickly to get in front of a problem.

"They're trying to be on the front foot, they're the most reactive company in our sector," one banker said. "When things happen they react very quickly." 

…. 

These investigations have weighed on Glencore's share price, which is down 29 per cent this year.

Glencore grew out of Marc Rich & Co, whose eponymous founder was regarded as the godfather of modern commodity trading. Since 2002, when Mr Glasenberg took the helm, it has been run by a tight-knit group of traders who have been at the company since the 1990s. 

…

Mr Glasenberg also made them fantastically wealthy after Glencore's $60bn flotation in 2011. Mr Mistakidis and Mr Maté have retained equity stakes worth about £1.2bn each.

"The management has been here a long time since the float, even though people thought since 2011 that a lot of the senior executives would leave," said Mr Glasenberg. "They haven't . . . and there comes a time when the next generation needs to take over."

Some think the management changes announced by Glencore last week also reflect its evolution from a commodity trader to a company that makes most of its money by extracting raw materials from the earth. 

…

"What you're seeing is a change in Glencore's structure that mirrors its evolution from a private trading company to one of the world's largest mining companies," said Paul Gait, analyst at Bernstein Research. 

"If anything, the turbulence of the last year has forced investors to ask more questions about the company, about management procedures; whereas before people were focused on the dollars and cents and tonnes out of the ground. Now there's an increased awareness that these kinds of things have become just as important," added Mr Gait.

Read the whole article online @FT here: https://www.ft.com/content/38f2768e-fa1d-11e8-af46-2022a0b02a6c

Bit.ly/MasterMetals

Bit.ly/MasterMetalsBlog

#Gold Manipulators Busted After @ZeroHedge Report On Flagrant Gold #Spoofing

 

Gold Manipulators Busted After Zero Hedge Report On Flagrant Gold Spoofing

By Tyler Durden

Created 05/01/2015 - 08:07

[1]

Submitted by Tyler Durden [1] on 05/01/2015 08:07 -0400

In the aftermath of the Nav Sarao scapegoating farce, one week ago Zero Hedge decided to give the confused CFTC a helping hand and launched a daily series highlighting the constant spoofing and "manipulation" (in the CFTC and DOJ's own words) that takes
place in every asset class, but mostly in the E-mini futures ("Dear CFTC: This Is The Market Manipulating "Spoofing" Taking Place In The E-Mini Just Today [7]").
Virtually every day since then we presented the "regulators" at the commodity trading commission a clear example of stock market manipulation, with the exception of Tuesday, when with the exclusive help of Nanex [8], we showed a clear case of gold spoofing.


This is what we said on April 28 [9]:

Here (courtesy of Nanex [8]) are
several examples in the June 2015 Comex Gold Futures this morning. All
times are Eastern Daylight. In each of these cases, no trades (or a
tiny few) executed against the large "spoof" order. You can see how
prices were influenced by the sudden appearance (and disappearance) of
these large, outsized orders.


1. June 2015 Comex Gold


Note how large buy and sell orders push prices up and down. [10]


[10]

2. Another set of instances appear about 50 minutes after the first set (shown in chart 1).


[11]
3. Another set of spoofing instances appear about an hour after the second set (shown in chart 2).


[12]
You're welcome CFTC — it's the least we can do.

Best wishes, 

Zero Hedge 

Reminder: We won't stop this until you are forced to address the
glaring hypocrisy and utter incompetence of everyone involved in the
regulation of market microstructure.

Much to our dismay, overnight we learned that while the CFTC
continues to be very, very confused and challenged by all those lobby
payments by the world's "liquidity providing" HFTs and ignores all documented
evidence of manipulation, the Chicago Mercantile Exchange - owner of
the futures exchange wheer the bulk of modern manipulation takes place -
did read this evidence of manipulation, and decided to immediately take action, suspending two traders for placing the manipulative "spoofing and layering" trades profiled here three days ago
which were virtually identical to the ones that got Navinder Singh
Sarao into headlines around the world last week. Except, of course, the
asset class manipulated was gold. And, perhaps what's far worse, the
manipulation sent the price of gold briefly higher.


The names of the perpetrators: perhaps not surprisingly, Heet Khara
and Nasim Salim. Extend to Navinder Sarao and a pattern emerges...

This is the full CME release [13]:

NOTICE OF SUMMARY ACCESS DENIAL ACTION: COMEX 15-0103-SA-1 





NON-MEMBER:





NASIM SALIM 





CME RULE: 413. SUMMARY ACCESS DENIAL ACTIONS (in part)





A. The Chief Regulatory Officer or his delegate, upon a good faith
determination that there are substantial reasons to believe that such
immediate action is necessary to protect the best interests of the
Exchange, may order that: 1) any party be denied access to any or all
CME Group markets; 2) any party be denied access to the Globex platform;
3) any party be denied access to any other electronic trading or
clearing platform owned or controlled by CME Group; or (4) any Member be
immediately removed from any trading floor owned or controlled by CME
Group. 





FINDINGS





On April 30, 2015, CME Group’s Market Regulation Department (“Market
Regulation Department”), through its Chief Regulatory Officer, summarily
denied Nasim Salim (“Salim”) direct and indirect access to all CME
Group markets, the CME Globex electronic trading platform, any other
electronic trading or clearing platform owned or controlled by CME
Group, and all trading floors owned or controlled by CME Group. The
summary access denial prohibits trading, placing orders, and controlling
or directing the trading for any person or entity in any CME Group
exchange product. The summary access denial further prohibits the
affiliation or business dealing with any member or member firm of CME,
CBOT, NYMEX, or COMEX.





CME Group’s Chief Regulatory Officer’s summary access denial of Salim
was based upon the findings of an investigation conducted by the Market
Regulation Department, which revealed that on multiple trade
dates during the time period of March 1, 2015 through April 28, 2015,
Salim engaged in a pattern of activity in which he repeatedly entered
orders or layered multiple orders for Gold and Silver futures contracts
without the intent to trade. Specifically, Salim entered these
orders or layered multiple orders to encourage market participants to
trade opposite his smaller orders resting on the opposite side of the
book. After receiving a fill on his smaller orders, Salim would
then cancel the resting order or layered multiple orders that he had
entered on the opposite side of the order book.





Salim introduced Heet Khara (“Khara”), who is also the subject of a
summary access denial action, to his first FCM and Salim had an account
at the second FCM at which Khara traded in a disruptive manner. Further,
it appears that on multiple occasions Salim and Khara coordinated
efforts to engage in disruptive activity. In
an example from April 28, 2015, Salim entered small-lot orders on one
side of the market in Gold futures, after which Khara entered large
orders on the opposite side. When Salim’s small orders were filled,
Khara canceled the large orders. Salim has not responded to
correspondence from the Exchange.





The foregoing conduct, as well as Salim’s failure to cooperate with
the Exchange, present a good faith determination that there are substantial
reasons to believe that such immediate action is necessary to protect
the best interests of the Exchanges and the marketplace.  





ACCESS DENIAL:





Pursuant to Rule 413, this access denial will remain in effect for 60
days, commencing on the effective date below and continuing through and
including June 29, 2015, unless the Chief Regulatory Officer or his
delegate provides written notice that this access denial will be
extended for an additional period of time.

We expect the CFTC and the DOJ to unleash the wrath of god now that
the CME showed them how gold manipulation works, something they figured
out by looking a this article [9].

And while we are delighted that yet one more alleged case of gold
manipulation is now confirmed, we are curious if the CME, CFTC and DOJ
will also prosecute instances of gold manipulation when the ultimate
outcome is the price of gold going lower instead of higher, such as the
one documented in "Vicious Gold Slamdown Breaks Gold Market For 20 Seconds [14]", "Stop Logic" Gold Slam Was So Furious It Shut Down CME Trading Again [15]" and on countless other occasions most of which have been duly documented on this website.

Finally, we wonder: will the CME, CFTC, DOJ, and FBI pursue as
promptly all those instances of constant S&P 500 manipulation and
spoofing we profiled over the past week in particular [16],
and over the past 6 years in general? Or was this merely another
"Sarao" case when several (non-Caucasian) traders are scapegoated by the
regulators, with the naive expectation that investors will suddenly
assume the market - in this case that of gold - is no longer rigged?

---

Source URL: http://www.zerohedge.com/news/2015-05-01/gold-manipulator-busted-after-zero-hedge-report-hft-gold-spoofing

Links:
[1] http://www.zerohedge.com/users/tyler-durden

[2] http://www.zerohedge.com/taxonomy_vtn/term/11403

[3] http://www.zerohedge.com/taxonomy_vtn/term/158

[4] http://www.zerohedge.com/taxonomy_vtn/term/10120

[5] http://www.zerohedge.com/taxonomy_vtn/term/8562

[6] http://www.zerohedge.com/taxonomy_vtn/term/10107

[7] http://www.zerohedge.com/news/2015-04-22/dear-cftc-market-manipulating-spoofing-taking-place-e-mini-just-today

[8] http://www.nanex.net/aqck2/4700.html

[9] http://www.zerohedge.com/news/2015-04-28/dear-cftc-here-todays-illegal-spoofing-gold-futures

[10] http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/04/NanexGold1.jpg

[11] http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/04/NanexGold2.jpg

[12] http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/04/Nanex3.jpg

[13] http://www.cmegroup.com/tools-information/lookups/advisories/disciplinary/COMEX-15-0103-NASIM-SALIM.html#pageNumber=1

[14] http://www.zerohedge.com/news/2013-09-12/vicious-gold-slamdown-breaks-gold-market-20-seconds

[15] http://www.zerohedge.com/news/2013-10-11/stop-logic-gold-slam-was-so-furious-it-shut-down-cme-trading-again

[16] http://lmgtfy.com/?q=zerohedge+dear+cftc



Gold Manipulators Busted After Zero Hedge Report On Flagrant Gold Spoofing | Zero Hedge

The changing world of energy trading #MasterEnergy @PlattsOil

Banks involved in energy have pulled back from the sector while merchant
traders known largely for their secrecy are strengthening their
position

The changing world of energy commodity trading

The Barrel Blog

By Jeff Ryser | March 28, 2014 11:48 AM Comments (2)

The
world of energy commodity trading has gone through a rather extensive
reshuffling over the past few months. The key thing to note is that
banks involved in energy have pulled back from the sector while merchant
traders known largely for their secrecy are strengthening their
position.

The most notable deal came last week when Swiss-based merchant firm Mercuria agreed to buy the entire physical commodity trading business of JPMorgan Chase
for $3.5 billion. Mercuria, which is headquartered in Geneva and is
predominantly a crude and refined products trading shop, has a team of
approximately 1,200 people working in some 37 offices around the globe
and has annual “turnover,” or essentially gross annual revenues of
around $100 billion.

JPMorgan, whose overall size is an
astounding $2.4 trillion in terms of the value of all its assets, had
valued the oil trading portion of the business it sold to Mercuria at
$1.7 billion. It valued its US and European natural gas trading business
at approximately $800 million, its metals business at $500 million and
its electricity and coal trading businesses at approximately $300
million, prior to the sale.

Mercuria therefore agreed to pay $200
million or so above book and will add JPMorgan physical assets, trading
books and contract to its already extensive trading portfolio.

Included
in the deal, apparently, is a trading team in London, New York, Houston
and Singapore that numbers more than 400 people. When JPMorgan bought
the trading operations of RBS Sempra in 2010 for $1.9 billion, it saw
its trading staff balloon to almost 700 people. It spent several years
bringing that staffing level down to a more manageable level.

Now,
Mercuria, founded by Swiss nationals Marco Dunand and Daniel Jaggi in
2004, will begin the task of integrating the various JPMorgan trading
teams with its own teams. Also now under discussion, according to
JPMorgan, is the future role at Mercuria, if any, of Blythe Masters, the
45 year-old British-born global head of JPMorgan’s commodities unit.

Dunand
and Jaggi have both spoken recently, and  publicly (at places like
Davos), acknowledging the fact that the merchants’ penchant for secrecy
runs counter to the push by governments to instill far greater trading
transparency. With its deal to buy JPMorgan, Mercuria, for example, will
have to report physical  US natural gas sales to the Federal Energy
Regulatory Commission. Its US affiliate already reports its quarterly US
wholesale power sales to FERC.

Mercuria’s vision of its business model is fairly clear. In a recent interview with the newspaper Neue Zurcher Zeitung,
Dunand offered that there are “two schools” for commodity trading. He
said, “One is the Marc Rich school, with Glencore and Trafigura, which
is obviously successful. And then there is the investment bank school,
which has more of a risk approach.”

Marc Rich, of course, is the
legendary commodities trader who, while working for Philipp Brothers in
the late 1960’s and early 1970’s essentially created the spot market for
crude, thereby breaking the hold over the market that big oil companies
had using long-term supply contracts with supplier countries.

The
key idea behind March Rich-style trading is to have access to your own
logistics, such as shipping and storage, and to strike deals with big
bulk buyers. The merchants are also not subject to Dodd-Frank trading
restrictions, as are the banks.

On the other hand, the investment
bank school of trading implies a far greater dependence on the
financial markets to not only hedge positions but also to hedge
positions for fee-paying clients. When trading for their own book–which
banks will be prohibited from doing when the so-called Volcker rule is
implemented in mid-2015–the investment banks rely heavily upon churn, or
buying and selling and re-buying and re-selling, to generate revenue
from large volumes of trading. This activity also provides markets with
liquidity.

Joining Glencore, Trafigura, and Mercuria as exemplars of the Rich school of commodity trading are Gunvor and Vitol.

On
Monday, the head of Vitol, Ian Taylor, made a comment on the impact of
the banks leaving the energy commodities trading business. He said, “The
withdrawal of some investment banks from commodity related activities
has reduced liquidity in markets such as power.” This is no doubt true,
since the pull-back by the banks has been most pronounced in the
wholesale power trading business due in no small part to tightened
regulations and lower prices and thus dampened price volatility.

It
was Taylor’s next comment, though, that also caught some people’s
attention. He said that the reduced liquidity “created longer-term
opportunities and our footprint in both the US and Europe is growing.”

Taylor
conceded that 2013 was “a very challenging year for many in the
physical energy distribution business.”” He said that “markets remained
extremely competitive with new entrants increasing margin pressure on
certain regional activity.” “While these market conditions aren’t
expected to change overnight, changing supply and demand balances are
generating some new opportunities,” Taylor said.

Meanwhile,
Barclays PLC and Deutsche Bank are understood to be selling their power
trading books, as the big UK and German banks announced they are exiting
the business.

While Citibank has been trying to strengthen its
trading in Europe and the US, Bank of America Merrill Lynch, strong in
the US, has shutdown European natural gas and power trading.

Morgan
Stanley, of course, is in the process of selling its Global Oil
Merchant unit to the Russian oil company Rosneft, for an undisclosed sum
that is nonetheless estimated to be in the range of $400 million.
Roughly 100 Morgan trading executives are expected to go to work for
Rosneft in London and New York, or about a third of  Morgan’s entire
global commodity trading team.  Rosneft earlier established a trading
unit in Geneva that is headed up by a former Shell trader.

One
question that has popped up is whether there are any future US or
European sanctions in the offing against Rosneft chief Igor Sechin, and
whether such sanctions could hurt the deal with Morgan Stanley.  The US
and the EU have already leveled sanctions against individuals in
retaliation for Russian President Vladimir Putin’s move into Crimea.
Sechin is a former chief of staff to Putin and was appointed head of
Rosneft by Putin in 2004.

On March 20 the US sanctioned the
Russian Gennady Timchenko, who was co-founder of Gunvor.  The
Geneva-based firm said that the day before the sanctions were announced,
Timchenko sold his shares in the firm to Swedish co-founder  Torborn
Tornqvist, who now owns 87% of the 14 year-old company.  Gunvor, mainly
an oil and products trader, employs approximately 500 front and back
office trading professionals and 1,100 people at logistical facilities,
has said that revenue in 2012 was roughly $93 billion.

The US
Treasury Department said it imposed the sanctions against Timchenko out
of the belief that Russian president  Vladimir Putin had earlier
invested in Gunvor and “may have access to Gunvor funds,” an assertion
that Gunvor denied.

The changing world of energy commodity trading « The Barrel Blog



The MasterMetals Blog

#MuddyWaters weighs on #commodities traders

Short seller's allegations surrounding #Olam are hitting investor appetite for the sector as a whole

Muddy Waters weighs on commodities traders
Financial Times, 8:22am Monday December 3rd, 2012--
By Javier Blas, Commodities Editor
--
Industry executives worry that the US short seller's allegations surrounding Olam are hitting investor appetite for the sector as a whole

Read the full article at: http://www.ft.com/cms/s/0/ee2cf2e8-3d10-11e2-9e13-00144feabdc0.html

#Gold getting hit, just above $1600/oz

#Gold getting hit, just broke $1600/oz, now back above

Citigroup recommends reducing resources exposure in order to cut risk

Citigroup recommends reducing resources exposure in order to cut risk
MarketWatch
By Sarah Turner

SYDNEY (MarketWatch) -- Citigroup Australian equity strategists said Tuesday that they recommend investors reduce exposure to the resource sector in order to cut risk. They cut miners to a small overweight in their portfolio and moved to underweight in energy stocks. At the same time, they lifted their positioning in defensive sectors of the market, by raising healthcare firms to index level and upping weightings in banks and other industrials. 'While resources have underperformed by about 5% recently, this only reverses gains a month earlier, and the sector could fall further,' they said.
Citigroup recommends reducing resources exposure - MarketWatch

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Sprott Loves Silver, But Slashes Many Mining Stakes

Sprott Loves Silver, But Slashes Many Mining Stakes

Yahoo! Finance

the tickerspy.com Staff, On Monday May 16, 2011, 10:01 am 

 

Canadian commodity hedge fund manager Eric Sprott was shifting his precious metals-focused bets during Q1 as the huge bull run for gold and silver continued.

In recent months, Sprott has been particularly bullish on silver, as the metal went stratospheric before pulling back sharply in commodities trading. In an interview in early April, Sprott predicted silver could go to $100 an ounce and called it "the investment of this decade." In early May, he called the underperformance of silver miners as compared to the metal itself, "shocking."

A look at Sprott Asset Management's top-15 U.S.-listed equity holdings from the end of Q1 shows that the bullion-backed Sprott Physical Gold Trust ETV (NYSE: PHYS - News), which debuted in early 2010, remained the firm's largest position. Sprott also introduced a similar, silver-backed entity in late 2010, the Sprott Physical Silver Trust (NYSE: PSLV - News). Elsewhere, Sprott was putting capital to work, with a new stake in gold miner Extorre Gold Mines (AMEX: XG - News) and increased stakes in Yamana Gold (NYSE: AUY - News), Brigus Gold (AMEX: BRD - News), Eldorado Gold (NYSE: EGO - News), and Sprott Resource Lending (AMEX: SILU - News), a Sprott-controlled firm that provides funding for commodities companies. 

Elsewhere, Sprott was trimming stakes in Barrick Gold (NYSE: ABX - News), Golden Minerals (AMEX: AUMN - News), Alexco Resource (AMEX: AXU - News), Claude Resources (AMEX: CGR - News), IAMGold (NYSE: IAG - News) and Exeter Resource (AMEX: XRA - News). Sprott was reducing its largest silver bets in the three months ended March 31. Sprott slashed its Silver Wheaton (NYSE: SLW - News) and First Majestic Silver (NYSE: AG - News) stakes during the period, but the latter was nonetheless the firm's second-largest equity holding heading into Q2.

Looking at tickerspy.com's graph charting the performance of Sprott's end-of-Q1 holdings so far in Q2, one can see that the holdings have been quite volatile compared to the broader market. If you want to see how your performance stacks up to Sprott's or take a look at some of the other stocks it's invested in, visit tickerspy.com to see the firm's top holdings and a chart of their combined performance.

Pro portfolio performance is based on institutions' top-15 holdings as disclosed in quarter-end filings with the SEC. Pro performance does not take into account additional holdings beyond the top 15 nor does it include positions that are not required to be disclosed by the SEC. As such, Pro portfolio performance should be considered an approximation and not a precise record of how an institution has performed over time.

http://finance.yahoo.com/news/Sprott-Loves-Silver-But-indie-2810516445.html?x=0&.v=1

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'Widowmaker' Oil Trade Lives Up to Its Name - CNBC

Widowmaker' Oil Trade Lives Up to Its Name

OIL COMMODITIES MARKETS ECONOMY INTEREST RATES INFLATION FUEL PRICES GASOLINE FUTURES NYSE FTSE

CNBC.com

| 12 May 2011 | 03:10 AM ET

Big oil traders who bet on a rise in gasoline prices relative to heating oil ahead of the summer driving season may have thought they broke the curse of a "widowmaker" trade even as oil prices crashed.

They were dead wrong. Some of the traders who shun the big, directional bets that hedge funds love have crowded into a common springtime trade: betting gasoline futures on the New York Mercantile Exchange (NYMEX) will hold at a premium to heating oil futures as consumption accelerates into the summer.

They have been counting their winnings since March, when the spread staged its biggest seasonal rise since 2007.

The surge accelerated earlier this week as the Mississippi River swelled, threatening refinery operations in Louisiana and Tennesse.

But then came Wednesday, when gasoline futures collapsed in the biggest absolute drop in more than two years.

The spread dropped by over 17 cents, the biggest one-day move since September 2009.

"There will be widows. Some people got pretty whipsawed. But that trade is not for the faint of heart," said Stephen Schork, editor of the Schork Report.

Indeed, lately it's been a stomach-churning ride. The spread has moved by more than 6 cents in either direction in four of the past eight trading sessions; prior to last week it moved by such a margin only nine times in two years.

First, the U.S. Energy Information Administration came out with data showing an unexpected build in gasoline stocks as the threat level for refineries from the Mississippi river abated.

This, coupled with mounting concerns that gasoline pump prices near the critical $4 a gallon level will cause U.S. consumers to balk, pushed many bulls to the exit.

RBOB gasoline at one point slumped by over 30 cents or 8.95 percent.

The price drop was so big it triggered a five-minute trading halt in all three oil major contracts for the first time since Sept. 22, 2008.

Victims

The "widowmaker" trade tends to be popular among trading houses and hedge funds which house some of the biggest speculative traders in the market.

One victim is said to have lost $500 million on a single bet in the summer of 2008 when gasoline failed to reach a premium to heating oil, contrary to the usual pattern.

On Wednesday, traders said a big Europe-based oil trading company was forced to stop out, or reverse its long position on gasoline to prevent further losses.

Volumes spiked to the highest level in hitory as dealers rushed to place orders.

"If you were long you were happy this time yesterday and you're probably not so happy now," said an oil trader with a European bank. "The flood story freaked everyone out. The market attracted tourists and then we overshot."

U.S. refineries, which ramped up their gasoline production by 111,000 barrels-per-day last week, according to the EIA, are also set to take a hit if the slump in the futures market is carried to spot markets over the coming few days.

The price crash in theory wiped off more than $5 in profits for every barrel of crude processed into gasoline.

Traders who sensed that the price may have been reaching a peak were relieved on Wednesday to have sold near the top.

The signs were already there. Gasoline demand has been on a continuous slump since the second week of April according to EIA's 4-week average gasoline supply data.

"Luckily, I sold this morning. I'm too scared to watch it," said a gasoline trader with a bank.

Before Wednesday's crash, gasoline was trading at a record premium to heating oil, according to Reuters data going back to 2008.

Others saw the plunge as symptomatic of a new oil trading environment, characterized by huge price swings following last week's record drop in oil prices, for no obvious reason.

In percentage terms gasoline price fell by less than crude in last week's price crash, but on Wednesday they led the whole complex lower, analysts said.

"Last week's steep slide has increased volatility in the market, and we are still responding skittishly to that.

Often in the period after a crash like that things become a little more volatile," said Gene McGillian, analyst at Tradition Energy.

Flagship commodity fund Astenbeck II run by top Phibro trader Andrew Hall was one name that suffered a double-digit loss last week as oil prices tumbled.

© 2011 CNBC.com

commodities - 'Widowmaker' Oil Trade Lives Up to Its Name - CNBC

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Glencore lists fraud, criminal case among IPO risks - Yahoo! Finance

Glencore lists fraud, criminal case among IPO risks

On Wednesday May 4, 2011, 1:23 pm

By Clara Ferreira-Marques and Quentin Webb

LONDON (Reuters) - Commodity trader Glencore, set to list this month in one of London's largest-ever offerings, has detailed its involvement in a Belgian criminal probe as it outlines risks to investors, including fraud and corruption.

Glencore said in a prospectus on Wednesday, ahead of its planned $11 billion listing, that its subsidiary Glencore Grain Rotterdam, a former employee and a current employee had been charged in a criminal case in Belgium.

Glencore said the criminal investigation was probing a public official, the European Commission's Directorate General for Agriculture and others for "violation of professional secrecy, corruption of an international civil servant and criminal conspiracy."

Glencore's unit and its current and former employees have been charged with having committed corruption in exchange for information on European export subsidies, it added.

The case was initiated in 2003, with co-operation from Dutch and French police, and covers facts dating from 1999 to 2003.

Commission agriculture spokesman Roger Waite confirmed that the EU executive expected a trial into alleged corruption by former agriculture department official Karel Brus.

Brus, a Dutch national, is accused of having passed confidential information relating to EU export subsidy application decisions to a French farming lobbyist between 1999 and 2003.

"As far as the Commission is concerned, we cannot comment further on an ongoing investigation," Waite said.

Glencore declined to comment on the case beyond details included in the prospectus. It says it is not involved in legal proceedings which could have a material impact on its profits.

Belgium's federal prosecutor confirmed on Wednesday that there is a criminal case against Glencore but declined to comment further. The case will be heard in Brussels on May 12.

The Commission, the European Union's executive arm, has become a civil party to the case, Glencore said.

FRAUD RISK

Glencore also listed in its prospectus over 30 other risks to the broader company, its marketing and trading operations.

The formerly publicity-averse trader and miner operates around the world and says its willingness to move into riskier countries in Eastern Europe, Central Africa and South America before rivals gives it a "first-mover advantage."

Companies typically outline a vast number of risks to future performance in the run-up to a listing, in order to satisfy requirements to provide a full picture for future investors.

Glencore, however, detailed more than many, with risks including declines in demand for commodities, geopolitical risk and the risk it may not be able to retain key employees.

It also raised the risk of fraud and corruption, "both internally and externally."

"Glencore's marketing operations are large in scale, which may make fraudulent or accidental transactions difficult to detect. In addition, some of Glencore's industrial activities are located in countries where corruption is generally understood to exist," the company said.

Glencore said it has internal controls, external due diligence and compliance policies.

(Additional reporting by Ben Deighton and Charlie Dunmore in Brussels; Editing by Alexander Smith and Mike Nesbit)

Glencore lists fraud, criminal case among IPO risks - Yahoo! Finance

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