China Exports Rise 7.2%

    The WSJ reports,"China's exports rose 7.2% in June from a year earlier, data from the General Administration of Customs showed Thursday.

The rise in outbound shipments pointed to recovering external demand, but the pace of growth fell short of analysts' expectations.

June's export growth was slightly faster than May's 7% increase, but below the median forecast of 10% growth from a Wall Street Journal poll of 21 economists.

Imports rose 5.5% from a year earlier, versus a 1.6% fall in May, exceeding the economists' median forecast of a 5.4% rise.

As a result China's trade surplus narrowed in June to $31.6 billion from $35.92 billion in May, short of the median forecast of a $36.9 billion surplus".

Alibaba's US site 11 Main finds niche market

Alibaba founder Jack Ma has found a niche in the US consumer market. The company's newest endeavor in the states is 11 Main, an invitation-only shopping website launched last month.

The San Mateo, California-based company is a spinoff of Alibaba's 2010 acquisition of online retail management companies Auctiva and Vendio. The site features 500,000 products in nine categories: fashion, toys, entertainment, home, collecting, jewelry, sporting goods, tech and baby products.

The site competes directly with eBay and Amazon, and caters to sellers who might get lost in the sea of offerings on those sites. 11 Main "is unique as it empowers entrepreneurs," said Porter Erisman, former vice-president of Alibaba.

The site charges a commission rate of just 3.5 percent, about half or one-third of what most major US shopping sites charge, and hosts more than 1,000 merchants, according to The Wall Street Journal.

"From what I understand, the site is going to be different from eBay in the sense that it will be more exclusive. They're not going to let anybody sell anything," said Kelland Willis, a global e-commerce analyst at Forrester Research, a global research and advisory firm with headquarters in Cambridge, Massachusetts.

"So eBay is really about enabling anybody to sell something online, whereas 11 Main is going to be more serious about a collection of items,” she said.

The site did not respond to email requests from China Daily for comment.

The 11 Main homepage and initiation process bear resemblance to the rising tide of US flash-sale sites, Fab, Rue La La, Gilt, HauteLook, among others, which require email signup, and others which require a wait list. The interface and functions of the site resemble online handmade and vintage marketplace Etsy.

Willis, who is based in Los Angeles, said she believes Ma is using the localization skills he learned in China, "which really just comes down to understanding what the customer needs,” or finding “where the hole is in the market, and then serving those needs.”

"What Alibaba did with Taobao was basically take eBay and flip it upside down,” Willis said. “They took the eBay business model and localized it for the Chinese market.”

Vendors can create personalized pages to display their goods, and also explain their business and feature informal videos. The site also features a special "Made in California'' section.

Like eBay, 11 Main does not handle the products on its site, leaving vendors to deal with logistics and shipping. But unlike American counterparts, the site currently does not have buyer-seller feedback communications.

11 Main is carefully screening merchants to make sure those who join the site meet certain criteria in terms of product quality, customer service and even the quality of the photos they post online, according to the Journal.

Willis compared Alibaba's branding of 11 Main to a TV network.

"If you watch Mad Men or Breaking Bad, they don't say 'we're AMC, this is what AMC does,' they're more likely to promote the show itself. And I think that Alibaba approaches their different entities in a similar way." said Willis. "I don't know if they necessarily want Alibaba to come to mind first when 11 Main is mentioned."

"They really put thought into the name," she said. "Main for Main Street and 11 stands for the one-to-one, direct consumer-to-seller relationship that they want the site to be about."

Erisman, who in recent years made a documentary about the company's road to success, said Alibaba has learned a lesson from eBay's mistakes in China. "You can't take eBay and put it in the Chinese market, just as you can't take TaoBao and put it in the US market," Erisman said.

Alibaba has allowed local management in the US to run site, and this has helped the site to develop as an American-style shopping website, according to Erisman.

The combined transaction volume of Alibaba Group's consumer shopping sites in China reached $248 billion, according to its IPO filing last month, triple the size of eBay and more than double the size of Amazon. The launch comes just before Alibaba's IPO prepares to go public on the New York Stock Exchange, which could be one of the largest initial public offerings in history.

Source: ChinaDaily USA

100 Chinese companies on Fortune Global 500 list

Chinese companies fill 100 places on the Fortune Global 500 list for 2014 with Sinopec Group taking third spot for the first time.

The Fortune Global 500 released on July 7 featured an unprecedented 100 Chinese companies.

Wal-Mart back to on top, Sinopec rise to third

The top two were Wal-Mart of America and Royal Dutch Shell of the Netherlands. Wal-Mart with $459.6 billion in revenue took over at the top while Royal Dutch Shell, with revenue of $459.6 billion, slipped to second. Sinopec, which replaced ExxonMobil in third place, climbed one notch with revenues of $457.2 billion. It is Sinopec's highest listing.

Of Chinese companies on list, 7 are new

The number of companies from the Chinese mainland, Taiwan and Hong Kong increased to 100 while there are 128 US companies listed, down from 132.

The number of Chinese mainland companies reached a record high, increasing from 89 to 95. Of all Chinese companies on the list last year, only Bailian Group slipped out. Rankings of Chinese companies are also on the increase with Haiwei Investment Holdings moving from 315 to 285 and Lenovo from 329 to 286.

Seven Chinese companies entered the list for the first time, including China Development Bank (122), Pacific Construction Group (166), China Energy Engineering Group (465), China General Technology (Group) Holding, Ltd (469), Bohai Steel Group (327) and China Energy Company Ltd (349). The five most profitable companies were Vodafone, Fannie Mae, Freddie Mac, China Industrial and Commercial Bank and Apple.

Source: ChinaDaily USA

Chinese president urges early FTA conclusion with Australia

Chinese President Xi Jinping called for an early conclusion to free-trade agreement (FTA) negotiations between China and Australia on Wednesday.

As he met with former Australian Prime Minister John Howard at the Great Hall of the People, Xi said the Chinese economy will grow in a sustained way and provide new opportunities for cooperation with Australia.

"The two sides should look at the future in a far-sighted way, bear in mind common interests, share the opportunities of development, take care of each other's major concerns, boost practical cooperation and accelerate the China-Australia FTA negotiations," said Xi.

During the meeting, he spoke highly of Howard's contribution to the bilateral relationship during his tenure and asked him to continue playing an active role in promoting China-Australia ties.

Howard said China's reform and development are beneficial for the whole world and that Australia shares extensive common interests with China.

Australia's economic growth has benefited from China's development, he added.

Source: Xinhua

Xinhua:Overcoming differences in China-U.S. dialogue

- Acknowledging differences candidly in a high-level dialogue here Wednesday, China and the United States have displayed the commitment to crack some hard nuts in their complex relations that bear global significance.

The sixth round of China-U.S. Strategic and Economic Dialogue (S&ED) and the fifth round of High-Level Consultation on People-to-People Exchange (CPE) have been in the global spotlight, as the world's economic heavyweights held extensive discussions.

COOPERATION NECESSARY, CONFRONTATION DISASTROUS

Enhancing cooperation and avoiding confrontation was reaffirmed during the dialogue.

Addressing the opening ceremony, Chinese President Xi Jinping said history showed that cooperation between China and the U.S. led to win-win results while confrontation hurt both sides.

After 35 years, Sino-U.S. ties have developed and the two countries' interests deeply intertwined, Xi said. Cooperation has not only benefited both populations, but promoted peace, stability and prosperity in the Asia-Pacific region and the world.

An agreement to build a new model of Sino-U.S. relationship, with aims to break the cycle of conflicts, is unprecedented and has significant implications for the future. But there are no ready-made solutions.

Xi proposed that both sides respect each other; stick to dialogue, consultation and other constructive ways to expand understanding; deepen cooperation based on equality and mutual trust; and accumulate shared interests to defuse differences.

The call was echoed by the U.S. when President Barack Obama labeled the new model a "shared goal" of practical cooperation and constructive management of differences.

"We should use the S&ED to demonstrate to the world that even the relationship is complex as ours, we remain determined to ensure that cooperation defines our overall relations," Obama said in a statement.

Secretary of State John Kerry, who co-chaired the dialogue, said the U.S. and China have stakes in each other's success and that his country welcomes the emergence of a peaceful, stable and prosperous China.

COMMON INTERESTS, PRACTICAL MEASURES

This year marks the 35th anniversary of formal China-U.S. ties, with trade between the two at 520 billion U.S. dollars last year, 200 times that of 1979.

Stressing that common interests far outweigh differences, Xi put forward proposals on accelerated negotiations on the Bilateral Investment Treaty (BIT), strengthening military dialogue, fighting terror, climate change and coordination on international and regional issues.

Climate cooperation is a good example of practical cooperation on common interests. Xie Zhenhua, deputy director of China's National Development and Reform Commission, said both sides strengthened dialogue and exchanged ideas on climate change during Wednesday's session.

Progress in climate cooperation in the past year includes defining major areas of cooperation and clarifying over 30 projects for the next three years.

Companies and research institutes from both sides signed eight partnership agreements on Tuesday covering areas from carbon capture to low-carbon cities.

The negotiations on BIT and China's structural reform were discussed.Chinese Vice Premier Wang Yang, co-hosting the economic dialogue with U.S. Treasury Secretary Jacob Lew, said "economic partnership makes our cooperation more formidable, though bargaining and differences play a part in this process."

Lew said President Obama and President Xi had made it clear that a strong U.S.-China economic relationship is their priority.

Wang also announced that the first round of negotiations on the BIT will be concluded shortly and enter the next phase on a negative list.

"The BIT creates jobs, opportunities and mutual interests on both sides. It helps stabilize the relationships and give you confidence the relationship will be handled carefully into the future," Kenneth Lieberthal, a senior fellow at the Brookings Institute's John L. Thornton China Center, told Xinhua.

THIRD PILLAR, PEACEFUL FUTURE

It is the first time the CPE has been held alongside the S&ED, showing the weight put on people-to-people exchanges, especially among the younger generations of China and the United States.

To build bonds between youth and create a peaceful future, the two countries will sign a series of agreements and are expected to achieve results in 103 programs, Chinese Vice Education Minister Hao Ping said prior to the event.

The CPE this year focuses on closer links between Chinese and American youth, with highlights including a school cooperation program proposed by President Xi's wife Peng Liyuan and President Obama's wife Michelle, and a commemoration of the 35th anniversary of student exchange.

Holding the consultation and the dialogue at the same time has a significant meaning, said Yuan Peng, vice president of the China Institute of Contemporary International Relations.

Yuan said people-to-people exchanges play an irreplaceable role in the new relationship model and have become a pillar - along with political trust and trade cooperation - in building the new China-U.S. ties.

Sugar falls ahead of cane data, cocoa slips

Raw sugar futures on ICE dropped to a 4-1/2-month low on Wednesday on expectations that upcoming Brazilian cane data will reveal rapid crushing, while cocoa slipped further below a recent three-year high.

Arabica coffee on ICE Futures U.S. was down a shade in choppy dealings while robusta coffee on Liffe also weakened but held just above its 100-day moving average.

ICE October raw sugar fell 0.26 cent, or 1.5 percent, to settle at 17.42 cents per lb, paring losses from a 4-1/2-month low at 17.27 cents, pressured by the expectation for a rapid cane crush in Brazil.

The contract initially rose near the 200-day moving average but it held resistance for the third straight session, sending prices lower.

Dealers focused on the expected release of Brazilian crop industry data from Unica on Thursday, which is expected to reveal a speedy cane crush in dry weather in the second half of June in the center-south of Brazil, the world's biggest sugar grower.

"We have Unica data tomorrow, and perhaps this will provide an impetus to what is presently viewed as a nearby short- to medium-term bear market," said Thomas Kujawa, co-head of the softs desk at Sucden Financial Sugar.

Liffe August white sugar fell $6.20, or 1.3 percent, to end at $459.00 per tonne, a four-week low.

Some dealers have said they expect a modest delivery against expiry of the August white sugar contract on July 16.

ICE second-month cocoa settled down $29, or 0.9 percent, at $3,087 per tonne on abundant supplies in top grower Ivory Coast despite forecasts for a 2014/15 global deficit that lifted prices to a three-year peak last week.

Dealers were awaiting second-quarter European grind data, a measure of demand, due to be released on Thursday.

Eric Sivry, head of agri options brokerage at Marex Spectron, said the market consensus was for the grind to be flat to up 5 percent year-on-year.

Liffe September cocoa dropped 19 pounds, or 1 percent, to finish at 1,912 pounds a tonne.

Ivory Coast increased its 2014 budget by nearly 4 percent, in part on expectations of higher earnings from cocoa, a government spokesman said.
Coffee futures were quietly lower in thin dealings.

The benchmark September arabica coffee contract on ICE finished down 0.05 cent, or 0.03 percent, at $1.7290 per lb.

The choppy dealings came after top producer Brazil saw a sharp year-over-year rise in exports last month, according to country's Council of Green Coffee exporters.

Liffe September robusta coffee eased $7, or 0.3 percent, to close at $2,056 per tonne.
Source: Reuters

Pentagon uses wrong oil price and fails to hedge fuel bill. By John Kemp

The U.S. Department of Defense has been using the wrong oil price in its budget, leaving the largest single buyer of fuel in the world with liabilities potentially hitting billions of dollars.

The Pentagon continues to rely on WTI prices even though Brent oil is more relevant to the cost of fuels it buys on behalf of the armed forces.

Using the wrong benchmark has introduced increasing risk into the military budget, according to a critical report published on Tuesday by the Government Accountability Office

(GAO) (“Bulk Fuel Pricing: DOD needs to re-evaluate its approach to better manage the effect of market fluctuations”).

Moreover, the Department of Defense (DOD) still does not hedge its exposure to changing fuel prices, even though the Pentagon’s Defense Logistics Agency (DLA) buys more than 100 million barrels of fuel each year at a cost of $10 billion to $20 billion, according to the GAO.

The DLA purchases fuel on the open market and then sells it to the armed forces at a standard price.

Differences between the standard price and actual cost of buying fuel are absorbed into the Defense-wide Working Capital Fund.
Source: Reuters

Shale boom confounds forecasts as US set to pass Russia, Saudi Arabia. When and how much?

Four years into the shale revolution, the U.S. is on track to pass Russia and Saudi Arabia as the world's largest producer of crude oil, most analysts agree. When that happens and by how much, though, has produced disparate estimates that depend on uncertain factors ranging from progress in drilling technology to the availability of financing and the price of oil itself.

Forecasts for U.S. shale oil production vary from an increase of 7.5 million barrels per day by 2020 – almost doubling current domestic output of 8.5 bpd -- to a gain of 1.5 million bpd, or less than half of what Iraq now produces.

The disparities are a function of the novelty of the shale boom, which has consistently confounded forecasts. In 2012, the U.S. Energy Information Administration (EIA) estimated that production from eight selected shale oil fields would range from 700,000 bpd of so-called tight oil to 2.8 million bpd by 2035. A year later, those predictions had been surpassed.

"The key issue is not whether production grows, it's by how much," said Ed Morse, global head of commodities research at Citigroup in New York. "We're only at the beginning of the first inning and this is a nine-inning game."

The stakes couldn't be bigger, ranging from the multibillion-dollar investments needed to explore and drill to oil supply issues that go to the heart of U.S. foreign policy. Relations with countries ranging from Iraq and Iran to Russia, Ukraine, Libya and Venezuela are colored to one degree or another by the question of energy.

The U.S., a nation transformed by the 1973 Arab oil embargo, could become energy independent by 2035, according to bullish forecasts from BP Plc and the International Energy Agency. Coupled with growing output from oil-rich neighbors, the continent has a growing shield from supply shocks.

"Looking at North America, including Canada and Mexico, we're much more politically stable," said Lisa Viscidi, program director of the Inter-American Dialogue in Washington.

Still, many drillers have found that healthy forecasts of oil in the ground don't guarantee it can be economically extracted.

For example, based on the promise of free-flowing oil, Chesapeake Energy's then-top executive Aubrey McClendon bought up land in Ohio's Utica shale oil field and touted it in 2011 as a $500-billion opportunity. State geologists estimated the shale play could hold as much as 5.5 billion barrels of reserves.

But last year, after months of drilling, Chesapeake’s average output per well per day was just 80 barrels. Competitor BP wrote off $521 million and exited the Utica just two years after leasing 85,000 acres.


SIX ESTIMATES

Shale production from the oldest shale patch, the Bakken of Montana and North Dakota, alone may rise to as much as 1.74 million barrels per day in the second half of this decade, according to the highest of six estimates compiled by Reuters. The lowest was 1 million bpd. Even that range belies disagreement over just how fast output will grow -- and when it may peak. (Graphic: http://link.reuters.com/ref32w)

The EIA, the U.S. agency responsible for energy forecasts, predicts that tight oil output will rise 37 percent from about 3.5 million bpd in 2013 to 4.79 million barrels per day by 2020. The forecast includes the Bakken, Three Forks and Sanish, Eagle Ford, Woodford, Austin Chalk, Spraberry, Niobrara, Avalon/Bone Springs and Monterey.

"There are other forecasts that are much more optimistic than this one," said agency administrator Adam Sieminski, speaking at a conference in New York. "We're still a little concerned about what the geology looks like for crude oil production. As technology moves, these numbers could grow."

The agency has already made some big adjustments to previous estimates. It recently slashed its forecast recoverable reserves for California's Monterey shale to just 600 million barrels, 96 percent less than the total amount of oil in place, citing the difficulty in pumping it out economically.

IHS Energy's projections are higher, with an estimated 6 million bpd from the Bakken, Eagle Ford and sections of the Permian and Niobrara by the end of 2020.

At the low end, Energy Aspects Ltd sees production of 3.5 million barrels a day from shale by 2017, a 1.5-million bpd increase from its current output estimate of 2 million bpd.

"In order to keep production going, you have to maintain your drilling and therefore, capex investments need to be in a continuous cycle," said Virendra Chauhan, an oil analyst at Energy Aspects in London.

McKinsey & Co.'s forecasts illustrate the uncertainty. While the consulting firm uses a reference case that puts tight oil production at the equivalent of 7.1 million bpd by 2020, it said the number could range from 5 million to 9 million bpd.

In its annual outlook released last month, BP estimated that U.S. tight oil production will increase to 4.5 million bpd in 2035. Exxon Mobil Corp. says global tight oil production, driven by North America, will rise 11-fold from 2010 to 2040, when it will account for 5 percent of global liquids output. Exxon added that in 2015, North American tight oil supply in 2015 will likely surpass any other OPEC nation's current oil production, with the exception of Saudi Arabia. Iran is the second largest OPEC producer, with about 4.2 million bpd.


TRICKY FORECASTS

Production forecasts are inherently problematic, especially years in the future, as they fail to anticipate major new discoveries or abrupt depletion rates.

Even so, the industry's reliance on multi-year mega-projects such as those off the coast of Angola or in Brazil's sub-salt region -- which progress along generally predictable time frames and produce stable volumes of oil for years afterward -- made it relatively simpler to anticipate new oil coming onto the market.

The shale oil industry is more complicated.

For instance, the rapid development of reserves in places like China and Russia could force prices lower, curtailing U.S. drilling. New technology may render development cheaper and more efficient, speeding it up. A change in current domestic policy, particularly an easing of the ban on crude exports, would also shape the forecasts.

Add to that growth the pipelines connecting Canadian producers to U.S. refiners, including TransCanada Corp's 830,000 bpd Keystone XL pipeline, whose approval has been delayed by the U.S. government for more than five years.

Never mind the vagaries of the credit cycle, which has also become a larger part of the puzzle. Companies face high levels of reinvestment to ensure the same levels of return for drilling oil, meaning companies have to take on additional amounts of debt.

Consultancy Wood Mackenzie estimates that it would require capital spending of $9.58 to $32.97 a barrel to drill in the Eagle Ford basin, depending upon which part of the formation was targeted.

"We're operating at present in a low interest rate environment, but a risk is what happens if the cost of credit rises," Energy Aspects' Chauhan said.
Source: Reuters

Corn falls for eighth session, near contract low

U.S. new-crop corn futures fell for the eighth consecutive session on Thursday to hover close to a contract low as favorable weather forecast add to expectations of a bumper crop, expected to be shown in U.S. government report later in the week.

* Chicago Board Of Trade December corn <CZ4> fell 0.38 percent to $3.96-1/2 a bushel, having slumped 1.55 percent in the previous session when the contract hit a all-time low of $3.95 a bushel.

* September wheat <WU4> unchanged at $5.51-1/4 a bushel, having closed down 0.9 percent on Wednesday.

* November soybeans <SX4> fell 0.11 percent to $11.02-1/2 a bushel, having slid 1.18 percent on Wednesday to hit a five-month low.

* U.S. Department of Agriculture report on Friday is expected to raise projections for autumn harvests of corn and soybeans.

* Asian grain importers are cutting back on purchases, hoping that prices will drop even further. 

* USDA is expected to report U.S. corn export sales last week on Thursday totalled between 600,000 to 1.05 million tonnes, wheat export sales of 400,000 to 635,000 tonnes, and soybean sales of 200,000 to 600,000 tonnes, analysts said. 

MARKET NEWS

* The dollar started at one-week lows against a basket of major currencies on Thursday, coming under some pressure after minutes of the Federal Reserve's June meeting gave no clear indication on when interest rates will rise. 

* Oil prices fell on Wednesday, with U.S. crude down more than $1 a barrel on faltering demand for gasoline, and Brent down too as a Libyan oilfield resumed output. 

* U.S. stocks finished higher on Wednesday, rebounding from a sharp two-day selloff, after minutes from the last Federal Reserve meeting showed policymakers have started to detail how the central bank will end its easy monetary policy.

Gold up on softer dollar; India budget eyed for import duty on gold cut

July 10 (Reuters) - Gold edged higher for a second straight session on Thursday, helped by a weaker dollar and as minutes of the Federal Reserve's recent policy meet gave no indication of an early hike in U.S. interest rates.

Markets were also eyeing developments in the second-biggest consumer India, where the new government is expected to cut a record high import duty on gold at the budget to be presented today.

China H1 crude oil imports rise 10.2 pct on yr, iron ore up

Oil imports by China, the world's second-largest consumer of the fuel, reached 150 million tonnes in the first six months of 2014, up 10.2 percent from the same period last year, customs data showed on Thursday.

Iron ore imports from January to June rose 19.1 percent on the year to 460 million tonnes, while copper arrivals rose 25.9 percent to 2.52 million tonnes in the same period.

Soy imports by the world's top consumer reached 34.2 million tonnes in the first half of 2014, up 24.4 pct from year ago.
Source: Reuters

India may cut gold import duty at budget-industry official

 India is likely to cut its gold import duty to 6 percent from a record 10 percent in Thursday's budget, leading to a rise in imports in the second half, a senior official at the country's biggest gold trade group said on Wednesday.

Higher overseas purchases by the world's No.2 buyer of the precious metal after China should underpin global gold prices that have risen almost 10 percent this year, recovering from a 28 percent plunge in 2013.

The drop to 6 percent in import duty "is practical and it may be reduced further. A reduction in import duty may encourage more demand from the consumers", Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation, told the Reuters Gold Forum.

Bamalwa, whose federation represents more than 300,000 jewellers, met Finance Minister Arun Jaitley late last month, and said: "He (Jaitley) seemed very positive and we expect some good news about the industry."

Jaitley's maiden budget will be the first major policy event since Prime Minister Narendra Modi's landslide general election win in May.

Finance ministry officials were not immediately available for comment outside business hours.

Gold imports into India are likely to rise 200 tonnes in the second half to December, a 14 percent increase compared with the first half, Bamalwa said.

However, a weak monsoon could have a negative impact on gold consumption. Nearly 60 percent of gold demand originates from rural areas in India where more than half of the country's 1.2 billion people live.

India imposed restrictions last year on overseas purchases of gold, its second biggest import item after crude oil, to tackle a balance of payments crisis. The current account deficit

(CAD) has since narrowed and gold traders expect Jaitley to ease the curbs in his budget address.

Modi, who leads the pro-business Bharatiya Janata Party, has said any action on gold should take into account the interests of the public and traders, not just economics and policy.


LOWER PREMIUMS

Besides the import duty levied by the finance ministry, India's central bank also imposed a rule last year that required 20 percent of all bullion imports be re-exported.

The government might remove the 80:20 rule in a gradual,

"phased" manner, Bamalwa said.

The rules crimped supply and pushed premiums up to as much as $160 an ounce above London prices in December. The premiums fell to $10 an ounce on Wednesday on expectations of a duty cut, compared to $25 last week.

India paid $54 billion to import 1,017 tonnes of gold in the year ending March 2013, which pushed up the current account deficit up to a record 4.8 percent of gross domestic product

(GDP).

Due to the tough gold shipment policy, gold imports have fallen significantly, helping the current account gap narrow to 1.7 percent of GDP in the fiscal year to March 2014.

However, such curbs have also spurred smuggling into India via informal international channels for remitting money.

The World Gold Council reckons that 200-250 tonnes of gold have been smuggled into India since the imposition of import controls. Only 2.5 tonnes of smuggled gold – or 1 percent of the estimated total – have been seized by law enforcement agencies.

"Smuggling will reduce once the import duty reduces and the 80:20 rule is removed. Till such time smuggling will continue...(as long as) there is a price difference in the neighbouring countries," Bamalwa said.
Source: Reuters

Oil drops on weak U.S. fuel demand, returning Libya supply

 Oil prices fell on Wednesday, with U.S. crude down more than $1 a barrel on faltering demand for gasoline, and Brent down too as a Libyan oilfield resumed output.

U.S. gasoline stockpiles rose 579,000 barrels, the Energy Information Administration reported, surprising analysts polled by Reuters who had expected a 217,000-barrel drop. [EIA/S]

"Gasoline demand didn’t grow as expected and that disappointment is showing in the negative reaction," said Phil Flynn, analyst at Price Futures Group in Chicago, Illinois.

RBOB gasoline futures fell by more than 1 percent to $2.937 per gallon, down 3.5 cents.

Libya has restarted the 340,000-barrel-per-day (bpd) El Sharara field after protesters ended a four-month strike, which could double the country's current crude output. [ID:nL6N0PJ3RW]

The government has also taken back control of the Ras Lanuf and Es Sider oil ports, ending an almost year-long occupation that reduced Libya's output to less than a quarter of the 1.4 million bpd it was pumping before protests began last summer.

Brent crude futures fell by 66 cents to settle at $108.28 a barrel. Brent hit a one-month low of $108.14 during the session, its eighth straight decline, the longest such streak since May 2010.

The August Brent contract was trading at a discount of about 19 cents to the September contract.

U.S. crude lost $1.11 to settle at $102.29 after falling as low as $102.00. The U.S. benchmark has fallen in nine straight sessions, its longest such streak since December 2009.

As speculators dumped Brent, its premium over U.S. crude touched its narrowest point in almost a month at $5.15, then widened to settle at $5.85


RISK PREMIUM SHRINKS

In June, Brent hit a 9-month high of $115.71 as fund managers and traders rushed to buy Brent when Islamic militants rampaged across Iraq. But many are taking profits now that the violence has had a limited impact on Iraq's crude exports.

At the same time, demand for crude has been low from European refiners whose margins have been squeezed by an influx of diesel from the United States, Russia and Asia.  Many refiners have slashed run rates or undertaken extensive maintenance at the height of summer season.
"European refiners are having a bit of a tough time. There's a lot of product coming from the (United) States into Europe, which has depressed refining margins, and that's probably one of the reasons why crude is weak," said Christopher Bellew, a broker at Jefferies Bache in London.
Source: Reuters

U.S. crude inventories down; gasoline demand falters -EIA

 U.S. crude stocks fell last week as refineries raised output, while gasoline inventories rose amid faltering demand, data from the Energy Information Administration showed on Wednesday.

Crude inventories fell 2.4 million barrels in the week to July 4, slightly more than analysts' expectations for a decrease of 2.2 million barrels.

Gasoline stockpiles rose 579,000 barrels, compared with analysts' expectations in a Reuters poll for a 217,000-barrel drop. Gasoline demand over the past four weeks was at 9.04 million barrels per day, down 0.4 percent versus the same period last year.

"Gasoline demand didn’t grow as expected and that disappointment is showing in the negative reaction," said Phil Flynn, analyst at Price Futures Group in Chicago, Illinois.

U.S. crude prices extended losses after the report and fell $1 to $102.40 per barrel. By 11:04 a.m. EDT (1504 GMT) prices had rebounded slightly to $102.69, down 71 cents on the day.

Crude stocks at the Cushing, Oklahoma, delivery hub rose 447,000 barrels, while crude imports inched up 20,000 bpd, the EIA said.

Refinery crude runs edged up 34,000 bpd, or 0.2 percentage point to 91.6 percent of total capacity, EIA data showed.
Source: Reuters
Distillate stockpiles , which include diesel and heating oil, rose 227,000 barrels, versus expectations for a 1.2-million-barrel increase, the EIA data showed.
Source: Reuters

Both candidates in Indonesia election claim victory; Jokowi ahead in more counts

 Both candidates claimed victory in Indonesia's presidential election on Wednesday, suggesting there could be a drawn out constitutional battle to decide who will next lead the world's third-largest democracy.

Just a few hours after voting closed, Jakarta governor Joko

"Jokowi" Widodo said he had won, based on quick counts of more than 90 percent of the votes. A victory for him would be seen as a triumph for a new breed of politician that has emerged in Southeast Asia's biggest economy, and increase the promise of desperately needed reform in government.

But ex-general Prabowo Subianto, the rival candidate viewed as representative of the old guard that flourished under decades of autocratic rule, said other, unnamed, quick counts of votes favoured him.

Jokowi, on other hand, named tallies by six pollsters, most regarded as reliable and independent. The included three respected, non-partisan agencies - CSIS, Kompas and Saifulmujani

- which provided accurate tallies in the April parliamentary election.

The quick counts are conducted by private agencies which collate actual vote tallies as they come out of each district. The results however are unofficial: the Election Commission will take about two weeks to make an official announcement and the new president is not due to take office until Oct. 1.

"There are many quick counts from various survey agencies. But...the one that will be valid according to law in the end will be the verdict of the KPU (Election Commission)," Prabowo told a talk-show on a television channel.

A senior aide to Jokowi said the party would not take any action like naming a cabinet until the official result is announced on or around July 22.

"We've waited months. We can wait another 2 to 3 weeks for the (Election Commission's) final verdict," Luhut Panjaitan told Reuters.

The standoff is unprecedented in Indonesia, a member of the G-20 group of nations that is holding only its third direct presidential election. In both the previous elections, Susilo Bambang Yudhoyono, now the outgoing president, won by a clear margin.

There have been concerns of violence once the result is known, a worry alluded to by Yudhoyono's administration.

"For both groups of supporters related with the split quick count results, we request they do not mobilise their supporters excessively," said Djoko Suyanto, coordinating minister for legal, political and security affairs.

There were no reports of any major violence. Around 250,000 police officers were on standby across Indonesia, authorities said.


CLAIM AND COUNTER-CLAIM

It has been the dirtiest and most confrontational campaign in memory in a country which traditionally holds up the value of consensus politics.

Ahead of the vote, the two candidates had been neck and neck in opinion polls as Jokowi lost a huge early lead in the face of smear campaigns and a far more focused, and expensive, race for the presidency by his rival.

"Today the people have decided a new direction for Indonesia ... This is a new chapter for Indonesia," Jokowi told hundreds of supporters at Proclamation Square, where the country's first president Sukarno declared independence in 1945.

At the same time, Jokowi offered conciliatory words to his rival, Prabowo, saying he was a patriot and contributed to a better democracy.

Prabowo countered with his own declaration of victory.

"(The quick counts) show that we, Prabowo-Hatta, have received the support and mandate from the people of Indonesia," he told a rally in the capital, referring to his running mate Hatta Rajasa.

After the official result is declared, candidates can challenge the results in the Constitutional Court, the final arbiter over contested polls.

The Court's reputation has been badly tarnished after its chief was sentenced to jail for life this month for corruption.

"There have always been challenges...So we could end up with delayed certainty for a few weeks," Douglas Ramage, a Jakarta-based political analyst told Reuters.

The government declared Wednesday a public holiday and markets were closed although the rupiah currency hit a seven-week high against the dollar in offshore markets on Jokowi's victory claim.

His clean image is seen likely to bring in more foreign investment as he seeks to correct Indonesia's reputation of widespread corruption.

But any euphoria in the market could quickly evaporate if the stalemate over the result is not quickly resolved or if there is violence.

"Whether the market goes up or down tomorrow will mostly depend on the security. For me, maintaining security is very important at this point," said Isbono Putro, a director at BNI Asset Management, who helps manage about 8 trillion rupiah.
Source: Reuters

First budget test of India Modi's reform mettle

 India's Prime Minister Narendra Modi faces the first major test of his reform credentials on Thursday, when his fresh-faced government presents its maiden budget amid early doubts about his willingness to make unpopular decisions.

Modi, 63, won a landslide general election victory in May with a pledge to boost growth and create jobs for the 1 million people who enter India's workforce every month.

He has since warned of the "bitter medicine" needed to nurse the economy back to health from high inflation and the worst slowdown since free-market reforms in the early 1990s unleashed an era of rapid growth.

Finance Minister Arun Jaitley's promises of bold budget decisions and broadsides against the "mindless populism" of his left-of-centre predecessors have proved a hit with investors, helping the benchmark BSE stock index to a record high last week.

Jaitley is due to address parliament at 11 a.m. (0530 GMT).

But, with an eye on state elections later this year, Modi has faltered in administering the medicine he has spoken of, delaying a decision to raise the price of natural gas and partially reversing a train fare hike after protests in Mumbai.

The government has tried to keep rural voters sweet by extending a temporary subsidy for sugar mills, benefiting farmers in Maharashtra, where Modi's BJP hopes to consolidate its strength in elections later this year.

"The budget is a key test of their credibility, and this evidence that they are moving back and dithering on their decisions, and in a sense playing politics, is a sign of more to come," said Nida Ali, India economist at Oxford Economics.

To be sure, the government has started a shake-up of politically sensitive labour laws, and is expected to roll out plans for a new services tax that would unify India's states into a common market for the first time.

Even the partial train fare hike was bolder than any measures by the last government to fix the tattered finances of the world's fourth largest rail network.

But some investors were disappointed by a railway budget delivered on Tuesday that was long on promises of opportunities for private investors but short on details of how to make the sector attractive for such capital.

The mood was reflected in losses on the stock market after the railway minister's speech to parliament.


MANAGING EXPECTATIONS

Foreign banks watching India have played up expectations of strong action on tax reform, privatisation and subsidy cuts after the young government's drum beats in recent weeks.

"We want Mr. Modi and his team to make a structural change by presenting a budget crowned with quality actions," Spain's BBVA Research said in a research note.

Tushar Poddar, chief India economist at Goldman Sachs, wrote this week that he expected a roadmap for a Goods and Services Tax, greater access for foreign investors to the insurance and defence industries and incentives for manufacturing.

A finance ministry report on Wednesday laid out the government's vision for a sustainable reduction in the fiscal deficit through a lower food and fertilizer subsidies and broadening India's tiny tax base.

The report's tone increased speculation that Jaitley will give a higher, more realistic fiscal deficit target for this fiscal year than the 4.1 percent of gross domestic product set by the previous government.

But political realities such as the looming elections could make the government reluctant to act too quickly despite commanding the first outright parliamentary majority for any Indian political party in 30 years.

"It is but natural for the new government to move ahead gradually so as to avoid policy-induced distortions," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.

Many of India's economic ills are structural and will take time to fix regardless of the government's appetite or strength. Food inflation, energy shortages and weak institutions will slow the pace of reform.
Source: Reuters

GLOBAL MARKETS-Asia stocks rise on Fed relief, dollar dips

Asian equities rose and the dollar dipped on Thursday, after the Federal Reserve indicated that it was not in a rush to end quantitative easing and begin hiking rates.

MSCI's broadest index of Asia-Pacific shares outside Japan  gained 0.2 percent.

Tokyo's Nikkei rose 0.1 percent, despite a sharp drop in machinery orders reported minutes before the opening bell.

Japan's core machinery orders unexpectedly fell 19.5 percent in May from the previous month, casting doubt over the outlook for a pickup in capital spending.

But markets were more focused on the Fed.

According to minutes from the last Federal Reserve meeting released on Wednesday, the central bank acknowledged the recent strengthening in the U.S. economy but suggested it was unlikely to raise policy rates until the second half of 2015. 
"The Fed Minutes did not deliver anything new. In practice this is dovish as almost all market participants who expected a shift from the statement/press conference were on the hawkish side," strategists at CitiFX wrote in a note to clients.

"No one expected a more dovish message so the hawks are caught offside."

The absence of a more hawkish message from the Fed eased worries over interest rate hikes and helped Wall Street snap a two-day slide on Wednesday, while driving U.S. Treasury yields lower.

The dollar slipped 0.1 percent to 101.58 yen , weighed by lower Treasury yields. The yen was little fazed by the machinery order decline.

The euro stood little changed at $1.3643 after gaining more than 0.2 percent against the greenback the previous day.

Traders were also awaiting China trade data due around 0200 GMT. 

The data will give the markets a chance to gauge whether a recovery is taking hold in the world's second-largest economy following a flurry of government stimulus.

China's exports are forecast to rise 10.6 percent in June from a year ago, faster than May's 7 percent expansion and the best showing in five months. Imports likely snapped back into positive territory, growing 5.8 percent, after May's 1.6 percent drop.
In commodities, crude oil extended losses after falling on faltering U.S. demand for gasoline and a Libyan oil field resuming output.

U.S. crude fell 0.45 percent to $101.83 per barrel.
Source: Reuters

Japan May core machinery orders record fall casts shadow over economy

Japan's machinery orders posted their worst monthly fall on record in May, defying expectations of a bounce and casting doubt on hopes that capital spending was picking up and could drive further economic recovery.

The 19.5 percent month-on-month fall in core orders in May from the previous months, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, compared with a median estimate of a 0.7 percent gain in a Reuters poll of economists.

That followed a 9.1 percent fall in April, data compiled by the Cabinet Office showed.

Thursday data directly contradicted the Bank of Japan's key tankan survey earlier this month, which found major Japanese companies plan to increased spending more than expected in the current fiscal year to March 2015.

Analysts have expected capital spending in Japan - long a weak link in the world's third biggest economy - to stay on track for a moderate recovery supported by steady corporate mood and earnings.

Capital spending holds the key to Prime Minister Shinzo Abe's campaign to engineer a revival after nearly two decades of mild deflation and stagnation.

However, the Cabinet Office cut its assessment on machinery orders, saying their rising trend is seen stalling.
Source: Reuters

Fed mulls policy exit, eyes October end of asset purchases

The Federal Reserve has begun detailing how it plans to ease the U.S. economy out of an era of loose monetary policy, indicating it will end its asset purchases in October and appearing near agreement on a plan to manage interest rates in the future, according to minutes of the last Fed policy meeting.

The minutes from the June 17-18 meeting indicate the Fed envisions using overnight repurchase agreements in tandem with the interest it pays banks on excess reserves to set a ceiling and floor for its target interest rate.

Though no decisions have been announced, the discussion has become detailed enough for Fed officials to contemplate the proper spread between the two - mentioned in the minutes as 20 basis points.

The minutes showed the Fed participants also "generally agreed" that monthly bond purchases would end in October, with a final reduction of $15 billion in monthly purchases of U.S. Treasuries and mortgage-backed securities.

Fed officials expressed overall confidence that moderate economic growth will continue and unemployment and inflation will gradually move towards the central bank's targets. If anything, there was concern recent low volatility in financial markets showed investors "were not factoring in sufficient uncertainty."

Analysts found little in the minutes to suggest the Fed will move forward its first interest rate increase, currently expected in the middle of next year.

But there was ample discussion about how the central bank should exit from policies put in place to fight the 2007-2009 financial crisis.

According to the minutes, there continues to be division over when the Fed should stop reinvesting proceeds of the $4.2 trillion in assets it purchased to support financial markets.

Ending reinvestment will put the central bank's balance sheet on a declining path , and some members argue that should not take place until interest rates have been increased.

In addition, the minutes indicated the reinvestment decision may not be an all-or-nothing choice: the central bank may try to

"smooth the decline in the balance sheet," perhaps by letting some maturities expire each month and reinvesting the proceeds of others.

The Fed’s exit strategy is complicated because its stimulus programs flooded the financial system with $2.6 trillion that has ended up back at the Fed as excess bank reserves. With that much money on hand, banks have little need to borrow from each other in the federal funds market - stifling an important interest rate tool.

The New York branch of the U.S. central bank has been testing the reverse repo facility since September as a way to help control short-term interest rates, and has seen strong demand from money market funds and other bidders.

In reverse repos, the Fed borrows funds overnight from banks, large money market mutual funds and others. The tool is designed to mop up excess cash in the financial system which could keep market rates too low if left in circulation.
Source: Reuters

Peruvian Gold Producer: PR Fitch Ratings: Affirms Buenaventura IDR's 'BBB' Outlook Stable

Chinese Lead Way as Foreigners Step Up Purchases of U.S. Homes

        The WSJ reports,"Chinese customers purchased $22 billion in housing for the 12-month period ended in March, or around 24% of all foreign sales by dollar volume, up from $12.8 billion, or 19%, during the year-earlier period.

Total international property purchases stood at $92.2 billion, according to the NAR's estimates, up from $68.2 billion the year before and $82.5 billion for the year ending in March 2012. The tally includes purchases by recent immigrants, and accounted for around 7% of all sales of previously owned homes during that period.

European and Latin American buyers have helped push prices of South Florida condos to record highs, while Asian buyers have focused primarily on Los Angeles, San Francisco and Las Vegas. Foreign buyers of all stripes have sent prices of new Manhattan developments to astronomical levels.

For many foreigners, American housing markets are both a bargain and a haven amid concerns over unsustainable asset values abroad. Chinese buyers in particular "want to diversify because the housing market over there is just way too hot," said William Yu, an economist at the University of California Los Angeles.

Favorable exchange rates have also boosted many foreigners' potential purchasing power. Given the relative weakness of the dollar, "after our housing downturn, homes became even more valuable if you were shopping with the yuan," said John Burns, chief executive of a home builder consulting firm in Irvine, Calif.

Chinese buyers have been particularly active in Irvine and Los Angeles' San Gabriel Valley, which is home to several long-established Asian immigrant communities. Commercial air traffic between Los Angeles and mainland China is up more than 400% since 2003, according to John Burns Real Estate Consulting Inc.

Political instability is also a source of concern to wealthy Chinese, said Mr. Yu. "There's no trust in the rule of law," he said. "If they're making money, smart people are going to try to keep the money here in case something happens in China."

Canadians accounted for 19% of property buyers last year, down from 23% in the year-earlier period. Chinese accounted for 16% of buyers, up from 12%".

Markets little changed ahead of Fed minutes

 A global stocks index was little changed on Wednesday as strong U.S. earnings offset weaker European industrial data ahead of key central bank news.

Markets were looking ahead to a speech by European Central Bank President Mario Draghi and minutes from the most recent Federal Reserve meeting, with special focus on any mention of a timeline to raise U.S. interest rates and the Fed's take on strengthening economic data.

Alcoa Inc reported results after Wall Street closed Tuesday, beating analysts' expectations and lifting the aluminum maker's stock more than 3 percent.

Wall Street opened higher, lifted by the good earnings mood, but gains are barely making a dent on losses sustained in the previous two sessions.

"The market was encouraged by Alcoa, especially since we were arguably oversold in the very short term," said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group in Greenwich, Connecticut.

"However, it's hard to predict big moves ahead of all the news coming out next week, and there's no reason to suspect we couldn't pull back further," he said, in reference to the heavy earnings calendar.

The Dow Jones industrial average <.DJI> rose 49.19 points or 0.29 percent, to 16,955.81, the S&P 500 <.SPX> gained 7.42 points or 0.38 percent, to 1,971.13 and the Nasdaq Composite <.IXIC> added 23.24 points or 0.53 percent, to 4,414.70.

The FTSEuroFirst 300 index of leading European shares was down less than 0.1 percent <.FTEU3> and MSCI's global gauge of stocks <.MIWD00000PUS> ticked up less than 0.1 percent.

The dollar edged 0.15 percent lower against a basket of currencies <.DXY> and the euro strengthened 0.2 percent against the greenback .

Regarding the Fed minutes, any discussion by Fed members about a recent uptick in U.S. consumer prices will be key after Fed Chair Janet Yellen downplayed heating inflation data after the June meeting as being "noisy."

"The characterization by Fed Chair Yellen of the inflation pop-up as noise really took the wind out of the sails of the near-term hawks," said Steven Englander, global head of G10 foreign exchange strategy at CitiFX in New York.

Overnight, China said its consumer price index rose 2.3 percent in June from a year earlier, shy of the consensus forecast of 2.4 percent, and a sign economic activity may be cooling.

U.S. bond markets were steady ahead of the Fed minutes and Draghi's appearance in London, where two years ago he delivered his speech pledging to do "whatever it takes" to save the euro.

The benchmark 10-year Treasury note yield was unchanged at 2.565 percent with traders setting up for $21 billion in 10-year note supply. The yield on Germany's Bund slipped to a 14-month low of 1.21 percent.

Upbeat U.S. employment data last week prompted some economists to predict the Fed would raise interest rates earlier than previously thought, but yields have since fallen, with investors cautious about the strength of the recovery.

Brent oil fell 0.5 percent to $108.35 per barrel and U.S. crude dropped 0.9 percent to $102.49.

Gold was up 0.5 percent at $1,324.70 an ounce.

Source: Reuters