Foreword
By Olivia Campbell, Sales & Marketing Director

Introduction
Everyone loves commodities, it seems. 'China Syndrome', Super-Cycles', 'Resource Depletion', 'Stronger for Longer', 'Supply Bottlenecks' and so on now dominate analytic circulars and the general media. They have almost become the sycophancy of modern day journalism.
By Guy Isherwood.

Pipeline Diplomacy
Russia's economic might is being exercised to re-establish its authority and prestige on the world stage. Natural resource markets are the beating heart fueling this ambition. Russia has learned to flex its natural resource muscle since President Putin came to power. Again in May this year, and ahead of the 30th EU-Russia Summit in Samara, its clout was enhanced by Putin's crude but effective diplomacy in Central Asia.

China's Heavy Energy
The scale of China's economic emergence this century is no better exemplified than by her energy use. Here, we profile a new report, China Energy: A Guide for the Perplexed, a joint project by the Center for Strategic and International Studies and the Peterson Institute for International Economics.
By Guy Isherwood.

Sukuk Market Growing at 45% Per Annum
Islamic bonds (sukuk) have grown dramatically in recent years and are now a major capital market product. This development reflects the widening of the regional market, the increasing demand for financing - particularly in the Gulf Cooperation Council (GCC) countries - for infrastructural development, and the desire of many regional and international investors to diversify their portfolios.

Hedge Funds Get 'Down & Dirty' With Ocean Freight
The dirty business of deep sea shipping of bulk commodities like crude oil, gasoline, iron ore and coal is a far cry from the clean cut trading offices of successful hedge funds - but that is changing fast. The hedge fund industry is rapidly becoming an influential participant in ocean freight, but via an interesting avenue.

US$ 30bn Carbon Market
The 7th World Bank carbon market intelligence study shows that the global carbon market tripled in 2006 - to US$30 billion from US$10 billion in 2005, [State and Trends of the Carbon Market 2007].

Commodities Trading & the UK Market Abuse Regime: Following the US Lead?
The exponential growth of the commodities markets in recent years - which has attracted new classes of investors to a hitherto specialised marketplace - has caused the UK Financial Services Authority (FSA) to intensify its scrutiny of the sector. Significantly, in March this year, the FSA published a detailed review of the commodities markets identifying what it characterised as significant risks which need to be addressed by participants.
By Doron Ezickson, Kate Learoyd & Prajakt Samant.

Managing Carbon Risk in EU ETS Phase II
The focus of players in the EU ETS is switching to Phase II which begins in 2008.
By Andreas Arvanitakis.

Middle East: Building Ahead
Continued high oil and gas prices have replenished the coffers in many Middle Eastern exporting countries. Oil and gas exporters amassed US$585 billion in earnings last year - about three times the level seen in 2002. The key policy challenge for the region now is to sustain or even accelerate growth in order to make significant inroads into reducing poverty and unemployment and in establishing programs to boost social and infrastructure investment.

Captive Power in GCC: The development of power projects in the Middle East.
Buoyed by stable high prices for hydrocarbons, rapid economic growth of the Gulf Cooperation Council (GCC) states has been accompanied by rapid growth in the demand for electricity. According to the EIA's World Energy Outlook 2006 the Middle East and North Africa will need 3,01GW of additional generation capacity by 2030, with a projected investment cost of US$203 billion, and not counting network investments worth US$255 billion. Despite the healthy projections, the current model used to tender for capacity in the region is likely to fail to provide the required security of supply and pricing certainty needed to develop a robust non-hydrocarbon based industrial sector. Industrial clients will find doing business more expensive since they will have to provide for their own power requirements.
By Kim Keats Martinez.

Middle Eastern Promise
The fact that around 20% of the world's high rise cranes can currently be found hard at work in Dubai provides some indication of the scale of the construction boom in the Middle East. There is US$45 billion worth of ongoing real estate projects in Dubai and it is estimated that the value of infrastructure projects in the pipeline across the Middle East is over US$1 trillion. Clearly, there is huge demand for materials in the industrial sector, particularly for a versatile commodity such as aluminium.
Ian Cogswell assesses the development of aluminium projects in the Middle East.

Ethanol: An Energy Alternative in Need of a Plan - and Hedging Vehicle ...
In view of the large amount of attention that ethanol is getting these days, we thought it would be useful to look at the potential of this budding sector, discuss its role as an alternative energy source, and perhaps of most interest to readers, evaluate the kind of hedging applications that exist.
By Edward Meir.

Global Status of Commercialised Biotech Crops
This article summarises the global status of commercialised genetically modified crops (GM - now more commonly called 'biotech crops'). Its focus on developing countries is consistent with the 'International Service for the Acquisition of Agri-biotech Applications' (ISAAA) mission to assist developing countries in assessing the potential contribution of biotech crops to food security and poverty alleviation. Our principal aim is to present a consolidated set of data that will facilitate a knowledge-based discussion by society of the current global trends in biotech crops.
By Clive James.

Trading Signals for Base Metals
Trading Signals based on LME Warehouse Inventories Data
This is the first document in a series of three focusing on inventory-based trading signals for base metals. The signals are derived from the daily changes in 'on warrant' inventories in London Metal Exchange (LME) approved warehouses.
By Jesper Dannesboe.

Mixed Fortunes for PGMs Continue
Exchange Traded Commodities Provide Support
The price performance of Platinum Group Metals has been resilient for the past 12 months. Notwithstanding extra supply from South Africa, this particular group of precious assets looks set to continue to deliver - so long as commodity prices more generally remain robust.
By Guy Isherwood.

From Dice to Carbon Price
Despite their young age, EU carbon emissions markets have already proven themselves as a volatile price environment. Some of the most dramatic price developments can be explained by the way in which market sensitive information was released by the European Union. On top of that, the very mechanism of the EU Emissions Trading Scheme also influences the term structure for carbon forwards; the likelihood for emission rights to become in short supply is an important risk driver to the curve dynamics.
By Michel Verschuere, Ph. D.

Top 10 Energy Market IT Related Developments - 2007
The commodity markets, and the energy sector in particular, continue to undergo significant developments in market structure. Here, we highlight the top 10 energy IT related market trends.
By Paul Mahady.

Total Wreck or Fender-Bender?: Knowing When It's Time To Replace Your ETRM System
Living with a complex and expensive software system as part of your business can be a trying affair. When it is also mission-critical, the experience just gets more intense. After the cost, effort, and sometimes the pain of selecting, purchasing, customising and implementing a system, you want it to be perfect. All the data goes in smoothly. All the calculations are correct. Reports run on time. Your IT support budget is under control. Features your traders have never had available before work flawlessly. Everyone is happy, busily taking advantage of this wonderful new tool procured for them.
By Rich Pedersen, KPMG LLP.

Unmanaged Risks in Energy
Major energy firms, banks and other organisations involved in energy trading have put in place a variety of processes to manage risk. However, despite firms' efforts, many risks in the energy markets are still not managed properly. Here, we look at some of these risks, examining why they remain unhandled and putting forward suggestions for their improved management.
By Jon Davies.