Commodities

30

The great Chinese power exchange

The Economist had a chart of the day earlier this week highlighting the new ultra-high-voltage projects in China: The largest connector under construction, the Changji-Guquan link, will carry 12,000MW (half the average power use of Spain) over 3,400km, from Xinjiang, in the far north-west, to Anhui province in the east. This is a good illustration

0

Oil rebalancing dreams

Job Done! The oil market is rebalanced according to the Saudis (from Bloomberg): OPEC and Russia won’t need to prolong output cuts beyond June because the agreed reductions will have already ended the oversupply in world crude markets, Saudi Minister of Energy and Industry Khalid Al-Falih said in Abu Dhabi on Monday. Unfortunately for oil

4

Iranian oil: back to pre-sanction levels

Another oil report from Oxford Energy, this time looking at Iranian oil and noting: Iran is broadly back to pre-sanction oil production levels. There is the potential for expansion, but that is years away as none of the agreements with European oil companies have progressed very far. There is LNG potential, but that is also

23

How Norway saved a trillion while Australia owes a trillion

Cross posted from The Conversation by Flavio Menezes Professor of Economics, The University of Queensland In the midst of the debate around whether Australia is correctly taxing miners, Paul Cleary provides a well-researched and written account of Norway’s approach to the development of its oil resources since the 1960s in his book Trillion Dollar Baby. Cleary

8

One more Trump coal threat for Australia

I don’t think the US exporting thermal coal to Asia is likely. But it is one more Trump risk for Australian coal that I was reminded of when I saw the latest EIA coal charts:   Note – this post is about thermal coal (to run power plants) – coking coal economics are different. The

8

OPEC deal falters as oil prices slump

The last few days has seen an unexpected slump in crude oil prices, with West Texas Intermediate (WTI – the main marker for US prices) futures falling from $54 to just above $50: While not a big move relatively for oil – which can throttle up 50% in a month or reverse the same quite

11

Coal – not dead yet, the body is still twitching

I’m a big fan of Oxford Energy, they produce well-researched energy analysis. Unfortunately, Oxford tends to be detail focused, not investment focused, and so there is usually a lot to wade through to tease out the effect on energy markets. Before Christmas they published a looong piece on South East Asian coal – the main

0

Daily iron ore price update (splat)

Iron ore price charts for December 22,2016:     The dream is over. Spot splatted though Tianjin benchmark is bit better -2.8% to $77.10. Paper fell more overnight and DCE looks ready to roll big. SGX is following. Steel fading. I have no idea why thermal is up but it’s not going to last. Coking is still

2

Stocks dodge the building China bond syndrome

Chinese bonds are bid a little today: And Dalian is flat: Under the surface, trouble still lurks, via Bloomie: Here’s another Chinese financial practice that’s prompting high-decibel warnings. So-called entrusted bond holdings are a way for financial institutions to skirt rules on using borrowed money to invest in bonds. How? By getting a third party

3

Another metal goes nuts for no reason

Via Credit Suisse: ■ The alumina price has climbed to $351/t, the highest for almost two years, driven by China. However, unlike late-2014, there is no fundamental alumina shortfall in China. In fact, the buoyant price caused Chinese alumina output to surge in Oct and Nov such that China was long alumina by almost 150kt

2

Chinese steel sentiment still very strong

From Macquarie:  Sentiment towards China’s steel market remains strong, as shown by our latest proprietary China steel survey. Steel mills reported a continued increase in their order volumes thanks to strong demand from auto, machinery and infrastructure sectors. Their capacity utilisation rate remained stable despite better profit margins, most likely influenced by recent environmental-related

7

Go to cash!

The USD rally sputtered last night: Commodity currencies were stronger but Aussie the weakest: Gold remains weak: Oil was soft: Base metals too: And miners: EM stocks got slammed: Though, oddly, EM high yield rallied: As did US bonds: Italian yields were stable: And stocks eased: I have no idea if the rally is due

0

Daily iron ore price update (painful)

Iron ore charts for December 21, 2016: Spot down. DCE paper down overnight. Steel down. Coal still dead cat bouncing. It’s trying to deflate but given the array of headwinds it is painfully slow. Tianjin port is shut owing to smog. Some support is coming from Cyclone Yvette: But, even so, one wonders how much

4

Big Iron sees light of hope in rising Chinese bond-fire

The Chinese bond-fire is rising again today and it is clearly a mini-crisis that could develop swiftly: Dalian is working it out: But not Big Iron. It sees hope in that fire! BHP is 1.3%, RIO 1.4%, FMG 1% and WHC 3%: Minor falls and broker upgrades must mean buy! Big Gas is fading too: Big

0

World steel output rebounds

From the World Steel Association: World crude steel production for the 66 countries reporting to the World Steel Association (worldsteel) was 132.4 million tonnes (Mt) in November 2016, 5.0% up on November 2015. China’s crude steel production for November 2016 was 66.3 Mt, an increase of 5.0% compared to November 2015. Elsewhere in Asia, Japan

0

Daily iron ore price update (absurdly high)

Iron ore price charts for December 20, 2016:   Spot is falling but remains absurdly high given the outlook for demand, supply and wider conditions. DCE paper wants to fall but so far has held on. Steel is falling. Mill margins have jumped as coking coal drops like a stone. More falls ahead in my

0

Dirt dumped, banks bought

Dalian has opened under pressure again: As Chinese bonds keep selling: And authorities are warning that liquidity will remain tight through the Q1 lending season: Tight liquidity in the interbank market is expected to continue until early February It recommends monetary authorities take steps to prevent the situation from getting worse Liquidity is forecast to get