Commodities

41

The death of coal comes to Asia

Via the AFR: Policy changes flagged by politicians and government departments in Vietnam, Indonesia and Bangladesh, and a full moratorium on new coal plants in the Philippines, may result in just 25 gigawatts (GW) of new coal-power projects getting built this year. That is an 80 per cent reduction from the 125GW planned five years ago,

1

Can China replace Australian iron ore?

Via SCMP: Brazilian port operator Grao Para Multimodal’s executive director, Paulo Salvador, knows there is plenty of untapped high-grade iron ore in northern Brazil, but a mix of bureaucracy and limited capital have stymied efforts to begin production for years. Across the states of Para, Piaui and Tocantins, there are at least three mines amounting

2

Goldman’s 10 reasons for a new commodity super cycle

Via Goldman: 1) OPEC and Georgia help neutralize near-term risks. The events of last week substantially reduced the downside risks to our bullish commodity narrative — a fact reflected in the rise in oil and copper alongside the sharp decline in gold. First, Saudi Arabia agreed to a unilateral production cut that neutralized current lockdown

9

China trade war on itself sends LNG prices mad

Via Argus: Strong consumer demand, lower-than-expected temperatures across northeast Asia and a severe shortage of prompt LNG supplies and spot tanker availability have combined to send northeast Asian spot LNG prices to an all-time high — just nine months after hitting record lows. The front half-month ANEA price surged to $21.785/mn Btu for first-half February

14

How long can China keep building 14k skyscrapers per year?

That’s the question that has plagued me for ten years. Via James White of Lessep Investment Management, at the AFR: If China’s annual residential property sold was built in Eureka Towers (14,000 of them) and one constructed every 65 metres, it would line the Hume Highway from Sydney to Melbourne. In terms of population, 14,000

7

A quiet warning on iron ore

A sensible suggestion from Matt Canavan: We should apply a levy on exports of iron ore to China. The funds raised can be used to compensate the Australian industries harmed by China’s actions. Our exports of iron ore to China amount to $85bn a year. So even just a 1 per cent levy would raise

1

Daily iron ore price update (choked)

Iron ore prices for December 8, 2020: Spot at new highs. Paper flamed out. Steel ahs not updated. Some explanation of recent price strength from Robert Rennie: Our bulk shipping activity models point to surprisingly weak November iron ore exports at 70mt, down from 76mt in October. Given the strength of Chinese iron ore imports

2

ABARES: Agribusiness income to surge despite China

Via Bloomie comes ABARES outlook for 2020/21: The value of its agriculture production is forecast to gain 7% in 2020-21, an upward revision from the September estimate of no change. This is supported by a winter crop that’s on track for its second-largest harvest, a promising rainfall outlook and elevated livestock prices. Value of agriculture

2

China cuts off nose to spite face as iron ore revenues skyrocket

Via the ABS: Key statistics The seasonally adjusted balance on goods and services surplus increased $1,641m to $7,456m in October. Exports of goods and services rose $1,819m (5%) to $35,720m. Imports of goods and services rose $178m (1%) to $28,264m. Main features Key figures, Seasonally adjusted Aug-20 ($m) Sep-20 ($m) Oct-20 ($m) Change Sep-20 – Oct-20 ($m) Change Sep-20 –

27

How to politely drop an iron ore bomb on not China

This idea has been around for a while but perhaps its time has come. From The Glass Pyramid: Over the last few weeks the airwaves have been buzzing about the falling national income (and the problems for Mr Hockey’s budget) due to the rapid decline in the price of iron ore and Twiggy Forrest’s calls for restraint

6

Jeffries: Copper the new boom metal

Via Jeffries: In this report, we evaluate copper demand under three different scenarios. In each scenario, we assume global GDP growth of 2% per year after 2021. The key difference in each scenario is our assumed rate of growth of renewable power capacity. We also assume that investment in electric networks aside from power plants