Commodities

The Mining GFC threw up an interesting mix last night with commodities diverging with other indicators.

Brent oil was hammered last night to within a whisker of its GFC lows before bouncing back to $38.19 as I write.

Here are the iron ore charts for December 14, 2015: Tianjin benchmark added 1.3$ to $37.50.

Big iron is down hard but nowhere near enough. BHP is down -2.7% to another post-GFC low (buy some more, Sykesy), RIO is down -1.5% and well above last week’s lows rather stupidly and FMG is down -3.3% but also hovering around last week’s lows despite now losing $495m per annum.

It is one of the great mysteries of our time.

It may have been the yuan devaluation, the collapsing oil price, or something else, but the Mining GFC took a sharp turn for the worse on Friday night.

Brent oil capitulated Friday night, smashed -5.2% to $37.67 and fast approaching GFC lows.

Here are the iron ore charts for December 11, 2015:    The iron ore price for Tianjin benchmark was bashed lower 1.3% to $37.

From Fairfax: Origin Energy has begun production at its Australia Pacific LNG project in Queensland, slightly behind schedule and amid the biggest rout in oil prices for years but marking a huge achievement for the venture after more than seven years of planning and construction.

From the FT: “We are going to deleverage this balance sheet,” said Ivan Glasenberg, Glencore’s chief executive, who is fighting to salvage his reputation as one of the top commodity traders of his generation.

Here are the iron ore price charts for December 10, 2015: Tianjin spot was smashed 2.1% to $37.50.

The Brent oil price is in free fall, down to a new post-GFC low last and at $39.57.

From the AFR: Junior exporter BC Iron has gone into a trading halt as its considers whether its flagship asset has a future amid depressed iron ore prices.

From Macquarie:  After falling ~3% this year, global steel demand will struggle to retain 2014 levels by 2020.

From Deutsche: …a default cycle in commodity-related areas at this point is unavoidable, and the only real question here is whether it stays contained to those areas or extends itself to other sectors”) and soon for most other sectors.

Here are the iron ore price charts for December 9, 2015: Tianjin spot was trashed another 1.3% to $38.30.

The Brent oil price was weak but managed to finish unchanged at $40.23.

As predictable as clockwork: Rio Tinto could still be considered a buy amid the current commodities carnage, according to investment manager AllIanceBernstein – which also recommends avoiding BHP Billiton and South32.

Tried to find this this morning and couldn’t, from Matthew Stevens: The suggestion that coal is on the chopping block looms another ugly challenge for the whole of the Australian coal sector.

From the AFR: Gina Rinehart, the richest Australian, is planning to see off Roy Hill’s first iron ore shipment in Port Hedland on Thursday, which the nation’s richest person said was one month ahead of her expectations as she lashed the media for “relentless negativity” surrounding the $10 billion project.

Oh, goodie, from Reuters: China will cut export taxes on steel billet and pig iron from Jan.

From UBS: Our valuation shows Santos and Oil Search (OSH) are more leveraged to oil price movement, but the sheer size of the fall in the Santos share price, in particular, relative to the oil price decline looks excessive in our view.