Citi has joined the recent debate about whether the commodity super cycle is finished (or nearly so) with an argument in the affirmative. Bulls like to point to the fact that the apparent intensity of use for steel (in terms of kg per capita) for China is still well below some other countries at their peak. However,
By Leith van Onselen The Bureau of Resources and Energy Economics (BREE) released its Resources and Energy Quarterly—March quarter 2012 (report below) yesterday, which provides a bullish outlook for Australian commodity exports. From the press release [my emphasis]: Australia’s resources and energy commodity export earnings are forecast to continue to grow over the medium term
After yesterday’s bombshell from Ian Ashby, President of BHP iron ore, Citi published a report on steel which said that steel-making raw materials are “capped on the upside” because the Chinese porperty sector continues to normalise. Global crude steel production, they believe, will only grow half the rate of 2011 for this year: We think steel-making
Anything related to China’s economy seems to provoke endless debates. While one bloke from JPMorgan announced that a hard landing is already happening in China, not all people in JPMorgan apparently agree, with Jing Ulrich saying that the worst for the real estate market is over, and some bloke for Gung Fangxiong claiming that the
The RBA released its monthly Commodity Price Index this afternoon and the “once in a century boom” continues: Preliminary estimates for February indicate that the index rose by 1 per cent (on a monthly average basis) in SDR terms, after rising by 1 per cent in January (revised). The largest contributors to the rise in February were increases in
Find attached NAB’s monthly commodity forecasts. She’s a slow old day so this might make some interesting reading. It’s a reasonable enough document though with my own view that China is likely to struggle with a bouncy (though not hard) landing I’ll take the under on most projected prices. Commodity Update M&E – Feb 2012
So, as predicted, ore looks vulnerable and continued its weakness last night. The spot prices got whacked another $2.20, down 1.6% to $137.40. We are still some ways above the next chart supports at $130.80, the post rout lows of late last year: Sadly for the miracle commodity, the 12 month swaps, which tend to
Iron ore has had a nice bounce since the October rout of last year but there are signs that that has run its course and new weakness is appearing across the charts. For a start, the spot price itself has rolled over and is accelerating downwards: Next, a look at the 12 month futures is
Today’s chart comes from Scott Barber from Reuters and puts the cost of fuel at the pump in Europe, and why a cheap Euro may not be wanted: www.twitter.com/ThePrinceMB
Yesterday’s oil production chart prompted some interesting discussion on the economic outlook for a world facing physical limits to energy resource extraction, and the peak of oil production in particular It is one more important factor to add to the impact of debt dynamics and the political response to recessionary conditions when considering the global
Today’s chart comes from The Bullion Baron, who has tracked the magnitude of silver’s rises and falls from 2004-2011: www.twitter.com/ThePrinceMB
On the heel’s of the release of the RBA’s paper on the mining boom, and the excellent analysis by The Unconventional Economist, comes a Dow Jones Newswire piece, reposted at The Oz: Global demand growth for iron ore is set to slow in 2012, bringing down average iron ore prices from last year’s record high.
Usually when I think of the CRB (Commodity Research Bureau) Index I’m looking at it as part of my toolkit for the Australian Dollar outlook. But I was talking to a few mates over in Perth yesterday and thoughts turned to the relationship between the CRB and the S&P ASX 200. We all have our
Some fascinating an in-depth research from Forecast: “Keep an Eye on the Baby”. The summary: La Nina returns, and is seen persisting through northern hemisphere spring and maybe summer The impacts are well-known after the disastrous effects of the – albeit more severe – 2011 episode Foodstuff prices could again spike further – agriculture index
The Reserve Bank of Australia (RBA) yesterday afternoon released its Index of Commodity Prices for the month of December. According to the release: Preliminary estimates for December indicate that the index fell by 1.0 per cent (on a monthly average basis) in SDR terms, after falling by 0.2 per cent in November (revised). The price of gold
According to the AFR this morning: Falling industrial output in Australia’s key mineral export markets of China and Japan is putting pressure on energy coal prices. China is reportedly pushing back on shipments of thermal coal from Australia and Indonesia as inventories in Qinhuangdao and Guangzhou, as well as at coastal power stations, continue to
Find above the updated chart for Port Hedland iron ore shipments. November numbers were down 2% with China down 1%, Japan up 10%, and the ROK down 12% and Taiwan down 39%. To put it bluntly, only China matters.
Reuters reports this facinating tale this morning from Brazil: The world’s largest iron ore carrier is disabled and could sink at a key Brazilian port from where Vale, the world’s No.2 mining company, loads about 10 per cent of the global iron-ore trade, shipping agents and media said on Monday. The crippled Vale Beijing is
The Reserve Bank (RBA) released the Index of Commodity Prices today, with preliminary results suggesting a rise of 0.2% for November, for a total rise of 16% for the year (in AUD) and remain at record high levels. Preliminary estimates for November indicate that the index rose by 0.2 per cent (on a monthly average
From NAB today comes this little note on a big subject, the developing pipeline of major mining projects: AUS: Resource project listing sky-rockets to $232bn from $173bn in April Prior to the release of the Government’s mid year review of the Budget this morning, an updated listing of major resource development projects has also been
The SMH report this morning that Rio is striding towards ever greater expansions of its iron ore output: Rio Tinto has revealed plans to expand its flagship iron ore operations in Western Australia beyond previous expectations, but the news has been dampened by confirmation that capital costs for the project will also rise higher than
Copper is a sort of middle of the pack commodities play, and Australian copper companies are in the middle of the pack in global terms, according to UBS. The price has been weak in recent months because of the general nervousness, risk aversion, and concerns about Chinese growth. There are predictions of limited mine growth
In a recent discussion with a gold and precious metals analyst I have known for a long time, he described a gold conference he recently attended in Europe. Many of the European investors who attended, mostly German and Swiss, were, he said, not really there to learn about the market. They were there to buy
Today’s chart plots the widely quoted West Texas Intermediate Crude (WTI) price against the ICE Brent Crude price since the early 2009 low following the GFC (non-Australian readers call this the Great Recession) The chart shows the recent divergence, whereby the former corrected alongside other “undollar” assets, whilst ICE Brent remained resilient has now closed,
While debate continues around land access and groundwater contamination, the coal seam gas industry in Queensland is powering ahead in a race for ‘first gas’. Which begs the question, why the rush? It is no secret that government is a few steps behind the resource companies in terms of providing a solid regulatory framework for
Today’s chart plots the CRB Index, a weighted basket of 19 commodities, against the two major crude oil products, West Texas Intermediate (WTI) and ICE Brent Crude. The horizontal orange line was the support area for the CRB during the minor correction throughout the 2006-07 lows, before the large bubble in commodity prices through 2008,
So, with a temporary floor under the ore price, it’s time to ask how big is the bounce likely to be? We have had a solid rebound so far with spot up another 1.7% last night to $125, 12 month swaps are at $129.50 unchanged and Shanghai rebar is also flat. According to Reuters, traders
Following on from Friday’s Chart of the Day, today’s chart from the McClellan Market Report (via Pragmatic Capitalism), shows how closely correlated commodities have become with the stock market: Note that the commodity index used is the old CRB index now called the CCI (which MacroBusiness reports on each morning through the Daily links post).
Yesterday saw the little bounce in the ore price continue with spot up 0.76% to $119.30, 12 month swaps reversed course and were down 2.1% to $125.55, whilst Shanghai rebar was again little moved. This looks like a weak bounce. I’m not confident that the correction is over. But today I want to discuss what
The Reserve Bank of Australia (RBA) just released the preliminary estimates for October’s commodity price index: …the index fell by 3.9 per cent (on a monthly average basis) in SDR terms, after falling by 1.4 per cent in September (revised). The largest contributors to the fall in October were declines in the estimated export prices
