Commodities

3

Coking coal crunched again

Friday saw a little more downward pressure on the iron ore price but coking coal was smacked for another 5% last week: Newc spot bounced last week adding 3.5% to USD85.65/t, while coking coal continued its decline falling 5.5% to USD182.27/t. Although prices at the premium end of the thermal coal spectrum gained ground, a succession of utility tender

2

Macro Investor: Mining services whimpers

By Chris Becker Over the weekend, reports continued to emerge following BHP-Billiton’s (BHP) announcement of a large impairment charge on its US shale gas assets on Friday, that expansion plans in the Pilbara will be put on the backburner. CBA analysts first reacted by cutting earnings forecasts at BHP – but this already looked priced

3

Dead cat borence?

The bounce in iron ore looks weak. Rather like a dead cat. Here’s yesterday’s moves: And the charts. No change to steel prices: But 12m iron swaps reversed substantially: Maybe a test of the low or straight through? The rally in China’s bulk shipping indexes is slowing too: The rally could be more short lived

2

RBA commodity price index falls

The RBA commodity price index for July is out and shows a 2.4% fall for July: Preliminary estimates for July indicate that the index rose by 1.3 per cent (on a monthly average basis) in SDR terms, after rising by 0.3 per cent in June (revised). The largest contributors to the rise in July were

1

ANZ cuts commodity price forecasts

Find below ANZ’s new commodity price forecasts, which include material downgrades to the iron ore complex. The ANZ team is excellent. Still, I can’t help feeling that an average price of $140 early next year is pretty bullish. ANZ Commodity Insight – Price Revision

10

Ore bounces

My call for a short term bounce in iron ore is firming up. Overnight we saw positive moves across the complex: And to the charts. For steel: As well as ore itself: Looks like the head and shoulders pattern may miss, which is good news to say the least. Nonetheless, I would caution against hopes

22

Ore breaks the neckline

Here’s your daily update ore prices. Not a lot of action yesterday but prices still fell on the spot market. In fact, they took out last year’s October low and the neckline on our scary head and shoulders pattern: The break is minor and may be bear trap but even so not encouraging. Neither is

2

Coking coal crunched

Just when you thought it might be safe to wade back into bulk commodities, coking coal gets crunched. From the ANZ Commodity Daily: Newc spot added 1.5% to USD82.8/t last week in light, macro-driven trade, while coking coal tumbled 9.7% to USD192.9/t as producers offered significant discounts to attract buyers. Despite the price cuts, buying interest is reported

4

Ore reaches the neckline

Here are Friday’s closing prices for iron ore: And the charts. First, Chinese steel: In short, prices fell again, despite rumours of monumental regional stimulus packages. There is clearly still fundamental weakness in the steel market. And for ore: The price of $116.20 is right on the neckline support of last year’s crash at $115.89

5

Has ore found a bottom?

Here’s your morning ore update: So, 12 month swaps finally found a bit of support even if spot continued its descent through the neckline of its head and shoulders pattern. Given the hand-wringing that has suddenly seized the MSM over iron ore, one can’t help wondering if we’re not at the bottom here, at least

12

It’s ore guesswork

By Michael Feller Like oil, which we analysed in MacroInvestor on Monday, the iron ore market is awash with divergent indicators. While spot and swap prices have been tracking lower in recent weeks – analysed today at length by Chris Becker and before that by David Llewellyn-Smith – many an investor has lost his or

26

Terms of trade taking a hammering

As predicted, coking coal is now breaking down in sympathy with iron ore. From the ANZ commodity daily: Newc September futures added 0.2% to USD87.8/t, while coking coal dropped sharply to USD202.1/t on reports of distressed cargos being offered at significant discounts. The sentiment surrounding coking coal has deteriorated in recent days due to continued concerns about weak demand, high

54

Ore’s not well

  By Chris Becker The thundering falls of iron ore continued overnight with spot prices falling almost 4%, and swap by nearly 3% with steel (rebar/billet) slipping slightly: This was on the back of news that Chinese buyers have asked for deferrals on shipments – from the FT: Traders and analysts said that Chinese buyers

39

Free steak knives with your boom!

By David Llewellyn-Smith Why is the AFR backtracking on the Deloitte report it rightly cast as the end of the mining boom yesterday? Talk that Australia’s mining boom will end in the next few years misreads the Deloitte Access Economics report on the front page of this newspaper yesterday. Rather than ending, the boom is

4

Coal gets smacked too

Fresh from this morning’s gloom over iron ore, comes this morning’s ANZ commodity report with the news that thermal coal is also plumbing new lows and coking coal is weakening: Newc spot dropped 4.8% last week to USD81.5/t, while coking coal fell 0.7% to USD213.6/t. Prices have continued to decline following muted buying and high inventories. In addition,

5

Iron ore gets ugly

The Friday close for iron ore was not pretty. Here are the key prices: And the charts, first steel: And now ore: Shanghai rebar and iron ore 12m swaps have broken their October lows well and truly. It’s clear air below. Spot will follow. No idea how low this goes, but I wouldn’t be at

3

China coal inventory surpasses GFC peak

I have mentioned a couple of times that coal inventory in China has reached historical high both in ports and at power plants as demand for electricity (and hence coal) slows amid slowing economic growth, while production of hydroelectric power picked up recently. The chart below is from Goldman Sachs, which shows the coal inventory days at major

2

The commodity rally is all about grains

Courtesy of Sober Look. Here is a good summary of commodity returns as of the end of last week. Overall the CRB commodities index is down 3.1% year-to-date. The index was down as much as 12.5% back in June but recovered as the North American drought pushed up agricultural commodity prices (10.8% rally in less than a

19

Iron ore is breaking down

Find above the latest spread of key iron ore prices. Chinese steel prices have rolled over and are falling, both billet (green) and rebar (pink). 12m iron ore futures have busted support and are threatening new lows vis-a-vis last year’s plunge. Iron ore spot is sitting right on the support that has held since last

7

Bulks rolling over?

Find above a chart of the latest key bulk markets. There are signs that, like broader markets, we’re about to witness another roll over in prices. The white line is iron ore and the yellow 12 month iron ore futures. Both are bumping along the bottom of their respective trading ranges. But what concerns me

19

Food prices on the up

Global food prices have been on the rise lately. Whether it is the heat wave in the US or the floods in Russia there is little doubt that agricultural commodities have broken away from the recent despondent price action in industrial or “hard” commodities. This is one of the core macro themes we’ve been looking

8

Iron ore volumes boom

The AFR is reporting that: Iron ore exports from Port Hedland, used by miners including BHP Billiton and Fortescue Metals Group, rose to a record level in the June quarter. The total exports of 64.7 million tonnes during the period topped the previous quarterly record of 60.9 million tonnes set during the December quarter and was

15

China’s ghost ships ply the bulk routes

From Reuters today comes an interesting story that complements this morning’s coal musings: China’s huge fleet of coastal ships, usually confined to plying the Chinese seaboard, has sailed out of the shadows to seek international business in yet another sign that China’s economy is slowing. The fleet, previously unnoticed by the global market, is suffering from

48

Coal catches Dutch Disease

Regular readers will have caught whispers in a number of posts at MB that there is a problem brewing in Australia’s thermal coal sector. Prices have been hit hard this year as China slows and the dramatic spike in fixed costs as well as the dollar is forcing a margin squeeze in the sector, even

40

Could gold hit $6000?

Find below a Bloomberg video in which an analyst of some sort claims gold could go to $6,000. Regular readers will know that I have been a long term believer in the gold bull market (indeed, MB itself is to some extent the result of my gold investment) but I take such predictions with a

13

Bulk stall = China stall?

Here’s a chart of iron ore spot (white), futures (yellow) and major Chinese steel prices (rebar green and billet purple), as well as China’s GDP (red): Without putting too fine a point on it, it is fair to say that there is a correlation between iron ore and steel prices and Chinese growth. Anyone describing the

15

Australia’s commodity volume bonanza

The Bureau of Resource and Energy Economics (BREE) is out with its latest quarterly assessment of commodity markets. I like BREE. They tend to forecast more conservatively than one might expect. The major story emanating from the latest update is the fruits of the long predicted surge in volumes in Australia’s major commodity exports, which

36

Peak oil no more?

Courtesy of Sober Look. Those who keep professing that “peak oil” is just around the corner or has already been reached should take a look at this Harvard paper (ht John A). The author (Leonardo Maugeri) analyzed oil exploration and development projects field by field globally to determine how oil production is expected to grow.