Commodities

Its an interesting start to 2016 for commodity markets with tensions over the weekend between Saudi Arabia and Iran spilling out this morning as the kettle and pot call each other out as black.

The big resources bear market rally is off and running with BHP up 4.2%, RIO up 3.2% and FMG up 3.5%: This is pretty mild stuff for a short squeeze suggesting either that it has not gotten going yet or it isn’t going to.

From Bloombergo: After a rough 2015, all Paula de Souza Vieira wanted — like millions of other beach-obsessed Brazilians who flood the coast at year-end — was a good vacation.

The Mining GFC is ending the year with a bear market rally driven by some better news for oil and steel, pretty ordinary economic data out of the US reaffirming slow rate hikes and rumblings of more Chinese stimulus.

From the AFR comes a journalist disappearing into the RIO PR slag pit: Unassailable.

Some…err…journalistic correction today from Fairfax: Loss-making iron ore miner Atlas Iron has been granted some breathing space by the majority of its lenders, who have agreed to a plan to cancel $US132 million ($183 million) of their debt in exchange for options and shares in the junior exporter.

The Brent oil price took off last night and is at $37.63 as I write.

Here are the iron ore charts for December 23, 2015: Spot stable with Tianjin benchmark unchanged at $40.20.

Some relief today for big iron, finally, with BHP up 3.5%, RIO up 5% and FMG up 4%: Dalian is down a point of two so it’s not that.

From the AFR: Oil giant Royal Dutch Shell has told shareholders the $US53 billion takeover of BG Group will act as a “springboard to change and reshape” the group, and outlined plans for job and spending cuts, as well as $US30 billion of asset sales that look certain to affect the business in Australia.

From Fairfax: Loss-making iron ore miner Atlas Iron has been granted some breathing space by most of its debtors, who have agreed to a plan to cancel $US132 million ($183 million) of their debt in exchange for options and shares in the junior exporter.

From Macquarie Bank: ORG has stayed a re-emerging financial risk that in a low oil price environment APLNG will require a cash injection to establish the debt service reserve ie 6 months of interest expense and debt amortisation (~$750m) along with the opex reserve (~$700m) instead of internal earnings.

The Brent oil price lifted a little overnight after keeping its head just above GFC lows and is trading at $36.31 as I write.

From Fairfax: The federal government has given approval to the revised expansion plans for the Abbot Point coal terminal, which will see dredged material dumped on land rather than at sea.

From the AFR: Origin Energy has acted to protect itself from a further dive in crude oil prices, paying $82 million for “put” options for oil and forward selling cargoes from its new $24.7 billion liquefied natural gas project in Queensland.

Big iron can’t catch a bid despite the rising ore price hinting firmly at a gathering de-rating for the sector, and not before time.

Here are the iron ore price charts for December 21, 2015: Spot still firming with Tianjin benchmark up 0.2% to $39.40 but it is lagging paper now which flamed-out after a rip higher yesterday.

The Brent oil price is sitting right on its GFC lows after falling again last night to $36.17.

From Macquarie:  The evidence from previous episodes of when the Fed has began hiking is mixed.

Big iron can’t find a bid today despite the incipient price rebound with BHP up 0.2%.

Via Macquarie:  The International Energy Agency (IEA), often referred to by coal producers due to its bullish outlook, today released their Medium-Term Coal Market Report to 2020.

Here are the iron ore charts for December 18, 2015: Spot up with Tianjin benchmark up 2% to $39.30. Paper too with a Dalian rip. Rebar up. Port stocks rocketed 1.9 million tonnes (mt) to 92.4mt.