Find above the iron ore price complex chart for December 11, 2012. Here is the ore chart: And steel chart: Pretty clearly, spot iron ore has broken free of fundamentals, associated prices and all sense, twirling, twirling, twirling towards freedom! My spread charts are now registering dangerous over-stretch for this price range. Swap versus spot:
It looks like my call that the end of the LNG boom is nigh is fast becoming conventional wisdom. From The Australian: Macquarie analyst Adrian Wood says Australian capital expenditure on LNG projects may peak next year, with the recently approved Ichthys development increasingly likely to be the country’s last new project to move into
In what is perhaps a strategic “leak” for the benefit of shareholders, the AFR is carrying a story on how the Gorgon LNG project is shifting to higher productivity practices: Staff working on Chevron’s $US52 billion Gorgon liquefied natural gas project have been banned from using chairs and told not to sit down during their shifts in a bid
Find above the iron ore price complex chart for December 10, 2012. The recent Chinese data seems to have suddenly convinced traders that Chinese rebalancing is a sham. Not without justification. The data flow showed pretty clearly that it is more investment that is driving the rebound in growth. Still, the move is highly speculative.
From the AFR this morning: Australia faces spiraling gas prices and a domestic gas shortage by 2016 unless new reserves are opened up for production, according to the official energy forecaster. …AEMO’s Gas Statement of Opportunities report, to be released today, says the LNG export market based around Queensland’s Gladstone was having a significant impact on the domestic market.
The Australian today writes that: The worldwide expansion of gas production may force Australian exporters to settle for lower prices after a Japanese company negotiated a landmark contract pegged to US domestic gas prices. The deal between Kansai Electric Power and BP is the first contract in Japan to be linked to gas rather than
Find above the iron ore price table for December 7, 2012. As you can see, spot hit the afterburners. Last week’s Politburo rhetoric and a little support from rebar seems to have sent traders barmy bullish. Good for them, what’s the evidence? First, here’s the ore chart: And the steel chart: Local bulk shipping rates
Find above the iron ore price complex chart for December 6, 2012. Some more stability clearly, no doubt on the ongoing hope that China will support growth, as the Politburo suggested. Still, for now, the raw volume figures remain lacklustre. Here is the November Port Hedland shipping chart for iron ore: Figures tend to weaken in
An important report economic modelling report commissioned by the US Department of Energy (DOE, which will determine the extent of LNG exports) has concluded that there is no senario in which the US does accrue net benefits from expanding its LNG exports. The report by NERA is available in full here. It’s conclusions are as
S&P has a note out affirming that the ratings for LNG companies will be supported by favourable regional pricing for a few more years: Global gas prices have increasingly diverged in the past two years, highlighting differing demand-supply dynamics and gas price conventions between regions. The divergence also demonstrates the arbitrage opportunities that exist between
From the AFR: Chevron has suffered a cost blowout of almost $10 billion at its Gorgon liquefied natural gas venture in Western Australia, with labour costs, poor productivity, logistics problems and weather delays taking the budget up to $52 billion. More upgrades to Australia’s spending pipeline! But seriously, this is not as bad as feared,
Find above the iron ore price complex table for December 5, 2012. As you can see, for yesterday at least, the gap between swap and spot was closed in favour of the latter: So, is the correction over? I don’t think so. And neither does ANZ, which released its monthy forecasts for the commodity complex
Find above the iron ore price complex chart for December 4, 2012. A good day for iron ore, defying my recent pessimism. Still, it seems I’m not the only one expecting ongoing falls. From Reuters: Construction activity slows during winter in China, cutting demand for steel products, whose prices have fallen recently to levels last seen
Brazil’s Vale has announced further cuts to its planned iron ore expansions. From the Globe and Mail: Brazil’s Vale SA , the world’s second-largest mining company, cut estimated 2013 capital spending by 24 per cent after a global slowdown and a drop in iron ore prices led the company to rethink its outlook for expansion.
Here is the the iron ore price complex chart for December 3, 2012: Spot still resilient, really, with some hope as well that swaps have bottomed. Not so long as Chinese steel prices keep falling, however. In some good news for the bulks and beleaguered thermal coal miners, it looks like a breakout from the recent
Things are not looking good for the iron ore juniors. From BS: Shares in Sundance Resources remain in a trading halt, as a potential takeover deal with suitor Hanlong Mining appears to be falling apart. Sundance released a statement on Monday saying Hanlong wanted to delay the deal because it could not secure credit approval
From ANZ: Last week Newcastle physical thermal coal prices were up 2.5%, but iron ore and coking coal prices fell 2.8%. Australian thermal coal prices gained on improved activity on-screen ahead of January annual term talks between producers and Japanese utilities. Traders were reportedly covering short positions ahead of year-end. Premium hard coking coal prices ended the week lower, in line
Find above the iron ore price table for November 30. As you can see, the slide is gathering pace, especially in China where rebar is now crashing towards its low for the year: Given this, the spot price is still dramatically out-performing: The percentage spreads between spot and swap and spot and rebar thus remain
But what exactly? The AFR and BS are reporting it’s all about productivity: Rio said it had boosted the size of the expansion plans to 360 million tonnes from 353 million tonnes previously through de-bottlenecking and productivity improvements with minimal spend. It has a current production capacity of 237 million tonnes and expects to reach 360 million
BREE (Bureau of Resources and Energy Projects) has released its much anticipated major projects update and although the numbers are epic, the peak is very much in sight. Just to confuse, BREE has introduced a methodology, making like for like comparisons with past reports difficult: This release of the Resources and Energy Major Projects report