Iron ore bounces (from a fall it never had)

It had to happen. Iron ore has found a bottom for now. The ore spot price closed yesterday up 1.3% to $118.40. Twelve month swaps are up big for two days and 5.5% yesterday to $127.94. Shanghai rebar is steady at 3640. So, is it over and can we expect a v-shaped recovery? First things


China spoils the party

Let’s party! Yes, it’s a world party and we’re all invited. At least, everyone else is. I’m sober, and, like some stale chaperone, worried. Still, let’s face plant into the punch before we call the police. Preliminary US Q3 GDP came in at 2.5%, right on expectations. Here’s the chart from Calculated Risk: This is an


Iron ore crash

Iron ore is crashing. Overnight the price fell 7% plus to $131.70: Thankfully, 12 month swaps only fell 1% to a new low of $117. Shanghai rebar was also flat on the day. But, as China iron ore port stocks show, there’s plenty in reserve if the draw down continues: So, there’s some inconsistency here. Obviously


Woodside parts the brokers

Woodside Petroleum is getting the attention of brokers, with raw enthusiasm the general tenor of the analysis. The stock is on a prospective price earnings ratio of 16 times and gross profit margins in excess of 50%, which gives it some buffer against any weakness in energy prices. Gas looks like a pretty strong long


Iron ore still falling

Yesterday brought no respite for iron ore. The 12 months swaps market fell another 3.08% to a new low at $117 and Shanghai rebar was down 2.44%. Ore itself fell 1.3% to $145.80. If you combine this with the dizzying crash of copper, 6% last night to a new correction low, you have to ask


Chart of the Day: Commodities rule

Today’s chart comes from the MarketSci blog, and illustrates the increasing correlation between commodities and equities: This chart shows the 3 year monthly correlation of the S&P500 (the broadest US equity index) and the Goldman Sachs commodity index, from 1970. Although the GS Index is not as diversified as the CRB Index, the comparison is


Boom and bust in iron ore

You know the ore market is in trouble when contracts start to disintegrate. There’s a raft of reports indicating just that this morning. The pick is from the AFR (and is free) but owing to its archaic attitude to the internet, copy and paste is disabled, so I can’t provide any of it. Here’s an


What’s freaked Swan out?

As I posted last night, the Treasurer, Wayne Swan, released a rather dour communique to Parliament indicating that Australia was ready to take on GFC 2.0. The timing of the missive seemed fairly random, though it did obviously seek to bring pressure to bear upon Europe prior to the G20, such as it is. I


Who really owns Antarctica?

I have often argued with extreme libertarians (and anarchists) that the existence of property rights first requires the existence of a government with a monopoly on coercive force (ie. government requires the largest armed force).  If such an entity didn’t exist, then the largest armed force would simply take control and become the government.  Many


Chart of the Day: Pay dirt in AUD

The Prince is on hiatus for a week, so I’ll be filling his Chart of the Day shoes. Today’s chart shows iron ore and thermal coal prices in Australian dollars.  They are typically quoted in USD however our big miners pay their Oz operations in Oz dollars, so these graphs are important. Iron ore’s recovery from the GFC


Iron bomb

Australia’s lifeline in China, John Garnaut reported this morning the worrying news that: The Chinese steel mills that have been holding up the Australian economy are under pressure, with steel prices falling and iron ore prices expected to follow. Robust steel demand in China led Australia to post a record $5.9 billion in iron ore


Is mining threatening our food security?

..there must be some data that they could have used to address the “value” of having future food security. This was a request once made of me in the context of losing productive capacity in agriculture from cutting water entitlements on environmental grounds.  It certainly got me thinking.  Given the recent conflicts between farmers and


RBA releases commodity prices

The Reserve Bank of Australia (RBA) has released its preliminary estimates for September 2011 commodity prices. Here’s the summary (emphasis added): Preliminary estimates for September indicate that the index rose by 1.0 per cent (on a monthly average basis) in SDR terms, after rising by 0.3 per cent in August (revised). The largest contributors to


Chart of the Day: Roll over CRB

Today’s chart will be very simple and illustrates what is happening on risk markets around the world. Its an index I’ve followed previously, the CRB Index – which measures a basket of 19 commodities, split amongst the energy, base metals, agricultural etc. And what is the chart saying? Rollover and stay down. The QE effect


The commodities crash

No doubt you will have noted the collapse in commodity prices that accelerated on Friday night, even as equity markets remained flat. Just in case you are unaware, here are a couple of quick charts. First the CRB: And its more volatile cousin, the CCI: The crash is across the commodity spectrum but is especially


Red gold rush

So, BHP has announced a profit of epic proportions. The Age sets the scene nicely: BHP Billiton has vaulted into the ranks of the world’s top 10 earning companies – and sparked fresh debate over how much tax Australia should collect from its booming mining sector – after the resources giant posted a staggering $A22.46


RBA Commodities Index

Sorry we missed this one on Friday. RBA reports commodities are still heading for the moon Preliminary estimates for June indicate that the index rose by 1.3 per cent (on a monthly average basis) in SDR terms, after rising by 3.7 per cent in May (revised). The largest contributors to the rise in June were


Charting Commodities

On news of the 4.6 percent decline in crude oil yesterday, in response to the International Energy Agency’s announcing a release of supplies from strategic reserves, and after my look at gold yesterday (which also fell last night) I thought I’d have a closer look at where we stand with commodities. First, the two major


ABARE bets on US stimulus

The ABARE quarterly update of commodity prices for the year ahead is out today. First, the key macroeconomic assumptions:   God knows, it’s no easy job putting that lot together but let’s unpack a couple of assumptions. US growth projected at 2.9%, hmmm…well, maybe. The first quarter of this year was 1.8% and the economy


The commodity bubble

In its recent Bulletin, the RBA has a new piece of research that questions the role of financialisation in commodity prices. The research has some spectacular charts and ultimately concludes that new financial instruments “short-run price dynamics for some commodities, the level and volatility of commodity prices appear to be primarily determined by fundamental factors.”


Can the oil stabiliser work?

So, last night oil got thumped, down 2%. Given the fall, and the prospect for further weakness, I thought it might be useful to ask, where oil might head to and what the implications are for this price trajectory. The stakes could not be higher. There’s an opinion at large that the current slowdown in


China’s great iron ore pile

I won’t lie, the iron ore price has been making a goose of me for almost two years. At various points my forecast for big falls has almost been right but in total I have been clearly wrong. My prediction has been frustrated by tear away fixed asset investment in China, new market dynamics and


Commodities hit new record

Missed this one yesterday. From the RBA’s Index of Commodity Prices: Preliminary estimates for May indicate that the index rose by 2.3 per cent (on a monthly average basis) in SDR terms, after rising by 7.3 per cent in April (revised). The largest contributors to the rise in May were increases in the estimated export prices of


Correlated risk is off

Stock markets around the world are either in full flight correction (Australia) beginning, or wobbling along. Yesterday we had the Asian stock markets, with the ASX200 down 1.88%, Japan (Nikkei 225) down 1.52%, Hong Kong (Hang Seng) over 2.11% and Singapore 1.83%. This action was continued through to Europe, with the German DAX down 2%,


The silver highway to regulatory risk

Silver is not probably one of the metals you watch. While we hear about the price of gold all the time Silver is in many ways the poor cousin. But if there was ever going to be a useable metallic standard it would probably be silver rather than gold. This fact has been picked up


Commodity boom gets bigger

The RBA has released its monthly commodity index and its up substantially again. Even with the dollar, there is another 3.8 rise for April. Preliminary estimates for April indicate that the index rose by 7.6 per cent (on a monthly average basis) in SDR terms, after rising by 0.8 per cent in March (revised). The


Silver’s Unrelenting March Higher

Another great guest post from The Bullion Baron. The current Silver rally is exhilarating. Even as I write this the chart I’ve used below is basically out of date with Silver having soared higher to almost US$42 during Asian trade today, only around $8 below it’s all time nominal high of $50 set in January


The mad, bad commodity rally

There’s something wrong with this rally. To be honest, beyond some vague notion of Japanese reconstruction demand, I can’t find any real cause for it. With China clearly not done with tightening, QE2 about to cease, the ECB hiking rates, global growth past its prime and oil punching through $1.10 on Gaddafi’s scorched earth policy,


Boom and bust is back

With Brent and WTI crude both surging to post-GFC highs Friday, I’m beginning to suspect that the world has entered a new era of oil price and growth volatility that spells the end of the Great Moderation. Why so? Supply and demand are the key to all things economic.  Previously at this site, the Unconventional


Rio has a whinge

Some days rent-seeking is a challenging business. Take Tom Albanese, CEO of Rio Tinto, who today held forth on the evils of government intervention in mining. According to Reuters: Besides, technical constraints, we are also seeing human constraints. We are seeing a combination of resource nationalism in some cases,” he said, citing “difficult governance” in