Take Chinese bulk defaults in your stride

The ANZ commodity team has a note out this morning suggesting that recent defaults by the Chinese in the bulk commodity space is nothing to be worried about. The note contains some interesting detail and is worth a quick read. However, the note also argues that the recent weakness is not some harbinger of doom


Chinese defaulting on bulk contracts

The World Steel Association last night released April crude steel production statistics and news is mixed: World crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 128 million tonnes (Mt) in April 2012, an increase of 1.2% compared to April 2011. China’s crude steel production for April 2012 was


Is iron ore swimming naked?

It’s not until the tide goes out that you know who’s been swimming naked, said Warren Buffet famously. Today a video by Reuters of ANZ Bank’s Nicholas Zhu sneaking into Qingdao port to examine enormous stockpiles of iron ore raises the discomforting notion that some large component of Australia’s export boom is shriveling in the


Bulk weakness spreads

Australia’s balance of trade is getting beaten up again. Two of out three bulk exports are still sliding. Iron ore 12 month swaps are accelerating downwards: The spot price is following: China steel prices have also rolled over. Rebar: And hot rolled: Thermal coal fell too: Coking coal appears to be stable. The aggregate value


Where does all of that iron ore go?

ANZ has produced a useful note on the outlook for iron ore. Regular readers will recognise plenty of conventional wisdom at work here, with the basic argument being that ongoing modest growth in Chinese demand and the cost curve for supply will support prices in the $120 to $160 range. That’s fair enough if more


Are bulk commodities in a bear market?

If you’ve read MacroBusiness Morning, you’ll know that iron ore prices fell last night. In the past couple of weeks, the ore price has retraced modestly some 4.4% to $142.70. I’ve asked The Prince to give me a technical take on the bulks and the news is not all that great. First iron ore: There


Shale gas hype: Subprime 2.0

The following is by Yves Smith and is cross-posted from Naked Capitalism. It has some important implications for Australia’s own gas boom, not all of them bad.  If my RSS reader is any guide, most of the press about shale gas has focused on two issues. First, shale gas is in considerable supply, cheap to produce, and


RBA commodity prices up a tad in April

From the RBA this afternoon: Preliminary estimates for April indicate that the index fell by 1.6 per cent (on a monthly average basis) in SDR terms, after rising by 0.5 per cent in March (revised). The largest contributors to the fall in April were decreases in the prices of coal, oil, gold and aluminium. In


An African iron ore deluge

PhD candidate Luke Hurst of the ANU’s Crawford School of Public Policy has produced new research on the potential impacts of African iron ore on the sea-born iron ore price. I recommend everyone read this paper (find it at the end). It’s solidly argued and a very readable summary of the various arguments put forward


Chart of the Day: nuclear power

Today’s chart comes from Reuters and shows the rapid deceleration in nuclear power generation in Japan as the aftermath of the Fukushima tragedy: For reference, here is worldwide electricity production, as reported by the World Nuclear Association, with the following stats: There are now over 440 commercial nuclear power reactors operating in 30 countries, with


Commodities Daily

Courtesy of ANZ – find the full report below the excerpt: Newcastle coal front month futures slipped with activity quieter than usual, as most market participants attend China’s CoalTrans (CT). In one presentation, BHP said China’s coking coal demand is expected to remain resilient to 2025, supported by capital and infrastructure spending in its steel