Commodities

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.

6

China’s hot and cold shipping

Bloomie has got some new indexes for shipping that are showing a rather mixed picture for the Chinese economy: On the on hand, we see a pretty healthy bounce in containerized traffic (red). At the same time, however, China’s Coastal Bulk Freight Index(white) is flat following the big fall last year. The orange line is

11

World steel growth stalled

Overnight, the World Steel Association released it production figures for May and was more zombie growth: World crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 131 million tonnes (Mt) in May 2012, an increase of 0.7% compared to May 2011. China’s crude steel production for May 2012 was

7

Bulk commodities still mixed

In recent days we seen a number cross-currents in the bulk commodities. On the positive half of the ledger, the spot  iron price (white) and 12 month swaps have based (yellow) , as have Chinese steel prices (purple and green). The recovery is quite muted as this point, no doubt reflecting generally weak global economic

3

US gas price goes bananas

Courtesy of Sober Look. This morning’s EIA natural gas in storage report took everyone by surprise. We started out with this projection. Bloomberg: The U.S. Energy Department’s natural-gas inventory report, scheduled for release at 10:30 a.m. in Washington, will show that supplies rose 2.6 percent last week, according to a survey of Bloomberg users. The government’s

4

China’s coal glut

Courtesy of Also Sprach Analyst. Regular readers will know that H&H has been covering the decline in the thermal coal price. One of the factors at play is that as electricity production growth stalls in China, and power plants’ coal inventory remains high, inventory elsewhere is rising in ports and warehouses. No one is buying. China

0

Commodities daily

Find below commodities daily courtesy of ANZ. For extra spice I’ve thrown today’s bulks chart, which shows iron ore and 12 months swaps rolling over (blue and yellow). It will be interesting to see what the PROC versus Fed does to the price. Chinese steel prices have at least stopped falling for now (green and

0

A psychological slowdown

Find below another interesting note from the ANZ commodities team about a recent trip to China. It has some good texture and decent analysis around short term developments around stimulus, even if it fails to address the now widely accepted conundrum that China faces vis-a-vis the shelf life of its fixed asset investment model. ANZ

2

Chinese stimulus and iron ore

ANZ released an interesting note late yesterday on the prospects for a rebound in the iron ore price in second half. The note is interesting on a couple of fronts. Firstly, there are some mixed messages coming out of the bank about China’s iron ore stockpile. Regular readers will recall a recent video with ANZ