Mining projects go ballistic

From NAB today comes this little note on a big subject, the developing pipeline of major mining projects: AUS: Resource project listing sky-rockets to $232bn from $173bn in April Prior to the release of the Government’s mid year review of the Budget this morning, an updated listing of major resource development projects has also been


Iron ore weakens again

The SMH report this morning that Rio is striding towards ever greater expansions of its iron ore output: Rio Tinto has revealed plans to expand its flagship iron ore operations in Western Australia beyond previous expectations, but the news has been dampened by confirmation that capital costs for the project will also rise higher than


Is Dr Copper worth a look?

Copper is a sort of middle of the pack commodities play, and Australian copper companies are in the middle of the pack in global terms, according to UBS. The price has been weak in recent months because of the general nervousness, risk aversion, and concerns about Chinese growth. There are predictions of limited mine growth


Precious palladium

In a recent discussion with a gold and precious metals analyst I have known for a long time, he described a gold conference he recently attended in Europe. Many of the European investors who attended, mostly German and Swiss, were, he said, not really there to learn about the market. They were there to buy


Chart of the Day: Oil is oil

Today’s chart plots the widely quoted West Texas Intermediate Crude (WTI) price against the ICE Brent Crude price since the early 2009 low following the GFC (non-Australian readers call this the Great Recession) The chart shows the recent divergence, whereby the former corrected alongside other “undollar” assets, whilst ICE Brent remained resilient has now closed,


The race for ‘first gas’

While debate continues around land access and groundwater contamination, the coal seam gas industry in Queensland is powering ahead in a race for ‘first gas’.  Which begs the question, why the rush? It is no secret that government is a few steps behind the resource companies in terms of providing a solid regulatory framework for


Chart of the Day: Crude divergence

Today’s chart plots the CRB Index, a weighted basket of 19 commodities, against the two major crude oil products, West Texas Intermediate (WTI) and ICE Brent Crude. The horizontal orange line was the support area for the CRB during the minor correction throughout the 2006-07 lows, before the large bubble in commodity prices through 2008,


How big the ore bounce?

So, with a temporary floor under the ore price, it’s time to ask how big is the bounce likely to be? We have had a solid rebound so far with spot up another 1.7% last night to $125, 12 month swaps are at $129.50 unchanged and Shanghai rebar is also flat. According to Reuters, traders


Chart of the Day: S&P500 vs CCI

Following on from Friday’s Chart of the Day, today’s chart from the McClellan Market Report (via Pragmatic Capitalism), shows how closely correlated commodities have become with the stock market: Note that the commodity index used is the old CRB index now called the CCI (which MacroBusiness reports on each morning through the Daily links post).


The iron ore crash in context

Yesterday saw the little bounce in the ore price continue with spot up 0.76% to $119.30, 12 month swaps reversed course and were down 2.1% to $125.55, whilst Shanghai rebar was again little moved. This looks like a weak bounce. I’m not confident that the correction is over. But today I want to discuss what


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


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


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


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


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


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