Australia’s terms-of-trade retraced in Q1

By Leith van Onselen Within today’s dump of balance of payments data that feeds into tomorrow’s June quarter national accounts release was the important news that Australia’s terms-of-trade fell by 1.3% in seasonally adjusted terms but rose by 1.0% in trends terms: Over the year, the terms-of-trade rose by 2.1% in seasonally adjusted terms and


RBA commodity price index rose in August

By Leith van Onselen The RBA has released its commodity price index for August, which increased 1.5% in SDR (currency weighted) terms – the key determinant of the terms-of-trade – as well as by 1.8% in Australian dollar terms: Preliminary estimates for August indicate that the index increased by 1.5 per cent (on a monthly


Banana Man abandons iron ore

Via Platts: Open interest in iron ore futures traded on China’s Dalian Commodity Exchange has fallen below 1 million lots in August, after peaking in April above 2.6 million lots. Iron ore open interest stood at 975,722 lots last Thursday, a year-to-date low, and at 981,858 lots on Monday. One lot is 100 mt. The


Fortescue sinks again

Interesting to note that the Fortescue share price is again in free fall: It’s not a very pretty chart with support around $3 and that’s about it. The culprit is discounts that just won’t narrow, via Platts: Australian miner Fortescue Metals Group has maintained the discount for term contracts for 58.3%-Fe Fortescue Blend fines and


Daily iron ore price update (down)

Iron ore prices for August 27, 2018: Spot down. Paper down. Steel down. I think the top is in here. The price signal from steel does not need to be this high and we’re entering the seasonally weak period plus Chinese Winter shutdowns. World Steel is still booming though: World crude steel production for the


The future of iron ore

Terrific stuff here from Westpac’s Justin Smirk: •Demand for iron ore has been very robust this year but more importantly there has been the collapse in Chinese ore production in response to industry reforms as well as a soft patch in imports. The more rigorous implementation of environmental policies has hit iron ore miners hard.


Daily iron ore price update (peak)

Iron ore prices for August 24, 2018: Spot firmed. Paper was flat. Steel fell. Rebar inventories are still one million tonnes higher than last year yet steel prices are 30% higher. Doesn’t make sense to me given even if Winter shutdowns are a little longer they we already know that idle capacity can cope. I


Turkey to smash commodity prices

Vai Damien Booey at Credit Suisse: Europe goes “cold Turkey” We have just published an article explaining why we are concerned about contagion risks from Turkey (attached). We argue that Europe is going “cold Turkey” in two respects: 1.    The ECB has warned us about banks’ EUR exposure to Turkey. 2.    The ECB still plans to go ahead with


Daily iron ore price update (orgy)

Iron ore prices for August 13, 2018: The stimulus party rolls on, largely confined to futures markets. This is still not inconsistent with seasonal patterns, especially so since the Winter shutdowns bring forward demand. Rebar inventories are still falling at a decent clip even if well above last year. My outlook remains unchanged. Overnight Chinese


China is fantastically reliant upon Australia

We all know how it ends. Eventually China is overwhelmed by its own bad debt. The dreams of empire crumble to empty vestiges, wealth greys with demographics, dynamism sinks into the rentier bog and endless growth into secular stagnation. This is China’s destiny and Australia will suffer for it. But in the meantime we are


Daily iron ore price update (much ado)

Tianjin benchmark lifted 65 cents to $68.75. Paper fell overnight. Rebar inventories fell again last week but remains well above the lows of last year. CISA daily steel output is trending down solidly. Steel prices have clearly responded to easing Chinese monetary policy. But there is nothing here out of the ordinary yet in terms


Giant LNG pirate ship arrives to plunder Australia

Via the AFR: Shell’s groundbreaking Prelude floating LNG plant off Australia’s far northwest coast has gone “live” ahead of the start of production later this year, chief executive Ben van Beurden has confirmed. LNG and liquefied petroleum gas have both been introduced into the plant in preparation for commissioning and testing of processes and systems


RBC: Iron ore crash ahead

Via RBC: The Chinese economy has stayed resilient through the first months of 2018, but the combination of an expected cyclical slowdown, increasingly challenging monetary conditions and increasing risks of tariffs to the wider economy points to a slowdown in Chinese steel demand in the second half of the year. We see a near-term destocking