Energy and Natural Resources Market Cheat Sheet (January 31, 2011)

Saturday, January 29th, 2011

Energy and Natural Resources Market Cheat Sheet (January 31, 2011)

Strengths

• China imported 164.8 million tonnes of coal in 2010, up 31 percent compared to 2009, and exports dropped 15 percent to 19.03 million tonnes. Indonesia remains China’s largest supplier followed by Australia.
• The latest U.S. weekly crude steel output reported by the AISI is back to levels last seen in June, at 83.3mtpa, representing a capacity utilization rate of 73 percent.
• China’s stainless steel output rose 28 percent last year to 11.3 million tonnes. Imports fell by 18 percent to 1.07 million tonnes, while apparent consumption increased 14 percent, according to the Stainless Steel Council.
• India pumped 3.34 million tonnes of crude oil in December, the highest monthly output, according to the oil ministry.

Weaknesses

• U.S. natural gas futures prices fell 8.5 percent this week on a forecast for milder weather.
• The Baltic Dry Index fell to the lowest level in almost two years as Australian floods curbed coal cargoes and supply of new vessels increased.

Opportunities

• Environmental regulators in Texas have approved an air quality permit, thus paving the way for construction of a thermal power plant in Corpus Christi. The EPA had earlier requested that Texas deny the permit. This event adds to the ongoing feud between Texas and the EPA. There are still further permits needed for the plant to come to reality, and in all likelihood, this initial permit will be challenged.
• Copper prices will rise as the global economy grows and construction recovers in developed countries, according to Caterpillar, Inc. Copper will average $4.25 a pound in 2011, Caterpillar said in its fourth quarter earnings statement. That’s up 24 percent from last year’s average. Global production of copper will increase 2 percent as prices are currently very attractive for new investment, the company said.

Threats

The latest estimates by the Queensland Resources Council suggest coal production loss may cost the industry up to $9.5 billion and output may go down by up to half of forecast production of 51 million tonnes during the quarter ending March 31. The report says that 85 percent of Queensland’s mines are “impaired by excess water.”

Tags: Aisi, Apparent Consumption, Baltic Dry Index, Capacity Utilization Rate, Cargoes, Caterpillar Inc, China, Copper Prices, Crude Steel, energy, Fourth Quarter Earnings, Gas Futures Prices, Global Economy, Global Production, India, Natural Gas Futures, Natural Gas Futures Prices, Oil Ministry, Paving The Way, Queensland Resources, Resources Council, Steel Output, Thermal Power Plant
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U.S. Equity Market Diary (November 22, 2010)

Sunday, November 21st, 2010

U.S. Equity Market Diary (November 22, 2010)

The figure below shows the performance of each sector in the S&P 500 index for the week. Five sectors increased and five sectors decreased. The best-performing sector for the week was industrials which rose 0.82 percent. Other outperforming sectors were energy and consumer discretion. Financials were the worst performer, followed by utilities and materials.

Within the industrials sector, the best-performing stock was Fluor Corp., up 5 percent. Other top performers were Honeywell International Inc., Caterpillar Inc., Avery Dennison Corp. and Pall Corp.

Strengths

• The specialty stores group gained 5 percent, led by its largest member, Staples Inc., which reported third quarter results that appeared to be favorably received by analysts and investors.
• The apparel and accessory group outperformed, rising 5 percent. The stocks of all three members of the index (Coach Inc., Polo Ralph Lauren Corp., V.F. Corp) rose for the week.
• The leisure products group outperformed, up 4 percent, led by Mattel Inc. The toy maker increased its dividend by 10.7 percent and increased its stock repurchase program by $500 million. In addition, an SEC filing showed that Icahn Capital LP bought 2.4 million shares of Mattel in the third quarter.

Weaknesses

• The homebuilding group was the worst performer in the S&P 500 this week falling by 8 percent. October housing starts fell to 519,000 from a revised 588,000 in September, below the 598,000 expected by economists. Also, building permits, a sign of future activity, rose by 0.5 percent to 550,000, but were less than the 568,000 forecast.
• The healthcare facilities group underperformed, losing 6 percent, led down by its single member, Tenet Healthcare Corp.
• The real estate services group lost 6 percent on the weakness of its single member, CB Richard Ellis Group Inc. The company held its annual business review day for analysts and investors this week.

Opportunities

• There may still be opportunity for gains in merger and aquistion (M&A) transactions in 2010. Corporate liquidity remains high, thereby providing the means to pursue acquisitions.

Threats

• As investors’ expectations for an improving economy not materialize on a reasonable time frame, stock prices could be threatened.
• As governments around the world begin to wind down the monetary and fiscal stimulus programs put in place during the economic crisis, it will likely present a headwind for stocks.

Tags: Avery Dennison, Avery Dennison Corp, Caterpillar Inc, Cb Richard Ellis, Cb Richard Ellis Group Inc, Ellis Group Inc, Estate Services Group, Fluor Corp, Honeywell International Inc, Market Diary, Mattel Inc, Pall Corp, Polo Ralph Lauren, Polo Ralph Lauren Corp, Ralph Lauren Corp, Staples Inc, Stock Repurchase Program, Tenet Healthcare Corp, Third Quarter Results, V F Corp
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