Posts Tagged ‘Seasonal Demand’
Energy and Natural Resources Market Diary (October 11, 2010)
Sunday, October 10th, 2010
Energy and Natural Resources Market Diary (October 11, 2010)
Strengths
- The Reuters/Jefferies CRB Commodity Index breached a new 52-week high on Friday in response to the Federal Reserve’s expected quantitative easing program (money printing) and prospects of improving global growth.
- Bulk freight continued its sharp rebound with the Baltic Exchange Capesize Freight Index up 7.9 percent on Friday to 3,786 amid growing expectation of a Chinese restock.
- The price of copper broke out to a new annual high price of $3.78 a pound. A rising copper price has historically been associated with a growing global economy, particularly in China.
Weaknesses
- Steel Business Briefing has reported that an official with the United Steelworkers Union believes that U.S. Steel Canada will idle the 1.8 million ton per year (mtpa) blast furnace at the Hamilton works in Ontario this week amid softening market conditions.
- Platts reports that recently announced $40/ton steel plate price increases in the U.S. are not sticking according to market participants.
- The price of natural gas fell to a 52-week low of $3.62 per Mmbtu this week on waning seasonal demand and ample domestic supplies.
- Latest port data for Brazil and Australia on iron ore show a surge in exports to China in recent months. Australian estimated iron ore exports in September were 38.3 million tons, up 9 percent from the prior month and 12 percent year-over-year. This represents a new monthly high and an annualized rate of 438mtpa.
Opportunities
- According to one recent research report, Iraq will require as much as $110-$115 billion in spending/capital investment over the next seven years in order to increase oil production to 12 million barrels a day by 2020.
- Commodities could extend a rally that has lifted prices more than 10 percent since late August, if central banks pump billions more dollars into the global economy to prop up the sputtering recovery. Raw materials prices surged after U.S. Federal Reserve Chairman Ben Bernanke said on August 27 the Fed was prepared to use “unconventional” policies such as buying more long-term securities to drive down interest rates, if necessary.
Threats
- Copper production at the 520,000 ton per day Collahuasi mine in Chile could be affected by labor issues later this month or in early November. The labor contract expires on October 31 and early reports suggest that the probability of industrial action is higher than normal.
Tags: Baltic Exchange, Blast Furnace, Brazil, Canadian Market, Capesize, Central Banks, China, Commodities, Copper Price, Crb Commodity Index, energy, Freight Index, Global Economy, Global Growth, India, Iron Ore Exports, Jefferies, Market Diary, Market Participants, Mmbtu, Money Printing, Natural Gas, Natural Resources, oil, Price Of Copper, Price Of Natural Gas, Seasonal Demand, Steel Business Briefing, United Steelworkers Union
Posted in Brazil, Canadian Market, China, Energy & Natural Resources, India, Markets, Oil and Gas | Comments Off
Energy and Natural Resources Market Diary (June 21, 2010)
Saturday, June 19th, 2010
Energy and Natural Resources Market Diary (June 21, 2010)
Strengths
- U.S. domestic steel mill utilization increased to 74.6 percent for the week ending June 12 versus 73.8 percent in the previous week. Quarter-to-date utilization has averaged 73 percent and year-to-date utilization 70.1 percent.
- U.S. industrial production rose by 1.2 percent month over month in May and is up 7.6 percent year over year. This was driven in part by strong output from utilities, although auto production also gained traction in the month, rising to an annualized rate of 8.02 million.
- China coal railings in January-May totaled 814 million metric tons, up 17.9 percent over the same period last year. Robust demand in downstream industries during those months and surging coal output contributed to the growth. Power consumption was up 22 percent year over year in January-May, and China coal output was up 20.6 percent.
- Natural gas futures prices gained 7 percent this week on forecasts of increased demand from hotter-than-normal weather and a reduction in the year-over-year inventory surplus.
Weaknesses
- Tokyo Steel Manufacturing, a large Japanese electric-furnace steel producer, reportedly cut prices by as much as 12 percent for July contracts, the first reduction in six months, as price competition with Asian mills intensified and costs fell.
- Copper imports by China declined for a second consecutive month in May amid ample domestic supplies and on prospects of weakening seasonal demand. The customs office said that shipments of copper and products were 396,712 metric tons in May. This is 9.1 percent below April’s 436,350 metric tons and 6.1 percent less than 422,670 metric tons a year earlier.
Opportunities
- Rio Tinto has announced that it will invest $469 million to build the Kennecott Eagle nickel and copper mine in Michigan’s Upper Peninsula. Construction of the mine will begin this year and should be complete by 2013.
- An expert from China’s National Development & Reform Commission has stated that the investment in high-speed railway construction will remain at around RMB 700 billion annually in each of the next five years, compared to RMB 600 billion in 2009, according to Antaike.
Threats
- The U.S. Army Corps of Engineers announced immediate suspension of the Nationwide Permit 21 program for surface coal mines in six states in the Appalachian region. The move is the latest step by U.S. authorities to crack down on mountain-top removal mining on concerns over the impact to valley streams and waterways.
- Interfax is reporting that the China State Council has announced that the government will not allow the construction of any new steel-making facilities before the end of 2011. Projects that received prior approval may proceed. It is estimated that China currently has the capacity to produce 700 million metric tons, with May data indicating production of 660 million metric tons on an annualized basis.
Tags: Auto Production, China, China Coal, Coal Output, Commodities, Copper Mine, Customs Office, Domestic Steel, Electric Furnace, energy, Gas Futures Prices, Kennecott, Market Diary, Million Metric Tons, Natural Gas, Natural Gas Futures, Natural Gas Futures Prices, Natural Resources, Power Consumption, Rio Tinto, Robust Demand, S Industrial, Seasonal Demand, Second Consecutive Month, Upper Peninsula
Posted in China, Markets | Comments Off
