Posts Tagged ‘Steel Market’
Saturday, May 19th, 2012
Energy and Natural Resources Market Radar (May 21, 2012)
- According to the Shanghai Futures Exchange, its copper inventory fell 9,178 metric tons to 187,449 metric tons.
- China’s steel product output rose 7.9 percent last month to 81.1 million metric tons from a year ago, according to the National Bureau of Statistics.
- China imported a record high 25.05 million metric tons of coal in April, up 90.1 percent year-on-year, Platts reported, citing preliminary customs figures. Chinese year-to-date coal imports rose 69.6 percent year-on-year to 86.55 million metric tons of coal.
- Stocks and commodities fell this week as the likelihood of a Greek exit from the eurozone has increased significantly during the past two weeks.
- Oil prices fell 4.8 percent this week. The current bout of concerns had arisen from the resurgent fears about the Spanish and Italian banking systems and speculation that Greece may have to exit the euro. Since then, for oil in particular, news reports suggesting that President Obama is seeking G8 cooperation on an oil stock release have compounded the depressing effect.
- Reuters reported that Chinese steel mills defer iron ore shipments owing to slowness in the steel market. Some Chinese steel mills are said to have postponed iron ore deliveries from suppliers such as Vale, given the slow steel markets. Producers are also expecting a further drop in prices.
- Global inflation might have already pushed the costs of exploring and producing oil from new most expensive projects, known in the industry as the marginal cost of production, above $100 per barrel, according to JBC energy consultancy. That compares to $50-$75 prior to the 2008 financial crisis. A decade ago, oil companies such as BP were saying they would start a project if oil traded above $17-$20. Even the International Energy Agency, which represents consuming nations, says production costs have gone up sharply. “There is not a single drop of oil in the world that cannot be produced at a price of oil of $85-$90,” IEA’s chief economist Fatih Birol told a summit.
- The Chinese government announced a new batch of new subsidies to promote the consumption of energy-efficient home appliances and autos on Wednesday. RMB6bn will be provided to fuel-efficient vehicles with engines below 1.6L, and an RMB26.5bn financial subsidy will be provided for energy-efficient appliance products, including all the major white goods products. This appears to be a clear signal of the government’s commitment to shift domestic demand toward more personal consumption and away from fixed asset investment.
- Oil industry executives and bankers are assuming oil prices will stay above $100 a barrel in the year ahead, despite mounting economic worries, as any fall below that level would trigger a cut in Saudi Arabia’s output and force closures at high-cost projects around the world. A Reuters straw poll of oil executives, traders, bankers and fund managers showed seven respondents predicting Brent crude trading at $100-$120 a barrel in the next 12 months.
- Boart Longyear, the world’s biggest provider of mineral drilling services, expects demand to remain strong as large mining companies proceed with projects. “We still see very strong demand, particularly from the majors,” Craig Kipp, CEO of the company said. “We haven’t heard from a lot of the majors outside of Australia that there’s a change in their plans or in their budgets. We haven’t seen any change in market dynamics – we’re operating all over the world,” Kipp said. “We do see that juniors, the second-tiers, have had problems getting financing,” he added.
- In a Wall Street Journal article last year at this time, Chief Executive Marius Kloppers said BHP would invest $80 billion by the end of 2015 to expand further. The eurozone crisis, slower Chinese growth, and falling metals prices are forcing BHP to now say it will be cutting those spending plans. Falling commodity prices and rising operating costs put its cash inflows at risk and, by extension, its commitment both to raising its dividend and keeping its single-A credit rating. BHP’s plans need to become clearer if it wants to reverse the 28 percent fall in its share price since a year ago.
- Agrimoney reported that the Federal Reserve has warned, “The surge in U.S. farmland prices, which in parts of the Plains achieved their strongest run of growth on record, may be about to fade, sapped by the worsened outlook for agricultural profits.” Farmland values posted sharply higher gains in states around Kansas in the year to the start of last month, reflecting higher crop prices and an easing in the drought which has plagued much of the area since 2010. “Strong farm incomes continued to fuel demand for farmland,” the Federal Reserve System’s Kansas City bank said, noting that values had now risen by more than 20 percent for two consecutive years for the first time since it began collecting data in the 1970s. Prices in Nebraska, which avoided drought, were particularly strong, with values of irrigated land soaring 41 percent.
Tags: Banking Systems, Bureau Of Statistics, Chinese Year, Coal Imports, energy, Energy Consultancy, International Energy Agency, Marginal Cost, Market Radar, Million Metric Tons, National Bureau Of Statistics, National Bureau Of Statistics China, Oil Prices, Oil Stock, Platts, Shanghai Futures Exchange, Steel Market, Steel Markets, Steel Mills, Steel Product, Stocks And Commodities
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Sunday, December 4th, 2011
Energy and Natural Resources Market Radar (December 4, 2011)
This chart from Deutsche Bank shows how the projections made by the International Energy Agency (IEA) have progressed since July 2007. In 2007, the IEA estimated that oil demand over 2008 would range between 86 to 88 millions of barrels a day. Except for 2009, the IEA’s forecasts increased. The 2012 projection is currently much higher, with the IEA forecasting oil demand to be around 90 to 91millions of barrels per day.
- Crude oil gained 4 percent this week to close above $100 a barrel in response to improving U.S. economic data, and a coordinated effort by global central banks to provide additional liquidity to Europe.
- Palladium is poised for a 12 percent advance this week, the most since December 2010, on concern that stockpiles are dwindling in Russia, the biggest supplier.
- Following months of contraction, steel market trends reversed in November with base prices increasing for all products.
- Iron ore bounced back strongly after more than a week of losses as falling prices encouraged some steel mills in China to return to the market. Iron ore with 62 percent iron content rose more than 2 percent to $133.60 a ton on Thursday.
- OPEC November crude production is up 390kb/d to a total of 30.4 mmb/d, the highest level in three years, says Bloomberg.
- China’s daily crude steel output fell to 1.664 million metric tons in the first 10 days of November, the lowest level in a year.
- According to the India Coal Market Watch, the country’s coal production decreased by 9 percent to 39.59 mn tonnes in Oct 2011as compared to 43.51 mn tonnes in 2010.
- OECD demand is declining. However, virtually all of the world’s oil demand growth is in non-OECD nations, which has been resilient despite global economic concerns.
- Copper stockpiles monitored by the Shanghai Futures Exchange declined to the lowest level since July 2009, bourse data showed today.
- Vale plans to invest $21.4 billion in 2012 including investment on sustaining capacity. Vale made much of the difficulty it has in spending all the money it would like to and has had to significantly scale back its spend due to ongoing delays in getting project approvals. Its original capex plan for 2011 was $24 billion but in the first three quarters of 2011 it only managed to spend $11.3 billion, implying a major shortfall this year, probably by $6 to $8 billion.
- Iraq’s semi-autonomous Kurdish region will go forward with its exploration deal with U.S. oil major Exxon Mobil despite objections by the central government in Baghdad, the Kurdish president said on Wednesday.
- The OPEC Secretariat, using a GDP forecast of 3.6 percent in 2012 believes oil growth will be 1.2mmb/d.
- Oil price volatility could escalate as tensions between the West and Iran have ratcheted up over Tehran’s nuclear program, and with the suggestion that Europe could join the United States in banning the purchase of Iranian crude oil.
Tags: Bourse Data, Central Banks, Coal Market, Coal Production, Crude Production, Crude Steel, Economic Concerns, International Energy Agency, Iron Content, Iron Ore, Market Radar, Million Metric Tons, Mmb, Oecd Nations, Oil Demand, Shanghai Futures Exchange, Steel Market, Steel Mills, Steel Output, Stockpiles
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Sunday, November 27th, 2011
Energy and Natural Resources Market Radar (November 28, 2011)
- Soaring demand for diesel and gasoil around the world is depleting stockpiles, sending U.S. prices to the highest level in three years, relative to gasoline. U.S. diesel and heating oil supplies have fallen 15 percent in six weeks, according to the Energy Department, and stockpiles in Singapore in the week ended November 9 were the lowest since July 2008, according to International Enterprise Singapore, a unit of the trade ministry. Inventories in Europe’s Antwerp-Rotterdam-Amsterdam hub were the smallest in almost three years at the end of October, data from PJK International BV show. Rising fuel imports by China, the world’s second-largest oil consumer, are combining with increased heating demand during the northern hemisphere winter to curb supplies.
- Natural gas prices gained 7 percent this week to close at $3.53 per mmbtu on expectations of colder weather this week and stronger heating demand for the fuel.
- Mining and energy equities corrected sharply this week due to worsening concerns over European debt problems and a Chinese hard landing scenario. This was triggered by the poor German bond auction and weak Chinese flash Purchasing Manager’s Index (PMI) reading of 48. The China PMI fell to 48 in November from 51 in October, indicative of a contraction in manufacturing output and its sharpest fall since early 2009, although there are more signs that the government is now starting to ease monetary policy.
- Taiwan’s largest steel producer, China Steel, has announced average price cuts of 7 percent for January through February 2012. This equates to a reduction of $58 per ton for hot-rolled-coil, which would be over and above the expected cuts in raw material costs into the first quarter of 2012. This highlights that the Asian steel market remains subdued, with steel margins under significant pressure.
- CODELCO, Chile’s state mining company, will cut the surcharge on copper sales to Japan next year by 5 percent, reducing the fee for the first time in three years, according to a Bloomberg News report.
- Analysts at Mirae Assset Management in Hong Kong noted that the geopolitical premium on oil prices could expand further in the coming months because France is pushing for a European oil embargo on Iran. The U.S. has banned oil from Iran since the 1980s. The EU foreign ministers will discuss a range of sanctions against Iran in a December 1 meeting in Brussels.
- Copper supply shortages are likely to persist until next year as labor strikes in Chile and Grasberg in Indonesia curb output, Terry Burgess, chief executive officer of OZ Minerals Ltd. said in an interview in Melbourne. He said OZ expects long-term copper prices to be around $2.50 a pound.
- China’s net coal imports may reach a record 150 million tons this year, Xinhua reports, citing Zhao Jianguo, an executive at the China Coal Transport and Distribution Association. China’s thermal coal stockpile at power plants was 80.3 million tons as of November 20, enough for 21 days use, the report says.
- Rising taxes on the mineral industries remain a headwind for producers. Australia’s plan for a 30 percent tax on the biggest profits in its booming mining industry has cleared its biggest political hurdle with legislation passing parliament’s lower house after last-minute support from the Green party. The legislation will go to the senate in early 2012. The government and the Greens have the numbers there to ensure the bills are passed into law.
Tags: Bond Auction, China Steel, Energy Department, Fuel Imports, Gasoil, Hot Rolled Coil, International Bv, International Enterprise Singapore, Market Radar, Mmbtu, Natural Gas Prices, Northern Hemisphere Winter, Oil Supplies, Pjk, Purchasing Manager, Raw Material Costs, Steel Market, Steel Producer, Trade Ministry, Weather This Week
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Sunday, September 18th, 2011
Energy and Natural Resources Market Cheat Sheet (September 19, 2011)
- The Global Resources Fund gained this week and outperformed its benchmark as energy- and industrial metal-related stocks rallied with major stock indices.
- The latest Steel Benchmarker price assessment by World Steel Dynamics showed further stability in global steel prices, with the majority flat over the past two weeks. The exception was U.S. hot rolled coil, which rose 5.1 percent sequentially to $768 per ton, arresting three months of consecutive falls.
- The Baltic Dry Index of freight costs increased 7 percent this week as shipments of iron ore remain robust. This is the fifth consecutive weekly gain for the Baltic Dry Index.
- Seaborne iron ore prices ended the week lower for the first time in 5 weeks on weakening steel prices. After hitting 3-month highs of $181 per ton last week, the TSI reference price has fallen nearly 2 percent to trade below $178 per ton. Per analysts at Citigroup, sentiment in the Chinese steel market is still deteriorating and buyers remain inactive owing to the lack of any clear direction.
- Corn prices fell 4 percent this week on a government report that corn crop conditions have improved recently.
- Despite news of additional supply constraints, copper prices slipped 1 percent this week on concerns of slowing demand in Europe and Asia.
- Southern Copper cut its production forecast by 8 percent for the year. Output will fall to 600,000 tons, from an earlier estimate of 650,000 tons, CEO Oscar Gonzalez Rocha said.
- The International Energy Agency released its Oil Market Report this week, revising its global oil demand growth forecast lower for 2011 by 160 thousand barrels per day to 1.04 million barrels per day, and for 2012 by 200 thousand barrels per day to 1.41 million barrels per day. The IEA attributes lower non-OECD readings and reduced economic growth expectations as the prime reason for its downward revision.
- Reuters reported that power rationing in China will likely persist in the first half of 2012, and the deficit should be between 10 gigawatts and 15 gigawatts in the first half of 2012. Other than low water levels impacting hydropower supply, power output has been hampered by insufficient coal production, low coal quality and a mismatch between coal and power prices. The grid has asked the local government to subsidize additional power generation.
- According to Alberta’s Energy Minister Ron Liepert, Canada’s oil sands producers need to build at least two more pipelines the size of the controversial Keystone XL project if they are to meet their ambitious plans for growth. “As we move forward, there will be a need for other pipelines … By 2020, we may need three Keystones,” he said.
- Peru’s Finance Minister Miguel Castilla commented that the country’s overhaul of its mining tax system will maximize government revenue while ensuring companies proceed with more than $40 billion of investment in new mines. Castilla also stated that companies won’t pay more than 50 percent of their operating profits under the new tax regime. Under Peru’s existing system, royalties are based on sales. He said that the new system will be fairer because it levies taxes on operating profits instead of revenue, and companies with contracts that protect them from higher taxes will be subject to a separate levy on profits.
- Australia’s Bureau of Meteorology sees La Niña conditions developing in Q4 this year. Historically this would mean cold winters in the U.S. northeast and stronger demand for heating fuels.
- Workers at Freeport MacMoRan’s Cerro Verde mine in Peru launched an indefinite strike today after discussions with the government failed to reach an agreement on wages and working conditions. The mine represents roughly 2 percent of the world’s mined copper production.
Tags: Baltic Dry Index, Canadian Market, Copper Prices, Corn Crop, Corn Prices, Crop Conditions, Global Steel, Growth Expectations, Hot Rolled Coil, International Energy Agency, Iron Ore Prices, Major Stock Indices, Oil Market Report, Oscar Gonzalez Rocha, Prime Reason, Resources Fund, Southern Copper, Steel Dynamics, Steel Market, Supply Constraints, World Steel Dynamics
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