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Thursday, 22 February 18
WHY THE COMMODITY RALLY WILL GET BACK ON TRACK - SIMON FLOWERS
 Implications for the US dollar and producers
Are we in the early stages of a sustained rise in commodity prices? And what does it mean for the US dollar?
We posed these questions a year ago when robust global economic growth was driving commodity demand and the US dollar was starting to tip over from a 15-year high. The two are inextricably linked, though which is the horse and which the cart is not always clear. The recent disruption in financial markets suggests it’s worth a fresh look at the relationship.
Over the past couple of years, there has been a broad improvement in commodity prices, with indices up by around 50% on average since early 2016. It’s been far from uniform, and different commodities bottomed at different times.
Iron ore and oil have seen the most spectacular rebounds, both up more than 100% from their lows.
The fundamentals in each commodity market are very different, but Principal Economist Jon Butcher identifies common factors behind the recovery.
First and foremost is growth in the global economy. GDP growth strengthened from a low of 2.3% in Q1 2016 to a six-year high of 3.1% in Q4 2017. The upswing has been broadly based with growth accelerating across Asia, Europe and the Americas. In 2016, emerging market growth was just 3.7%; this year we expect 4.6%, with China and India driving much of the improvement. This is doubly important for commodity demand, given the resource-intensive nature of emerging market growth.
Then there is the US dollar. The currency dropped 10% on a trade-weighted basis by end-January 2018, from its high of a year ago. The relationship between the US dollar and commodity prices is not straightforward, or indeed constant. But the dollar tends to be inversely correlated with commodity prices; a weaker dollar usually means stronger commodity prices, and that’s what we’ve seen over the past six months.
The fall in the value of the dollar reflects strength in the emerging world rather than a weak US economy.
It’s also sentiment: with confidence boosted by the global economic upswing, investors have shifted capital out of traditional safe havens like US treasuries into riskier assets with potentially higher returns.
Better prospects for growth in major trade partners like Europe and Canada, and with the expectation of monetary tightening in those economies, they have pushed their currencies higher against the dollar. We’d expect continued dollar weakness through 2018 given the prospects for a strong year of global economic growth.
Financial market volatility in the last fortnight has upset the apple cart. Commodity prices have corrected and the US dollar bounced by 4%, taking it back to December levels. US jobs data released on 2 February highlighted tightness in the US labour market.
Associated wage gains prompted fears of higher inflation and raised the prospect of accelerated US interest rate hikes. Uncertainty spiked, and equities and commodities dropped. Increased risk aversion effectively pulled capital back into safe havens like the US.
So, turning point or just a blip? More likely the latter.
Our view is that the global economy is set fair for growth at a healthy pace, perhaps a tad slower than in 2017-18. Developing economies in particular will do well.
This provides a backdrop for a sustained recovery in commodities over the next five years, though each commodity market has its own fundamental story. Oil, for example, is stuck in oversupply for the next two years before the market tightens into the early 2020s.
As commodities gradually recover, the US dollar should revert to gentle decline – though markets adjusting to the end of 'easy money' means it will doubtless be a bumpy ride for the currency and commodities alike. If we’re right, then some commodity producers may be on a journey to a better place in the next few years – firmer prices and better margins.
On the other hand, it might not pan out this way. So producers have to learn from this tough down cycle and persevere with the relentless drive to keep costs down so they can still make money even at future cycle lows – and wherever the US dollar travels. That has to be the goal.
Simon Flowers
Chairman and Chief Analyst
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Friday, 09 March 18
THE WORLD CANNOT KEEP IGNORING THE ASIAN COAL STORY - BENJAMIN SPORTON
There were significant changes in the global energy system in 2017, including the growth in electric vehicles, the rise of renewables and the conti ...
Friday, 09 March 18
U.S. EXPORTED 97 MMST OF COAL IN 2017, A 61 PER CENT INCREASE FROM 2016 - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.1 million short tons ...
Thursday, 08 March 18
BUMA SIGNED OVER US$ 500 MILLION WORTH OF NEW CONTRACT WITH PT TANAH BUMBU RESOURCES
PT Delta Dunia Makmur Tbk., announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into mining services ...
Thursday, 08 March 18
THE ENERGY CONTRIBUTION FROM COAL-BASED POWER PLANTS IS LIKELY TO INCREASE TO 1072 BU BY 2021-22 : PIB
Government of India has set an ambitious target of 175 GW from Renewable energy sources (RES) by 2022, which comprises of 100 GW Solar, 60GW from W ...
Thursday, 08 March 18
SUPRAMAX: THE MARKET IS STILL GOING STRONG IN THE PACIFIC - FEARNLEYS
Supramax
The market is still going strong in the Pacific, with Ultra fixing high US$ 13000+375000 bb for South Africa to ECI while nickel ore run ...
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Showing 1781 to 1785 news of total 6871 |
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- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- GMR Energy Limited - India
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Australian Coal Association
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