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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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- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- White Energy Company Limited
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
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