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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 February 18
COAL BUYERS SPOOKED BY INDONESIA'S NEW SHIPPING RULES - ASSOC
Buyers of Indonesian coal are holding back orders of the fuel after the government issued new shipping rules for coal and crude palm oil that would ...
Thursday, 08 February 18
ENHANCED PRODUCTION BY COAL INDIA LIMITED HELPS DECLINE IN COAL IMPORTS - UNION MINISTER OF RAILWAYS AND COAL
According to press release from PIB, as per the current import policy, coal is kept under Open General License (OGL) and consumers are free to impo ...
Thursday, 08 February 18
A NEW WEEK WITH A SOFT SENTIMENT AND DECREASING RATES IN BOTH HEMISPHERE FOR THE PANAMAXES, SAYS FEARNLEYS
Supramax
USG dropping remarkably due to lack of fresh enquiry both for fhaul and bhaul, Supras were fixed from USG to Spore-Japan range now aroun ...
Wednesday, 07 February 18
INDONESIAN COAL PRICE REFERENCE RISES TO HIT THIRTEEN-MONTH HIGH OF $100.69 A TON
COALspot.com: The Indonesian Coal Price Reference (HBA) rose 5.39 per cent in February 2018, the latest ministerial decree showed.
The benchma ...
Wednesday, 07 February 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
Crude oil supply has been reported to have grown by approx. 2.5% reaching 40.1m bpd in 2017. However, tanker charter rates have been under pressure ...
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Showing 1811 to 1815 news of total 6871 |
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- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- The University of Queensland
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
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