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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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Thursday, 11 January 18
SUPRAMAX: INDO TO CHINA COAL ROUNDS FIXING AT AROUND $10K - FEARNLEYS
Supramax
USG rates improved both for backhaul and fronthaul, Ultras from USG to Japan receiving around $26k daily while supras 1-2k less for same ...
Wednesday, 10 January 18
2018: IT IS PROJECTED, THE SHIPBUILDERS WILL DELIVER FOUR HUNDRED FORTY NEW VESSELS IN 2018
Headlines from IMF's 2017 – World Economic Outlook:
January 2017 - “After a lacklustre outturn in 2016, economic activity is p ...
Tuesday, 09 January 18
INDONESIAN GOVERNMENT DECLARED COAL REFERENCE PRICE UP IN JANUARY
COALspot.com: the Indonesian Coal Price Reference ( HBA) rose 1.60 per cent in January 2018, the latest ministerial decree showed.
The benchma ...
Friday, 05 January 18
U.S. WEEKLY COAL OUTPUT FELL 32.4% PER CENT WEEK OVER WEEK, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 10.5 million short tons ...
Friday, 05 January 18
COAL DEMAND TO REMAIN FLAT TO 2022, RESULTING IN A DECADE OF STAGNATION - IEA
Global demand for coal should remain nearly flat between 2017 and 2022, resulting in a decade of stagnation for coal consumption, according to the ...
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Showing 1831 to 1835 news of total 6871 |
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- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- The University of Queensland
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Parliament of New Zealand
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
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