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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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Wednesday, 22 November 17
CHINA CONSUMES MORE THAN TWO-THIRDS OF THE GLOBAL SEABORNE IRON ORE MARKET; PRODUCES AS MUCH STEEL AS THE REST OF THE WORLD COMBINED - CHRISTOPHER T. WHITTY
China consumes more than two-thirds of the global seaborne iron ore market and at the same time produces as much steel as the rest of the world com ...
Monday, 20 November 17
INDONESIAN COAL BENCHMARK PRICE SURGES 0.86% TO $94.80 A TON, GOVERNMENT DATA SHOWS
COALspot.com: Indonesian coal benchmark price surges 0.86% in November compared to declared price in October, the latest ministerial decree showed. ...
Friday, 17 November 17
U.S. PRODUCED 678.8 MMST OF COAL YEAR TO DATE; 9% UP Y/Y, EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 14.8 million short ton ...
Thursday, 16 November 17
PANAMAX ACTIVITIES HAVE SLOWED DOWN QUITE SUBSTANTIALLY THE LAST WEEK - FEARNLEYS
Supramax
Another week with rates easing over all the Supra routes within Atlantic.
Front hauls from USG got payed around 21-22k daily and ul ...
Thursday, 16 November 17
KOMIPO INVITED BIDS FOR 3.9 MILLION TONS OF 5700 NAR AND 5400 NAR COAL FOR 2018 - 2020 DELIVERY
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued an another new tender for total 3,900,000 Metric Tons of min. 570 ...
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Showing 1871 to 1875 news of total 6871 |
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- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Australian Coal Association
- White Energy Company Limited
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Minerals Council of Australia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
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