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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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Showing 41 to 45 news of total 6871 |
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- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
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