Energy and Natural Resources Market Radar (April 9, 2012)

Sunday, April 8th, 2012

Energy and Natural Resources Market Radar (April 9, 2012)

Strengths

• Saudi Arabia is likely to maintain high oil production in the event consumer countries release emergency stocks, but it will not seek to lure buyers for more oil by discounting its crude, industry sources said. Spare capacity has fallen below 2 million barrels per day which typically is a sign of a tight oil market.
• Palm oil gained to the highest level in more than a year on speculation that buying from China, the biggest user of cooking oils, may increase when local markets reopen this week after a three-day holiday. June-delivery palm oil rose as much as 1.2 percent to 3,574 ringgit ($1,167) a metric ton on the Malaysia Derivatives Exchange, the highest for a most-active contract since March 9 last year. Financial markets in China were closed from April 2 for public holidays. Palm oil advanced 2.9 percent in two days after a U.S government survey showed soybean acreage in the world’s largest producer will decline. Palm oil and soybean oil are substitutes in food and fuel uses.
• Also in agriculture, soybeans jumped 3.5 percent after the U.S. Department of Agriculture cut the acreage to 73.9 million acres which is the lowest since 2007. Soybeans advanced 17.1 percent in the first quarter and were the best-performing agriculture commodity year to date as dry weather conditions in South America hurt crops.
• The Sun reports that stores are hiking the price of Easter eggs — even though the cost of producing them has fallen. Since peaking two years ago, cocoa prices have plunged by a third. But Easter egg favorites are still up in price.

Weaknesses

• A slump in coal exports contributed to another monthly trade deficit for Australia. Exports were down to their lowest level in a year at A$24.4 billion as coal exports plunged 21 percent to A$3.4 billion, the lowest since March 2011. Hard coking coal exports were down $597 million, 27 percent, hurt by volumes down 27 percent. Thermal coal export volumes were down 16 percent and prices were down 4 percent, implying a 19 percent drop in dollar terms.
• While gold producers in Mali signal mining operations have so far gone unaffected by a recent military coup d’état and an ongoing rebel insurgency in the country’s north, juniors, intermediates and majors alike have suspended work at Malian exploration projects citing, among other reasons, fuel-supply risk and flight of foreign personnel. The latest notice of suspension of exploration operations comes from intermediate producer IAMGOLD.
• Bloomberg news reported waning demand for gasoline is putting the U.S. on course to miss a target for ethanol use for the first time, signaling no let-up in the slide in prices. A 2007 U.S. law requires refiners to mix 13.2 billion gallons of renewable products with motor fuels in 2012, up 4.8 percent from last year. Gasoline demand averaged over four weeks fell 3.8 percent from a year earlier, the U.S. Energy Department reported this week.

Opportunities

• Global food prices rose in March for a third successive month, driven by gains in grains and vegetable oils, the United Nations’ Food and Agriculture Organisation (FAO) said on Thursday, putting food inflation firmly back on the economic agenda. Food prices hit record highs in February 2011 and stoked protests connected to the Arab Spring wave of civil unrest in some north African and middle eastern countries. They then receded but started to grow again in January. An FAO index that measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 215.9 points in March, up from a revised 215.4 points in February, FAO data showed. Its Cereal Price Index averaged 227 points in March, up from February, with maize prices showing gains, supported by low inventories and a strong soybean market, the FAO said. “You can see prices in the near term rising even further,” FAO’s senior economist and grain analyst Abdolreza Abbassian told Reuters before the index update.
• China is mulling a new round of subsidies for the home appliance sector that may help support copper demand this year according to Hu Xiaohong, an official with China Household Electrical Appliances Association. Subsidies for the purchase of energy-saving models of air conditioners and televisions are being considered. Last year, air-conditioner manufacturers were the second-largest consumers of copper in China, behind the power sector comprising 15 percent of consumption.
• Chinese aluminum producer Chalco is said to be buying a controlling stake in a Mongolian coal miner. Chinese aluminum producer Chalco has agreed to buy 56-60 percent of SouthGobi Resources at $4.89/share (a 29 percent premium over SouthGobi’s closing price) from Ivanhoe Mines. Chinese miners have increased initiatives to acquire overseas natural resources assets as the deal suggests. Chalco is diversifying its exposure out of aluminum and is investing in other resources as well; however, this coal will help in securing coal for its aluminum production, too.
• In coking coal, BHP Billiton has declared force majeure on coal shipments from its Bowen Basin coal mines in Australia due to a continued workers’ strike and heavy rainfall. The industrial action at the BHP Billiton-Mitsubishi Alliance (BMA) operated Bowen Basin coal mines has clearly intensified, adding to the rolling work stoppages experienced since June 2011. BMA-operated coal mines together produced 38.2 million tonnes of coking coal, accounting for 14 percent of the global coking coal trade and 29 percent of Australian coking coal exports in 2011.

Threats

• Despite some confusion, an industry ministry official said this week that Indonesia plans to impose a 25 percent export tax on coal and base metals this year, jumping to 50 percent in 2013, as the major producer of raw materials looks to boost domestic investment and take a bigger slice of mining profits. If imposed, the tax would add to a raft of regulations announced this year that have caused confusion in Indonesia’s mining sector and worried foreign investors. It would hit the profits of both national and foreign-owned companies and could also raise costs for importers. India, a major buyer of Indonesian coal, said it would raise concerns about the proposed tax with Jakarta.
• States hoping to capitalize on their energy booms are running into resistance from local officials who want to be able to police the noise and industrialization that accompany oil-and-gas drilling. Last Thursday, seven towns collectively sued Pennsylvania in state court to overturn a law passed in February that prevents them from using their zoning authority to regulate oil-and-gas development. The day before, an Ohio state senator introduced legislation to grant local officials more control over where companies can drill. The municipalities are fighting laws that bar them from regulating drilling, enacted by state lawmakers who feared towns would stunt job-creation and a stream of tax revenue.
• Agrimoney reported that “U.S. corn stocks may fall over 2011-12 up to 50 percent more than officials are currently factoring in,” analysts said, as they reacted to data showing inventories weaker-than-expected at the mid-year stage. The U.S. Department of Agriculture has forecast a 327 million bushel drop in inventories, to 801 million bushels, over the current season, depleted by resilient domestic and export demand following a disappointing harvest. However, investors expected the figure to be revised after inventory data, released on Friday, showed stocks as of March 1 at a multi-year low of 6.0 billion bushels, and below market forecasts.
• Argentina’s Neuquen Province has revoked oil and gas concessions held by three companies, Tecpetrol, Argenta Argentina and Petrobras, because the companies had not invested enough in production at the oil fields, the province said in a statement. The concessions will be given to the provincial government’s oil and gas company, Gas y Petroleo del Neuquen.

Tags: Agriculture, China, Coal Exports, Cocoa Prices, Coking Coal, Consumer Countries, Cooking Oils, Department Of Agriculture, Dry Weather Conditions, Easter Egg, Easter Eggs, Food And Fuel, Gold, Government Survey, India, Industry Sources, Market Radar, Metric Ton, Mining, Oil Market, Palm Oil, Public Holidays, Soybean Acreage, Soybean Oil, Sun Reports
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Energy and Natural Resources Market Radar (March 26, 2012)

Sunday, March 25th, 2012

Energy and Natural Resources Market Radar (March 26, 2012)

Strengths

• Despite concerns over a slowing economy in China, recent statistics for the first two months of the year indicate rather robust trends for commodity demand. Chinese refined copper imports rebounded from the New Year holidays, up 12 percent month-over-month, reaching 375.8 kilotons in February.
• The latest incoming data from Asia continues to surprise to the upside, with demand in the region posting a year-over-year growth of 373 thousand barrels per day in January. Oil demand in non-OECD countries has also improved significantly, coupled with indications from OECD Asia Pacific being extremely strong. A critical driver for the boost comes from Japanese oil demand (up year-over-year by 297 thousand barrels per day) supported by the loss of nuclear power post-Fukushima.
• South Korean oil demand appears to have benefited from the cold spell in February. Despite a mild winter in January, demand increased by 13 thousand barrels per day. February numbers are also showing further demand pick-up by 173 thousand barrels per day year-over-year. This is one of the strongest growth rates ever.
• China coal imports surged 154 percent year-over-year to reach 17 million tons in February. Coal exports stood at 1.21 million tons last month.
• Chinese oil demand soared to a record high in February, supported by all-time high demand in gasoline and strong diesel demand.

Weaknesses

• There has been more pressure placed on the Indian Government. The FT had a front page story on the alleged $210 billion losses under pricing of coal blocks sold between 2004 and 2009.
• South Africa has suspended almost all oil imports from Iran, its biggest crude supplier, in response to U.S. diplomatic pressure, a senior diplomat said on Thursday.
• The HSBC flash purchasing managers index (PMI) numbers, the earliest indicator of China’s industrial activity, fell to 48.1 from February’s four-month high of 49.6, and firmly below 50, the threshold that divides contraction and growth. Markit’s Eurozone Composite PMI also declined unexpectedly to 48.7 in March from 49.3 in February, a full point below economists’ consensus forecast of a 49.7 reading, capping the first quarter of the year in disappointing style. Combined, the weakness in manufacturing continues to provide a headwind to resource performance.

Opportunities

• The Macquarie China Steel Survey, which gauges sentiment on the ground in China from the steel industry, showed a notable improvement in market expectations. Improving orders have been the biggest change, with traders and mills reporting significant month-over-month improvements. In addition to improving orders, mills also are planning to raise production – the first time they have signaled a raise since September 2011.
• China’s aluminum demand will be sustained through the government’s affordable housing projects with the consumption outlook most bullish from the transportation sector, which may use 13.5 percent more of the metal this year, said Wen Xianjun, Vice Chairman of the China Nonferrous Metals Industry Association.
• President Obama has said that he is directing agencies to speed up any regulatory approvals needed to construct the Keystone XL oil pipeline’s southern leg from Cushing, Oklahoma, to the Gulf Coast. Obama has initiated a new process that seeks to speed up the approval of key energy and infrastructure projects such as pipelines, highways, ports and electricity transmission lines.
• The China National Grain and Oils Information Center says China will import about 29 million tons of soybeans in the first half of 2012, up by 25 percent year-over-year, owing to strong demand for livestock feed.

Threats

• China intends to limit domestic output and consumption of coal in the five years through 2015 to reduce pollution and curb reliance on the fuel. Production and demand will be restricted to about 3.9 billion metric tons a year by 2015, according to a five-year plan for the coal industry released by the National Energy Administration at a briefing in Beijing this week.
• Ian Ashby, President of BHP Billiton Iron Ore, gave a presentation at the Australian Journal of Mining, Global Iron Ore & Steel Conference in Perth this week. The newswires picked up on his comments that Chinese demand for iron ore is “flattening out,” and could fall to “single digits” if it hasn’t already. While there was nothing new in the comments, they did spook investors who are already nervous about a lack of recovery in China thus far in 2012.
• Iron ore may decline 8.5 percent this year as global output increases and growth in Asian steel production slows, according to the Australia Bureau of Resources and Energy Economics. Prices may average about $140 a metric ton in 2012 from $153 last year. “Over the remainder of 2012, iron-ore prices are forecast to ease as production increases from new projects in Australia and growth in Asian steel production weakens,” the bureau said. China’s crude-steel production may advance 7 percent to 731 million tons in 2012 compared with an 8.9 percent gain last year, the bureau said.
• China’s potential house-buyers hit a record low with only 14.1 percent of Chinese residents planning to buy a house in the upcoming quarter and an overwhelming 67.7 percent considering the current housing price too swollen and “too high to be acceptable,” according to the first quarter survey report on depositors issued by the People’s Bank of China. Only 9.4 percent of those surveyed in Beijing and Shanghai intend to buy an apartment in the next three months.
• China released its plan to cap coal production and consumption by 2015. China’s National Energy Administration has released a five-year plan which will see coal production and demand restricted to about 3.9 billion metric tons per year by 2015. China produced 3.8 billion tons of coal in 2011.

Tags: Asia Pacific, China Coal, Chinese Oil, Coal Exports, Coal Imports, Cold Spell, Critical Driver, Diplomatic Pressure, Incoming Data, Indian Government, Market Radar, Mild Winter, Months Of The Year, New Year Holidays, Oecd Countries, Oil Demand, Oil Imports, Purchasing Managers Index, Refined Copper, S Industrial
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Energy and Natural Resources Market Cheat Sheet (July 18, 2011)

Sunday, July 17th, 2011

Energy and Natural Resources Market Cheat Sheet (July 18, 2011)

Strengths

• China’s steel production hit another record high in June. According to data from the National Bureau of Statistics, China produced 59.9mt of steel in June, equivalent to 729 million tonnes per year (a 11.9 percent year-over-year increase and a 2.8 percent month-on-month increase), beating the previous record high of 718 million tonnes per year set in April this year.
• Gold prices hit a new nominal high of over $1,580 and ounce in Wednesday trading as the combination of dovish comments from Federal Reserve Bank Chairman Bernanke and ongoing uncertainty over contagion in European sovereign debt markets saw a further push in the yellow metal. White metals also rose strongly, with the breakdown in wage negotiations in South Africa likely to lead to strikes.
• Corn prices rebounded this week as a WASDE report released earlier this week showed a smaller-than-expected increase in 2011-12 U.S. ending stocks despite a projected record crop, highlighting tight balances for corn.
• Data from the International Trade Commission showed that total U.S. coal exports for the January–May 2011 period was at 44.52 million tonnes, up 37 percent year-over-year.
• Commodities generally rallied this week on economic data out of China. China’s GDP rose 9.5 percent year-over-year in the second quarter, the statistics bureau said, after a 9.7 percent gain in the previous three months. This was higher than consensus estimate of 9.3 percent. Industrial output advanced 15.1 percent in June. Fixed-asset investment, excluding rural households, also rose 25.6 percent year-over-year in the first half, the report showed.
• Japan’s ten utilities consumed 31 percent more liquefied natural gas (LNG) in June than a year ago, according to data from the Federation of Electric Power Companies of Japan.

Weaknesses

• Peru’s copper production dropped 4.7 percent year-over-year in May to 98,628 tonnes, with big declines from Southern Copper’s mines, according to the country’s mining ministry. Meanwhile, zinc production fell 6.9 percent year-over-year to 121,253 tonnes and tin by 24.7 percent year-over-year to 2,189 tonnes.

Opportunities

• In its monthly Oil Market Report, the International Energy Agency forecast that oil use will increase by 1.47 million barrels per day to 91 million barrels per day amid growth in emerging economies.
• BHP Billiton agreed to acquire all the shares of Petrohawk Energy for $38.75 per share, representing a total equity value of approx $12.1 billion and a total enterprise value of approx $15.1billion, including the assumption of net debt. The deal adds three shale oil and gas assets across about one million net acres in Texas and Louisiana with proved reserves of 3.5 trillion cubic feet equivalent of natural gas.
• In a report from the Financial Times, U.S. ethanol producers are consuming 40 percent of the U.S. corn crop which is the first time fuel use has exceeded use by farmers for livestock feed.
• China has ordered local governments to phase out a total 2.04 million tonnes of aluminum, copper, lead and zinc smelting capacity in 2011 as part of a multi-year plan to crack down on energy-intensive and polluting industries, raising the target by 13 percent from the prior target set in May. The iron smelting industry was ordered to cut 31.22 million tonnes of capacity, up 17.7 percent from the May target, as issued by the Ministry of Industry and Information Technology.
• China has announced that it will be increasing rare earth exports by 8.9 percent versus first half 2011 and 97.3 percent versus second half 2010; however, on an annualized basis, total rare earth exports will be slightly lower year-on-year. The move comes amid pressure from the World Trade Organization regarding China’s virtual monopoly on rare earth supply.

Threats

• BHP Billiton is facing more strikes at its coking coal mines in Australia this weekend after making small progress at talks with the miners earlier this week, a labor union said. Workers will hold 12-hour stoppages at the Gregory mine on July 17, Stephen Smyth, a division president at the Construction, Forestry, Mining and Energy Union in Queensland said. The industrial action follows another round of six-hour stoppages this week at seven coking coal mines owned by BHP Billiton Mitsubishi Alliance in Queensland’s Bowen Basin, he said. The next round of meetings with the management will be held next week.
• Saboteurs blew up an Egyptian pipeline distribution station in northern Sinai that supplies natural gas to Israel, the MENA news agency reported. This marked the fourth attack on facilities supplying Egyptian gas to Israel this year.

Tags: Asset Investment, Bernanke, Bureau Of Statistics, China China, Coal Exports, Commodities, Consensus Estimate, Copper Production, Corn Prices, Debt Markets, Federal Reserve Bank, Gas Lng, Gold Prices, Liquefied Natural Gas, National Bureau Of Statistics, National Bureau Of Statistics China, Record Crop, Statistics Bureau, Wage Negotiations, Wasde Report, White Metals
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Energy and Natural Resources Market Cheat Sheet (June 27, 2011)

Sunday, June 26th, 2011

Energy and Natural Resources Market Cheat Sheet (June 27, 2011)

Strengths

• Chinese oil demand is up 9 percent year-over-year in May despite stronger prices and various tightening measures, and is running 10.9 percent higher year to date, far exceeding initial consensus expectation.
• According to the World Steel Association, global crude steel production in May was 130 million tons, 4.2 percent higher year-over-year. The data also showed that China alone produced 46.4 percent of the world’s crude steel in May.
• U.S. preliminary steel imports rose to 2.44 million metric tons, up 2.8 percent month-over-month and 20.9 percent year-over-year on a day’s adjusted basis.
• Aluminum demand in the U.S. and Canada rose 6.6 percent year-over-year to an estimated 1.814 million pounds in April, the Aluminum Association said. In the first four months of the year, demand climbed 8.5 percent year-over-year to 7.127 million pounds, the group said.
• Indian power utilities increased coal imports by 43 percent during last month to 2.97 million tons. April imports stood at 2.34 million tons. India’s Central Electricity Authority has set a target of 35 million tons of imported thermal coal for fiscal year 2011-2012, according to Bloomberg news.

Weaknesses

• Crude Oil Futures (West Texas Intermediate) fell 2 this week percent after the International Energy Agency announced it would release 60 million barrels of oil from strategic petroleum reserves in the U.S., Europe, and Asia to ease high oil prices and offset supply disruptions from Libya.
• The Australian Bureau of Agricultural and Resource Economics and Sciences cut its met coal output and shipment estimates for the year ending June 2012 by 4.4 percent and 5.6 percent, respectively, as the country still tries to recover from historic flooding in the Queensland region. Met coal exports for the fiscal year are now estimated to be 164.2 million tons.
• The AIA Architecture Billings Index slipped to 47.2 May, suggesting that the positive momentum in confidence in non-residential activity in the U.S. has faded in recent months.
• According to the U.S. department of Transportation, U.S. highway travel fell 2.4 percent in April from a year earlier and fell 1.3 percent year-over-year in March.
• Japan’s steel output fell 7 percent year-over-year in May as demand remained weak following the earthquake.
• Japanese thermal coal imports were down by 21.6 percent to 13.1 million tons in the last month per a report from China Coal Resource.

Opportunities

• According to the chief engineer for the Ministry of Industry and Information Technology, China may need to eliminate 70 million tons of outdated iron-smelting capacity in the next five years.
• According to Eskom’s chief commercial officer, Dan Marokane, the South African power utility requires 15 new mining projects over the next 2 to 4 years in order to meet Eskom’s demand between 2011 and 2018. He also said that between 2011 and 2039, about 1200 megawatts of power was at risk due to potential project delays.
• According to Wall Street analysts, Rio Tinto and BHP Billiton are expected to generate significant free cash flow over the next three to five years due to robust commodity prices. In fact, both companies could generate $20 billion in cash this calendar year, which could be used to buy back further shares, make accretive acquisitions or be distributed via a special dividend.

Threats

• Germany’s ZEW survey of investor confidence fell to a two and a half year low in June. Both the current conditions and future expectations components of the survey fell, pointing to slower growth in the coming months.
• Japan’s rebuilding efforts are facing a major hurdle in the form of debris to the tune of 25 million tons of concrete, steel and wood etc. The Japanese government estimates an expense of $8.4 billion and a period of at least three years in clearing areas prior to rebuilding.

Tags: Aluminum Association, Canadian Market, Central Electricity, Chinese Oil, Coal Exports, Coal Imports, Coal Output, Crude Oil, Crude Oil Futures, Crude Steel Production, Electricity Authority, India, International Energy Agency, Million Metric Tons, Oil Demand, Power Utilities, Queensland Region, Steel Association, Steel Imports, Strategic Petroleum Reserves, Thermal Coal, West Texas Intermediate, World Steel
Posted in Canadian Market, India, Markets, Oil and Gas | Comments Off

Energy and Natural Resources Market Cheat Sheet (June 6, 2011)

Saturday, June 4th, 2011

Energy and Natural Resources Market Cheat Sheet (June 6, 2011)

Strengths

• The Air Transport Association (IATA) data for April showed a strong resurgence in air traffic with freight traffic growing by 5.4 percent and international passengers increasing 16.5 percent year-over-year. International passenger traffic has climbed to 7 percent above pre-recession peaks.
• The U.S. Mint sold 3.65 million ounces of American Eagle silver coins in May, a rise of 30 percent from April’s 2.82 million ounces.
• According to the International Monetary Fund (IMF), Russia raised its gold reserves by 13.7 tons in April to 824.8 tons, and Mexico increased its gold reserves by 5.9 tons in April to 106.1 tons.
• The Aluminum Association’s producer shipment and inventory data for April showed that the pace of growth in North American shipments of ingot and mill products increased by 10 percent year-over-year.

Weaknesses

• Japan’s refined copper exports plunged 51 percent from a year earlier to 23,582 tons in April, for the seventh straight month of year-over-year declines.
• According to the Indonesian Coal Mining Association, Japan is expected to import 57 million to 58 million tons of coal from Indonesia this year, down from previous peaks of around 65 million tons.
• According to industry data from the China Electricity Council (CEC), five major power generating companies suffered losses of 10.57 billion yuan from January through April. This is a loss of 7.3 billion yuan greater than the previous year, and increasing coal prices stand to make matters worse for the power generating companies.

Opportunities

• Russian coal exports to China may increase by 30 percent in the next 5 years. Russia exported about 11.6 million tons of coal last year to China at an average cost of $130 per ton, including both steam and coking coal varieties. The deliveries may increase to 15 million tons per year during the next five years and may even increase to 20 million tons.
• China’s steel demand may increase to between 670 and 750 million tons by 2015. This estimate is based on the assumption that China’s economy will grow at a rate of 8 to 9 percent year-over-year in the next five years. The first four months of this year saw China’s steel production grow by 8.3 percent year-over-year.
• Saudi Arabia’s Oil Minister Ali Al-Naimi gave a speech this week in Poland ahead of the OPEC meeting in Vienna next week. He indicated that the OPEC nation will invest $125 billion in the next five years on both upstream and downstream assets to continue to meet the world’s oil needs. Minister Al-Naimi indicated that OPEC continues to maintain 3 to 3.5 million barrels per day of spare capacity to meet any market shortages.

Threats

• BHP Billiton is facing the first strike at its Australian coal mines in a decade. About 4,000 members of the Construction, Forestry, Mining and Energy Union at all seven mines in the Bowen Basin in Queensland State, owned by BHP Billiton Mitsubishi Alliance, will vote to give the union power to take industrial action.
• China’s NDRC decided to raise electricity prices for industrial, commercial and agricultural users by 4 to 5 percent this week. This is the first time has China raised electricity prices in more than a year, with the aim to maintain power supply and mitigate financial losses at electricity generators. Currently around 40 percent of the power generators are operating at a loss, therefore more tariffs hikes are likely.

Tags: Air Transport Association, Aluminum Association, Association Japan, Coal Exports, Coal Mining, Coal Prices, Coking Coal, Freight Traffic, Gold Reserves, Indonesian Coal, Ingot, International Monetary Fund, International Monetary Fund Imf, International Passenger Traffic, International Passengers, Inventory Data, Mining Association, Refined Copper, Silver Coins, U S Mint
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Energy and Natural Resources Market Cheat Sheet (May 23, 2011)

Sunday, May 22nd, 2011

Energy and Natural Resources Market Cheat Sheet (May 23, 2011)

Strengths

• According to the National Bureau of Statistics, China’s 2010 corn harvest reached a record 177.25 million tonnes.
• The world’s largest uranium producer, Kazakhstan, boosted output of the metal by 9 percent year-over-year in the first quarter of 2011 to 4,444 tonnes according to the state nuclear firm Kazatomprom.
• The U.S. produced around 161,521 tonnes of primary aluminum in April up 13.6 percent compared to 142,164 tonnes year-over-year, according to the Aluminum Association.
• U.S. coal exports climbed to 9.8 million short tonnes in March, up 48 percent year-over-year and 18 percent above February, according to the Census Bureau.

Weaknesses

• Preliminary Indian iron ore export data for April showed a continuation of previous trends over the past few months, with volumes down 28 percent year-over-year at 9.06 million tonnes. This is the eleventh consecutive month of year-over-year fall. Over the first four months of 2011, Indian exports have fallen 12 million tonnes compared with the same period in 2010.
• BP Plc and ConocoPhillips announced the cancellation of their $35 billion Alaska gas pipeline project this week, due to lack of shipper interest in more U.S. gas supply.
• Japan’s third-largest refiner, Idemitsu Kosan Co., said this week that it plans to refine 15 percent less crude oil in the April-June quarter compared with a year earlier, as the earthquake in March hurt demand for oil products.

Opportunities

• Vietnam has plans to build 90 thermal power plants with a total capacity of 106 gigawatts (GW) and a $83 billion investment by 2025. According to the Vietnams National Coal-Mineral Industries Group, a new coal port will be built in the Southern region where most of the thermal power plants will be built.
• According to government projections, Indian power utilities are set to independently import 35 million tonnes of thermal coal during the current 2011-2012 fiscal year as state owned producer Coal India is unable to fulfill demand.
• The weekly USDA Crop progress data this week revealed a marked pick-up in U.S. plantings but they continue to lag five year averages, most notably in the case of U.S. spring wheat where plantings were 36 percent planted compared to the five-year average of 76 percent. For corn, 63 percent was planted (a marked pick-up from 43 percent) but below the five-year average of 75 percent.

Threats

• The National Oceanic and Atmospheric Administration reported this week that the Atlantic hurricane season will be “above normal” this year with 12-18 named storms. Six to ten of these may become hurricanes and three to six are likely to become major systems. The storm season begins June 1.
• China, the world’s biggest iron ore buyer, cut purchases by 11 percent in April month-over-month due to higher prices. China’s imports were 52.88 million tonnes in April, down from 59.48 million tonnes in March, according to China’s General Administration of Customs.
• Russia plans to raise its export duty on most crude shipments by 1.9 percent on June 1, the highest level since 2008 after oil prices climbed.
• Chinese factories are facing power rationing due to coal shortages because of rising coal prices and a severe drought leading to lower output from hydro-electric plants. The overall share of hydro in power generation fell due to a fall in reservoir volumes in May for the first time in 13 months. In the six reservoirs that constitute half of China’s water stocks, the fall in level was a sharp 12 percent year-over-year and 9.5 percent month-over-month.

Tags: Alaska Gas Pipeline, Aluminum Association, Bp Plc, Coal Exports, Coal Port, Corn Harvest, Crude Oil, Gas Pipeline Project, Gigawatts, Idemitsu Kosan, Indian Exports, Indian Iron Ore, Industries Group, National Bureau Of Statistics, National Bureau Of Statistics China, National Coal, Shipper Interest, Short Tonnes, Thermal Coal, Thermal Power Plants, Uranium Producer
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Energy and Natural Resources Market Cheat Sheet (February 22, 2011)

Saturday, February 19th, 2011

Energy and Natural Resources Market Cheat Sheet (February 22, 2011)

Strengths

• According to analysts at Macquarie Capital, 2010 saw the fastest liquefied natural gas (LNG) demand growth on record, up over 30 million tonnes or almost 18 percent over the past year (to approximately 215 million tonnes), reflecting the considerable capacity additions brought on during 2010.
• Copper broke a new all-time high at $10,190 this week.
• Prices of precious metals edged higher across the complex for a second session this week, as equity markets eased and the dollar stabilized against the euro.
• Palladium prices reached $825.10 this week, the highest since March 20, 2001.
• The Baltic Dry Index has now moved up for the eighth consecutive session, in line with the rise in freight rates after the Chinese holidays.

Weaknesses

• Chinese banks extended 1.04 trillion Yuan ($157.8 billion) of new loans in January. The figure was 318.2 billion Yuan lower than a year ago, according to the People’s Bank of China (PBOC). This pullback in economic growth is due to inflation concerns.
• The world’s largest gold-backed ETF, SPDR Gold Trust said its holdings fell to 1,224 tonnes by February 15, a nine-month low.

Opportunities

• China’s steel output may rise 5 percent to 660 million tonnes this year, the Ministry of Industry and Information Technology said.
• Australian floods seem to be serving U.S. coal miners. According to the Energy Department in Washington, U.S. coal exports are poised to rise 8.8 percent this year to about 86.5 million tons, the highest since 1996.
• Silver’s use in the solar power industry has received much press this week. Silver is used in photovoltaic (PV) cells in solar panels, and as this industry grows rapidly, so has its demand for silver. This sector’s requirement for the metal has now become larger than the silverware market.
• Chinese oil major PetroChina Co. Ltd. plans to boost annual coal bed methane (CBM) gas output 12-fold to 4 billion cubic metres (bcm) by 2015 from 0.3 bcm in 2010, a company official said.
• Rio Tinto Group forecasts high copper prices will continue amid rising demand and before output from new projects eases a supply shortfall. Tom Albanese, CEO of Rio Tinto, said in Australian Broadcasting Corp.’s “Inside Business” television program that he expects to see a continued period of strong copper pricing, largely because many of the large mines, including Rio, see declining grades, deepening pits.

Threats

• China’s inflation exceeded the government’s 2011 target for a fourth month as prices excluding food rose the most in at least six years. Consumer prices rose 4.9 percent last month from a year earlier after a 4.6 percent gain in December, the statistics bureau said. Producer-price inflation quickened to 6.6 percent from 5.9 percent. The acceleration reflects higher rents, a 53 percent surge in money supply in the past two years and increasing domestic demand in China.

Tags: Baltic Dry Index, Bank Of China, Capacity Additions, China, Chinese Banks, Chinese Holidays, Chinese Oil, Coal Bed Methane, Coal Exports, Coal Miners, energy, ETF, Freight Rates, Gas Lng, Gold, Inflation Concerns, Liquefied Natural Gas, oil, Palladium Prices, Pboc, Petrochina Co Ltd, precious metals, Pullback, Pv Cells, Silver, Steel Output
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Energy and Natural Resources Diary (November 1, 2010)

Saturday, October 30th, 2010

Energy and Natural Resources Market Diary (November 1, 2010)

Strengths

• China’s imports of copper concentrate climbed to a record in September as smelters ramped up production in response to rising treatment charges. Inbound shipments jumped to 683,523 metric tons last month, up 22 percent year-over-year, the customs office said.
• World refined copper was in a deficit of 356 thousand metric tons year-to-date through July, compared with a deficit of 164 thousand metric tons in the same period in 2009, according to the International Copper Study Group.
• September imports of coking coal into China hit their highest levels since January of this year. China imported 4.17 million metric tons, up 7.5 percent sequentially according to Customs data.

Weaknesses

• Vietnam’s coal exports in 2011 are projected to drop 5.6 percent from this year to 17 million metric tons, a state-run newspaper said on Tuesday, as the country seeks to save more for domestic consumption. Coal exports would drop gradually to between 3 million and 4 million tonnes by 2015, the Rural Today newspaper said, citing an Industry and Trade Ministry report.
• China’s daily crude steel output fell further to 1.56 million metric tons in the second ten days of October, down 3.9 percent from early October, according to the China Iron & Steel Association.

Opportunities

• Russia, the world’s top oil producer, will need over 8.6 trillion rubles ($280 billion) to keep pumping oil at current record levels until 2020, Prime Minister Vladimir Putin said on Thursday. “This is not an easy task,” Putin told a meeting of oil industry top managers and government officials. Putin was chairing a government meeting on a new 10-year energy strategy, which seeks to stave off output declines and encourage investment as the heartland of the Russian oil industry, the Soviet-era fields of West Siberia, goes on the wane.
• India, Asia’s second-fastest-growing major economy, may face a shortage of 60 million metric tons a year of power-plant coal by the year ending March 2012, as domestic output falls short of demand, Enam Securities Ltd. said.
• India, the world’s third-largest iron-ore exporter, should ban shipments overseas to ensure that local steelmakers have adequate supplies of the raw material, according to Steel Minister Virbhadra Singh. The country will need increased quantities of iron ore to meet domestic demand from steel producers, so there was a need for a ban, Singh said at a seminar in New Delhi this week.
• South Africa opened public hearings on a $125 billion energy plan to shift from dependency on coal while avoiding major price increases and a repeat of paralyzing blackouts in 2008. The draft plan proposes nearly halving the share of coal in the country’s energy mix to 48 percent by 2030, down from about 90 percent, using nuclear power and renewable energy such as wind and solar to make up the difference.

Threats

• Halliburton Co. may face increased liability in the Gulf of Mexico oil spill after the staff of a U.S. presidential panel said the contractor knew cement it mixed for BP Plc’s well was unstable. The staff of the National Commission on the BP Deepwater Horizon Oil Spill said documents provided by Halliburton showed at least three tests of the mixture, in February and April, found the recipe wasn’t stable. BP received data in March from at least one of the tests, the commission staff said in a letter this week.

Tags: Association Opportunities, China, Coal Exports, Commodities, Crude Steel, Customs Office, Domestic Consumption, energy, Inbound Shipments, India, India Asia, International Copper Study, International Copper Study Group, Market Diary, Million Metric Tons, Ministry Report, Natural Resources, oil, Output Declines, Refined Copper, Russia, Russian Oil Industry, Steel Association, Steel Output, Treatment Charges, Vladimir Putin, West Siberia
Posted in China, Energy & Natural Resources, India, Markets, Oil and Gas | Comments Off

Energy and Natural Resources Market Diary (August 16, 2010)

Saturday, August 14th, 2010

Energy and Natural Resources Market Diary (August 16, 2010)

Strengths

• The Baltic Dry Index of freight rates jumped 20 percent this week on improving charter activity.
• China’s copper imports climbed for the first time in four months as arbitrage traders sought profits by buying the metal in London and selling it in Shanghai. Shipments of copper and products gained 4.5 percent month-over-month in July, the customs office said. Buyers have reduced shipments since April as they drained domestic inventories. Stockpiles dropped to the lowest level in six months as of July 30, according to warehouses monitored by the Shanghai Futures Exchange.
• The Brazilian automotive sector continued to grow in July with auto sales increasing by 15.1 percent (up 302,300 units) over last month and up 5.9 percent versus a year ago. Analysts estimate that auto sales in Brazil will approach 3.4 million units in 2010.
• China’s power output rose to a record 377.6 billion kilowatt-hours in July, up 11.5 percent from a year ago, the National Bureau of Statistics said.

Weaknesses

• Latest U.S. trade data show that coking coal exports fell 10 percent from the previous month in June. This reflects weakness in European demand which is down 23 percent, ahead of scheduled blast furnace closures.
• Unofficial port data from India shows a collapse in iron ore exports in July, according to Analysts at Macquarie Securities. This could partly explain the recent sharp rally in iron ore prices. Indian exports were just under 4.5 million tonnes in July, the lowest July figure in over six years, reflecting the impact of the Indian monsoon season and a temporary ban on exports of iron ore from 10 ports.

Opportunities

• The Organization of Petroleum Exporting Countries (OPEC) raised its global oil demand outlook for 2010 and 2011 by 140,000 barrels per day in its monthly report despite growing concerns of an economic slowdown. The organization highlights that oil demand growth will remain moderate due to uncertainties regarding the recovery.
• The U.S. Energy Information Administration (EIA) trimmed its estimates for domestic natural gas output growth to 1.9 percent year-over-year in 2010 but raised the year-over-year demand forecast to 3.8 percent.
• China Railway Construction and Tongling Nonferrous Metals Group Holdings have indicated that they will invest $3 billion in a copper project in Ecuador. Initial production of 30,000 metric tons is expected to begin in 2013 and is eventually expected to approach 250,000 metric tons. A company official indicated that the ore from the mine will be shipped back to China.

Threats

• Anti-government protests are negatively impacting several zinc, silver, tin and lead mines in Bolivia. Production from San Cristobal, which accounts for nearly 3 percent of global zinc supply, has come to a halt. San Cristobal was the sixth-ranked zinc and fifth-ranked lead mine in the world output league in 2009.

Tags: Baltic Dry Index, Blast Furnace, Brazil, Bureau Of Statistics, China, Coal Exports, Commodities, Customs Office, Economic Slowdown, energy, Freight Rates, Global Oil, India, Indian Exports, Indian Monsoon, Iron Ore Exports, Iron Ore Prices, Kilowatt Hours, Macquarie Securities, Market Diary, Monsoon Season, National Bureau Of Statistics, Natural Gas, Natural Resources, oil, Oil Demand, Organization Of Petroleum Exporting Countries, Shanghai Futures Exchange, Silver
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Energy and Natural Resources Market Diary (August 9, 2010)

Monday, August 9th, 2010

Energy and Natural Resources Market Diary (August 9, 2010)

Strengths

• Wheat prices continue to climb higher with the September futures price, trading up to $7.85 per bushel, the highest level in 23 months. The price of wheat has rallied as a heat wave in Russia, dry weather in Kazakhstan, Ukraine and the EU; and flooding in Canada has damaged crops.
• The price of crude oil closed above $80 a barrel this week for the first time since early May on improved sentiment for global growth.
• AK Steel announced they are raising prices for carbon steel products by $40/ton effective immediately. The company cited increased demand for carbon steel products and higher costs as the reason for the price increase.
• According to McCloskey, Colombia’s steam coal exports in the first half of 2010 hit 34.02m tons, up 3.04m tons from 30.98m tons in the same period last year.

Weaknesses

• Metal Bulletin reports that the China Iron & Steel Association (CISA) said that steel producers in China will have to cut production in the second half of this year on the back of an oversupply situation.
• China, the biggest driver for global commodity demand, said its manufacturing grew at the slowest pace in 17 months in July as the government clamped down on property speculation and investment in energy-intensive and polluting factories. The Purchasing Managers’ Index fell to 51.2 from 52.1 in June, according to the Federation of Logistics and Purchasing.

Opportunities

• Rio Tinto said Tuesday that it would invest a further $790 million to expand the annual capacity of its iron ore operations in the Pilbara region of Western Australia to 330 million metric tons by 2016 from the current capacity of less than 225 million metric tons.
• China’s equity rally over the last few weeks could be a positive leading indicator for global stock market; China has appeared to reach inflection points prior to other global markets going back several years, according to Bloomberg.

Threats

According to Bloomberg, Codelco, the world’s biggest copper producer, suggested that copper demand in China is likely to decline in the second half of the year due to government actions to tighten lending and control inflation.

Tags: Canadian Market, Carbon Steel Products, Coal Exports, Commodities, Dry Weather, energy, Futures Price, Global Commodity, Global Stock Market, Inflection Points, Market Diary, Million Metric Tons, Natural Resources, oil, Oversupply Situation, Pilbara Region, Price Of Crude Oil, Property Speculation, Purchasing Managers Index, Rio Tinto, Russia, Steam Coal, Steel Association, Steel Producers, Weather In Kazakhstan, Wheat Prices
Posted in Canadian Market, China, Energy & Natural Resources, Markets, Oil and Gas | Comments Off