Energy and Natural Resources Market
Strengths
- The latest Steel Benchmarker assessments from World Steel Dynamics have shown a further surge in U.S. steel prices, with hot rolled coil up 2.6 percent to $590 per tonne from the previous assessment on December 14. The world export hot rolled coil price rose 3.4 percent to $534 per tonne, while #1 heavy melt scrap was up 4.7 percent to $261 per tonne. Western European prices bucked the general trend, with hot rolled coil falling 0.5 percent to $574 per tonne.
Weaknesses
- Natural gas futures fell 2 percent this week on a weaker than expected inventory report released by the U.S. Department of Energy.
Opportunities
- Over 50 percent of Codelco’s Chuquicamata mine workers voted to strike after a contentious contract negotiation, where Codelco ended up offering a 3.8 percent (started at 1 percent) salary increase over a 36-month period, plus bonuses in excess of Chilean Peso (CHP) 14 million or US$28,000 (started at CHP 10 million). The current contract expires on December 31, thus a strike at the Codelco Norte mine is expected to start on January 1, 2010.
Threats
- The U.S. Deptartment of Energy released EIA-914 production data for October 2009 which indicated a +1.1 billion cubic feet (Bcf) per day sequential increase in monthly production growth. With natural gas storage levels at 3,276 Bcf, 14 percent above the five-year average of 2,885 Bcf and 13 percent above last year's level of 2,897 Bcf, the market is already oversupplied and sequential production growth remains an overhang to the price of natural gas.
