Energy and Natural Resources Market
Despite forecasts for record grain supply over the 2009 and 2010 growing season, the global grains stocks-to-use ratio is expected to remain below the historical average due to forecast growth in grain consumption.
Strengths
- Capacity utilization at U.S. steel mills has risen 1.5 percent to 65.6 percent in the last week, according to the latest American Iron and Steel Institute data. At 1.44 million metric tons, the total production was the highest since the end of October 2008 and represents 75 million metric tons per year on an annualized basis.
- Japan's shipments of aluminum rolled products rose 9.1 percent in December, posting the first increase since September 2008.
Weaknesses
- Crude oil prices fell this week as the U.S. Dollar gained 1.4 percent and concerns about Chinese oil demand amidst the Chinese government's tightening economic policy.
- Base metals prices plunged this week on fears of a slowdown in buying from China. Copper fell nearly 9 percent and zinc more than 10 percent.
Opportunities
- BHP Billiton announced that it will acquire Athabasca Potash for $320 million. BHP Billiton also raised offers on manganese ore to customers in China by as much as 17 percent, as global supply tightens and demand picks up.
- The queue of ships at Newcastle, Australia-the world's biggest coal port-is near its longest level since before the financial crisis, and waiting times are at a one-year high. Figures published this week show 58 ships waiting on Monday, just shy of the pre-Christmas peak of 60, which was the longest queue since mid-2007. Average waiting times for vessels is 18 days, the Newcastle Port Corporation figures show.
- Bunge has sold its Brazilian fertilizer assets to Vale for $3.8 billion in cash to fill a war chest for agribusiness and sugar expansion and to attack its heavy debt burden.
- Russian steelmaker Severstal confirmed its intention to restart its 1.2-million-metric-ton-per-year facility in Warren, Ohio, during March.
Threats
- Australia's government has not yet decided what recommendations it will adopt from a report proposing major tax reforms, possibly including a big increase in mining royalties, Prime Minister Kevin Rudd said this week.
- MySteel.net claims that Chinese hot-rolled coil prices have fallen 80 Chinese yuan per metric ton so far this week and that cold-rolled coil price is off 100 Chinese yuan per metric ton. Further declines are expected ahead of the Chinese New Year holiday.
