Energy and Natural Resources Market
Strengths
- Nickel prices continue to trend higher, having increased by 5.8 percent on the London Metals Exchange over the last five trading sessions. According to industry sources, high purity nickel is scarce in the U.S. due to surging demand, tightness in the scrap market and the continuing strike at Vale's facilities in Sudbury, Canada.
- Copper prices gained 4.2 percent this week following a large earthquake in Chile where 30 percent of global copper is produced.
- Crude oil futures climbed toward $81 a barrel on Friday, approaching a seven-week high, after signals China will maintain its economic stimulus measures boosted hopes that strong growth will help drain excess oil supplies.
Weaknesses
- The UxC weekly spot price of uranium continued to fall, down another $1.25 per pound, and currently sits at $40.50 per pound. The UxC spot price has not had a price increase since the end of November.
- Australian oil production in 2009 declined 17 percent to its lowest level in four decades and is expected to continue falling as oil fields age. Consultants at EnergyQuest said falling rates will occur after a temporary increase over the next year, reflecting the “maturity” of significant fields and maintenance-related disruptions.
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Opportunities
- China’s implied demand for oil may rise 5 percent this year to 427 million tonnes, after imports reached a record in the world’s second-largest energy consumer in 2009, the official Xinhua News agency reported.
- Steel Business Briefing has reported that Vale is looking to increase iron ore prices to domestic Brazilian buyers by 80 percent, split into a 40 percent rise during March and April.
Threats
- According to Bloomberg news, the International Monetary Fund (IMF) has recommended that the Zambian government increase mining taxes in view of the increase in copper prices in the past few months.
