Energy and Natural Resources Market Diary (June 7, 2010)
Strengths
- Natural gas futures climbed 12 percent to $4.85 per mmbtu this week on potential supply disruptions in the Gulf of Mexico and forecasts of warmer weather.
- The U.S. Mint sold 190,000 ounces of American Eagle gold bullion coins last month, the most since sales of 231,500 ounces in December, according to data on its website.
Weaknesses
- ArcelorMittal is to idle three of its European blast furnaces in the third quarter, Steel Business Briefing reported, citing Antoine Van Schoolen, the company’s Chief Marketing Officer. He did not reveal which furnaces will be affected, but said one would be idled in July and two in August.
- According to the China Automotive Technology & Research Center, China’s auto production in May was down 14.36 percent month-over-month, while inventories increased by 12 percent month-over-month. A source from Maanshan Iron & Steel told Steel Business Briefing that auto sheet orders were down by about 20 percent in May. The source noted that the slower summer sales season is approaching and demand for auto sheet could pick up in September at the earliest.
- Taiwan, which imports all of its coal needs, reduced purchases for the first time in five months as power producers cut shipments. Coal imports fell 9.3 percent from a year earlier to 4.73 million metric tons in April, the Bureau of Energy in Taipei said.
- According to the ministry of finance, Japan's refined copper exports fell 28 percent in April from a year earlier to 47,645 tonnes.
Opportunities
- Kazakh mining companies will invest $16 billion in the next five years, Deputy Industry and New Technologies Minister Derik Kamaliev said at a conference in Almaty. 85 percent of the investment will come from private companies, including Kazakhmys Plc and Eurasian Natural Resources Corp, Kamaliev said.
- China announced a 24.9 percent rise in natural gas prices on Monday in a reform to spur supply of the cleaner-burning fuel, use of which is growing fast as the country gives more weight to the environment.
Threats
- Xstrata Plc shelved spending on projects worth $5.6 billion in Australia, intensifying pressure on the government to wind back its proposed tax on mine profits.
- China’s coking coal import growth rate may slow in the second half of the year compared with the first half, according to Huang Jingan, General Director at the China Coking Industry Association as government measures to curb speculation in the property market may impact demand for steel.
- According to Russian news agencies, the country may restore an export tariff on copper and adjust a 5 percent export tariff on nickel this year after lifting tariffs in February last year.
