Energy and Natural Resources Market Diary (September 26, 2010)
Strengths
- Australia raised its forecast for commodity exports this fiscal year to a record amid rising prices and increasing demand. Sales may total $214.9 billion (Australian dollars) by June 30, 2011, officials said. That compares with its June estimate of $202.5 billion (Australian dollars) and a revised $170.6 billion (Australian dollars) for the previous year.
- Copper prices continue to perform well on the back of the weakening dollar, with copper prices for all delivery dates up and three-month copper prices reaching a new five-month high on the London Metal Exchange this week.
- According to Russia’s central bank, Russia added 300,000 ounces of gold to its reserves last month to bring the country’s stockpile to 23.6 million ounces.
- The Norwegian National Oil Fund is expected to be worth approximately $500 billion by the end of this year--roughly $100,000 for each Norwegian citizen.
Weaknesses
- The Organization for Economic Co-operation and Development (OECD) cut its 2011 growth forecast to 2.6 percent, from its previous 3.2 percent. It also warned that the 2008-2009 recession may trigger long-term damage to the U.S. economy with higher long-term unemployment. The OECD believes employment may not reach prerecession levels until 2013.
- Teck Resources Ltd. cut its coal sales forecast because of capacity constraints at a British Columbian port. Third quarter 2010 sales will be 5.2-5.5 million metric tons, compared with a previous target of 5.8-6.2 million metric tons, the company said in a statement.
- Indonesia’s trade ministry forecasts that tin shipments may drop 19 percent this year. Exports may slump to about 80,000 metric tons in 2010 from 99,287 tons in 2009 as heavy rains disrupt mining.
Opportunities
- Mongolia will seek an IPO for its Tavan Tolgoi mining assets after this year’s opening of a national stock exchange, with the government retaining control, Prime Minister Sukhbaatar Batbold said. The country will sell as much as a 50 percent stake in the coal deposit to the public. Mongolia will pick a contractor for the project in the next month, he said.
Threats
- Antofagasta may delay the Antucoya copper project worth around $850 million in Chile if the country’s congress approves a bill to increase mining taxes, company CEO Macelo Awad said.
- From a contrarian standpoint, analysts at JP Morgan reported that the Denver gold show this past week attracted a new record attendance of 1,080 bullish gold investors. At a Bull and Bear lunch discussion only two members of the audience admitted to being bearish, which is perhaps a bit worrisome.
