Energy and Natural Resources Market Diary (October 25, 2010)
Strengths
- China's total coal imports surged 15 percent sequentially in September to 15.22 metric tons. September marks the fifth consecutive monthly gain in coal import levels according to McCloskey.
- Early this week, copper prices in London and Shanghai rallied to their highest levels since July 2008, supported by improving global demand and expectations of a second round of quantitative easing in the U.S.
- Corn imports by South Korea, the world's third-largest buyer, rose by 21 percent to 6.5 million tons in the first nine months of the year, customs data showed.
Weaknesses
- According to China Iron & Steel Association statistics, the crude steel output from the 75 member mills have dropped in the first ten days of October to 13.74 million tons from 14.17 million tons due to power-induced production cuts ordered by the provincial governments.
- For the week ending October 16, U.S. steel capacity utilization rates decreased to 67.4 percent versus the prior week of 68.3 percent. This is the fifth week in a row of declining utilization rates and the first time utilization rates dipped below 68 percent since early February.
Opportunities
- Reuters reported that coal miner Peabody Energy is shipping a test cargo of U.S. Powder River Basin coal to the United Kingdom in a response to European concerns about future supply.
- Reuters reports that an aluminum-backed ETF will hit the market within three months, backed by half a million to one million metric tons from Rusal.
- China Minmetals Corp. plans to invest $2.5 billion to develop the Galeno copper project in Peru. Galeno, located in the northern region of Cajamarca, would produce 144,000 tons of copper in concentrate annually, according to a 2007 feasibility study. No timeline of the project was provided.
Threats
- The Canadian province home to Potash Corp said it opposed BHP Billiton's $39 billion bid to buy the fertilizer supplier, setting the stage for a politically-charged final decision by the Canadian government.
