Energy and Natural Resources Market Radar (May 14, 2012)
Strengths
- The S&P 500 Utilities Index posted a gain of 4.6 percent this week, the second-best performing sector, as investors sought lower volatility and higher dividend yields.
- Saudi Arabia is producing approximately 10 million barrels per day and storing 80 million barrels of crude oil to meet any sudden disruption in supplies, the Oil Minister said.
- Coal shipments from the Richards Bay Coal Terminal in South Africa, the world’s single largest export coal terminal, increased 7.6 percent year-over-year to 5.2 million tons in April.
- OPEC said its crude oil production rose to 31.62 million barrels per day in April and the world will consume 88.7 million barrels per day of crude in 2012.
Weaknesses
- Industrial metal stocks fell nearly 6 percent this week on growing concern over European debt issues and weakening economic data out of China.
- Thermal coal demand at Chinese power utilities was down 1.3 percent year-over-year in April and inventories rose to 25 days, representing the highest level in the last 2.5 years.
- Chinese refined copper output was down 3.7 percent month-over-month in April, to 491 thousand tons.
Opportunities
- Refined copper demand in China is forecast to grow at 5.2 percent annually through 2015, while that of aluminum is expected to grow at 8.6 percent annually, according to China Minmetals Nonferrous Metals Holding Corp.
- India’s Ministry of Coal has proposed to set up a sovereign fund to acquire coal assets outside India, as the government is under pressure to boost energy supplies to meet the targeted 76 gigawatt additional capacity over the next five years.
Threats
- The Australian Bureau of Meteorology expects El Niño conditions to returns later this year. El Niño events tend to bring flooding across the Americas and droughts across Asia.
- Peru’s federation of mining unions said on Monday it is planning to start a two-day nationwide strike on May 14, but individual unions have not yet confirmed their participation. Peru is the world’s second-largest copper producer.
- According to the World Steel Association, global steel consumption is expected to fall by 3.6 percent in 2012.
