Energy and Natural Resources Market Radar (September 2, 2013)

September 2, 2013

2 minute read

Strengths

Brent and West Texas Intermediate (WTI) crude oils moved higher this week on rising geopolitical threats to oil supply in the Middle East on expectations that the United States may engage in military strikes in Syria.
The price of natural gas reached a five-week high this week as warmer temperatures increased cooling demand.

U.S. sales of existing homes fell 1.3 percent month-over-month in July, following a 0.4 percent drop in June, confounding consensus market forecasts for a steady level of transactions. A rise in mortgage rates to two-year highs has been blamed for pushing some prospective buyers out of the market.
Grupo Mexico is delaying a planned IPO in London of its mining unit, Bloomberg reports citing three unidentified people with direct knowledge of the matter. Grupo Mexico tabled the offering of the unit, Americas Mining, after the price of copper and emerging market stocks fell. An IPO is unlikely until at least next year.

Steel destocking slowed in China. Steel inventories in Chinese warehouses have fallen for 23 straight weeks, to 14.8 million tons at the week ending August 16. This total is now down approximately 35 percent from mid-March highs.
Peru’s anti-mining protests are the main constraint on its expansion, according to Standard & Poor (S&P), as the protests could lead to projects being delayed or scrapped. However, S&P still believes Peru’s mining sector is poised for significant growth, given its large and high quality metals reserves, reasonable tax regime, regulations that promote private investment, attractive power costs, and a long track record of mining activity.

Rio Tinto has delayed targeted production from the Simandou iron ore project in Guinea by three years, according to an Australian newspaper. It is understood the Simandou partners—Rio, China’s Chalco and the World Bank have signed a draft agreement with the Guinea government that says first exports are now not expected until the end of 2018.
Sumitomo Corp. forecast a global aluminum surplus will extend into an eighth year in 2014 as demand growth in China is slowing, Bloomberg reports. Supply will outpace demand by 994,000 metric tons, expanding from 883,000 tons estimated for this year, said Shingi Yamagiwa, manager of light metals trading. “The situation won’t change much over the next two to three years as demand growth in China is slowing,” Yamagiwa said in an interview. “The surplus will remain next year as output cuts so far were less than we had expected,” he said.