Energy and Natural Resources Market Radar (March 31, 2014)

March 31, 2014

2 minute read

Copper rebounded over $3 per pound this week, to post its largest five day gain in six months based on speculation that China will under take steps to strengthen economic growth.
The benchmark West Texas Intermediate (WTI) crude oil price climbed above $100 a barrel, marking its second weekly gain on lower storage inventory at the Cushing, Oklahoma hub.
According to recent reports, Indonesia has reached a deal over export taxes with U.S. mining company Freeport-McMoRan (FCX), allowing nearly $4 billion worth of annual Copper shipments to resume as early as next month. FCX halted concentrate shipments since January, refusing to pay an escalating export tax that FCX said breached its contracts.
There is support for coal prices. The draw on domestic coal inventories at utilities eclipsed a 35-year record of 15.6 million tons during January, compared to a 10-year average of 5 million tons.

In a Bloomberg survey, corn traders were the most bearish on their outlook for the commodity since the week ended February 14 in advance of a U.S. Department of Agriculture report that may show larger domestic inventories.
Rio Tinto faces more delays on its $6 billion Mongolian copper and gold project after it was revealed that an agreement with the Mongolian government could be at least four months away. For more than a year, the partners have been unable to agree on a way to expand the Oyu Tolgoi mine.

The U.S. Census Bureau released its 2012 Economic Census Advance Report this week, which highlighted strong job growth within the natural resources sector, as “Mining, Quarrying and Oil and Gas Extraction” grew faster than other industries, posting revenue growth of 34 percent over a 5-year period to $555 billion by 2012. Oil and gas alone saw payrolls increase by 60 percent to $15.4 billion.
U.S. natural gas storage declined to 10-year low. U.S. natural gas storage for the week ending March 21 was 896 Bcf (down 49.7 percent year-over-year). Current inventories for natural gas are down 50.8 percent vs. its 5-yr average, according to the U.S. Energy Information Administration.
Following year-over-year declines in 2011 and 2012, federal government highway awards in 2013 showed renewed signs, which typically leads to higher spending for road construction and infrastructure in the ensuing two to four month period.

U.S. Steel’s President and CEO calls for imposition of duties on imports of Oil Country Tubular Goods (OCTG) from South Korea alleging the makers had fudged the facts by setting up networks of companies to evade U.S. laws and disguise the cost of producing and importing.
A potential threat to copper pricing, China’s copper market is expected to experience a 400,000 ton surplus in 2014 as increases in production and imports outpace the growth in real consumption, according to Shanghai Metals Market.