Energy and Natural Resources Market Diary (June 28, 2010)

Energy and Natural Resources Market Diary (June 28, 2010)

Strengths

• Global crude steel output jumped 30 percent in the first five months of the year to 586 million metric tons, the World Steel Association said.
• According to the World Gold Council, the Saudi Arabian central bank’s gold holdings climbed to 323 metric tons, more than double the 143 metric tons reported in March.
• China increased coal imports by 17 percent year over year in May because of a rebound in the economy. Coal purchases rose to 11 million metric tons in May, according to data released by the General Administration of Customs. China paid an average $109 a ton for delivered coal in May, about 11 percent higher than in the previous month.

Weaknesses

• Platts reports that hot-rolled coil steel prices in the U.S. declined by $12.50 per ton to $645 per ton, down 6.5 percent over the last month.
• The Baltic Dry Index, a key indicator of future international trade activity and the U.S. economy, closed at 2,502 on Thursday, down 7 percent from the prior week and more than 40 percent since the end of May.
• Spot hard coking coal prices in Australia fell $2.00 per metric ton to $203, according to Platts. Prices are down 6 percent over the last month and down 14 percent over the last two months.

Opportunities

• Petrobras announced it will boost its five-year capital spending plans for oil and gas projects by 14 percent to $224 billion.
• Physical ETFs may become increasingly important in to base metals, with an aluminum ETF likely to come to market this year.
• According to a draft government document obtained by Chinese media, China aims to shut down as many as 7,000 small coal miners by 2015.
• China’s natural gas consumption is expected to account for 8 percent of total energy consumption in the country during the 2010-15 period, compared with the current 4 percent, according to the National Energy Bureau.

Threats

• The tropical wave over the western Caribbean Sea could develop into a tropical depression over the next couple of days as it moves toward the Gulf of Mexico, the U.S. National Hurricane Center and other weather forecasters predicted.
• India's food price index rose 17 percent in the year to June 12, while the fuel price index climbed 13 percent, according to government data.