Big Changes Underway In Commodities
There are some signs that the commodities markets are changing, and that will affect all of us in the years to come
Tuesday, 31 May 2016
Things you need to know today -May 31, 2016
1) Kenya’s nascent mining industry set for boom
Mining minister seeks to build additional 10-20 mines in 15 years....
2) LME nickel should find support from $8,330 per tonne
A strike at the Cerro Matoso nickel mine, global second largest ferro-nickel mine which is owned by South32, is expected to break out not before June 14....
3) Oil Set for Longest Run of Gains in 5 Years Before OPEC Meeting
Oil is set for the longest run of monthly gains in five years as output disruptions from Nigeria to Canada reduce supply before OPEC meets Thursday in Vienna to discuss production policy..
4) China steel, iron ore futures post worst month on record; agriculture firmer
The price surge pushed many shuttered Chinese steel mills to resume operations, increasing supply that could keep steel markets under pressure as seasonal demand slows down with hot weather curbing construction activity from June....
China's Supply-Chain Scramble Now Comes With Added Commodities
China's Supply-Chain Scramble Now Comes With Added Commodities
"Source raw materials wherever available, and have enough capacity to process these, ideally exporting a small volume of refined products....
Monday, 30 May 2016
Workers Vote to Strike at South32’s Cerro Matoso Nickel Mine
Workers Vote to Strike at South32’s Cerro Matoso Nickel Mine
Workers at South32 Ltd.’s Cerro Matoso, the world’s second-biggest ferro-nickel mine, voted to take strike action amid a dispute over negotiations on a wage agreement
Sunday, 29 May 2016
Once Bullish, Miners Turn Bearish on Metals Prices
Metals Sector wrestles with overcapacity that built up during the decade-long commodity boom
Lakshmi Mittal, chief executive of the world’s largest steelmaker, ArcelorMittal , said that China has yet to fulfill a promise to shut down more than a hundred million tons of excess steel-production capacity. Instead, the world’s No. 2 economy continues to export large quantities of steel.....
Establishing a Social Media network Does Not Replace Other Communication
Social Media Does Not Replace Other Communication
An effective leadership is dependent on thorough and comprehensive communication, and that great leadership demands using all medium at one’s disposal to enhance communication efforts....
The 2016 winners of the Platts Global Metals Awards
Steel Dynamics wins Metals Company of the Year
Steel Dynamics, Inc. (SDI), one of the United States’ largest steel producers won the prestigious Metals Company of the Year award at the fourth annual Platts Global Metals Awards, which recognize exemplary performance in fifteen categories across the steel, metals and mining complex....
Usage of Stainless Steel Pipe Fittings
Where and Why is Stainless Steel Pipe Fittings used?
Pipe fitting is the occupation of installing or repairing piping or tubing systems that convey liquid, gas, and occasionally solid materials....
CARBON STEEL VS STAINLESS STEEL
COMPARISON BETWEEN CARBON STEEL AND STAINLESS STEEL
Stainless steel is a metal alloy consisting of iron and chromium
Saturday, 28 May 2016
Lunch with the FT: Dior's Sidney Toledano
Lunch with the FT: Sidney Toledano Dior's Couture's boss
Over boeuf and wine in Paris, Dior Couture’s boss tells how he tackled the Galliano racism row, why he’s in no rush to appoint a designer, and why you won’t fix problems by looking at numbers
Friday, 27 May 2016
Iron Ore & Steel Prices: Short Analysis
Iron Ore & Steel Prices: Short Analysis
we expect that steel prices could move even lower ....
A bad senario could become an ugly reality very soon for Nickel?
You might want to go back to the beginning of your nickel price chart in the early 2000s to see how low the market could go.......
U.S. Regulators Against China's Steelmakers
According to Reuters, U.S. regulators on Thursday launched an investigation following accusations by United States Steel Corp that Chinese competitors stole its secrets and fixed prices.
Based on a statement by The International Trade Commission (ITC) there has not made any decisions on the merits of the case.
U.S. Steel, in its complaint under section 337 of the main U.S. tariff law, is seeking to stop the majority of imports from China's largest steel producers and trading houses.
ITC identified 40 Chinese steelmakers and distribution subsidiaries as respondents, including Baosteel Group, Hebei Iron and Steel Group, Wuhan Iron and Steel Co Ltd, Maanshan Iron and Steel Group, Anshan Iron and Steel Group and Jiangsu Shagang Group.
U.S. Steel filed its original complaint a month ago, stating that it was a victim of a 2011 computer hacking incident that also prompted U.S. federal cyber-espionage indictments against five Chinese military officials in 2014.
The Pittsburgh-based producer stated that hackers stole research data on production techniques for a new generation of lightweight, high-strength steel now favored by automakers. It said this accelerated Chinese competitor Baosteel's ability to replicate the product, which took U.S. Steel nearly a decade of researches and development.
Source: Reuters
Things you need to know today - May 27, 2016
Goldman said it saw iron ore at $55 a ton this quarter and $45 a ton between July and September, repeating forecasts that the New York-based bank gave in a report earlier.
Bloc to ‘step up trade defence measures’ as Beijing battles for market economy status.
Concerns over demand and strong action by Chinese authorities to curb speculative activity sparked a rout that began in late April and has nearly reversed an earlier price surge.
Demand for refined nickel and ferro-nickel has been rising in China, in part due to the above but also due to the falling availability of nickel ore to feed the country’s nickel-pig iron market.
The dollar’s best month in more than a year faces one last hurdle: Janet Yellen speaks on Friday and any hint of dovishness could spur a reversal for the greenback.
Thursday, 26 May 2016
Things You Need to Know Today - May 26, 2016
WTI has topped $50.
Here are some market headlines which make today's news.
The deal avoids an immediate financial crisis, which is something, no doubt. It doesn’t actually preclude the measures, including further debt relief, that will sooner or later be needed to put the Greek economy back on a stable footing. But it’s a breakthrough with European characteristics -- one that settles nothing. #Bloomberg
Hebei, China's top steelmaking province, has pledged to close a total of 14.22 million tonnes of capacity in 2016 as part of the country's efforts to tackle a price-sapping glut in the sector, the official Xinhua news agency said on Thursday. BEIJING #Reuters
The game changer was last year's decision by the Shanghai Futures Exchange (ShFE) to allow Norilsk brands to be delivered against its new, booming nickel contract. #Reuters
The Singapore Exchange (SGX) is in exclusive talks to buy London's Baltic Exchange, which has been at the heart of the global shipping industry for centuries, the two companies said on Wednesday. #cnbc
Wednesday, 25 May 2016
Monday, 23 May 2016
Friday, 20 May 2016
Market at a glance
Leaders from the Group of Seven advanced economies will discuss actions to reduce global industrial overcapacity, with an emphasis on the current steel glut, when they meet in Japan next week, according to a senior White House aid.
Wally Adeyemo, deputy national security adviser for international economics, state that the leaders would discuss ways to influence countries responsible for excess capacity in base metals.
He highlighted the need to work with South Korea, Brazil and India, but did not single out China, which is the country most often responsible for excess steel and aluminum production that has been flooding markets and causing job and production cuts in the G7 countries as well as worldwide.
Major miners are trying to avoid hundreds of millions of dollars in closure costs by selling off pits, as cash is tight given the prolonged commodities price slump, but the crippling cost of environmental rehabilitation makes it difficult to seal deals.
Where mine sales have gone ahead, production is being prolonged, adding to oversupply in depressed markets, like coal. In specific cases, such as in nickel, producers are continuing to produce at a loss to avoid closure costs.
BHP held on to its loss-making Nickel West operation after failing to find a buyer for a business estimated to have $1 billion in closure liabilities. BHP's Australia president Mike Henry recently said it will continue running it and look to sell or close it down the track. As he stated, "The barrier to exit is far greater than the loss of running it".
Goldman Sachs on Thursday forecasted a rise in zinc price for the ongoing and coming years, citing stronger than previously anticipated demand from China and a tightened supply.
The influential commodities bank continues to remain pessimistic on other metals, including copper as it sees supply rising sharply throughout the year.
While nickel prices may have touched bottom in this cycle the overriding feeling is that excess supply will leave a significant upturn in fortune the preserve of 2017, when vast stocks are consistently moving in the right direction for fundamental reasons. Most market speculators expect prices in 2016 to average close to current levels at around $9,000 per tonne.
Mindful of the recent poor track record of consensus forecasts in nickel, however, and the metal’s propensity for wild price swings, industry watchers are wary of potential surprises that may lie in store to confound that consensus.
New Caledonia's nickel industry is in difficult situation as large stocks are expected to prolong a recent considerable decrease in nickel's price.
According to the local newspaper Les Nouvelles caledoniennes, it was recently discovered that 75 percent of nickel producers worldwide could not cover their costs.
In New Caledonia's case, the plants of SLN, Vale and Koniambo have to implement structural reforms related to a limited industrial base, high electricity and labour costs.
Oil prices rose close to six-month highs on Friday as a series of supply breakdowns in Nigeria, Canada and Libya.
Benchmark Brent crude prices were up 45 cents at $49.26 a barrel.
U.S. West Texas Intermediate (WTI) crude traded at $48.59 a barrel.
Tuesday, 17 May 2016
Monday, 16 May 2016
Sunday, 15 May 2016
Weekly Market Analysis - 3rd Week of May
Market overview:
After a long period of big economic growth, many investors are now questioning the future of China’s equity market and its economy, with some being very pessimistic of it.
Despite the fact that China’s gross domestic product (GDP) growth is slowing compared with past years, we witness the transformation of the economy from investment to consumption.
This transformation will have huge implications in many sectors of the economy.
China’s economic transition, along with the incredible economic growth we have already seen, has resulted in a much larger economy so that the percentage growth numbers will naturally limit their growing rate as we going forward.
However, that is not a negative indication. the announced and Government planned changes will not happen overnight. The significant continued urbanisation of the country, which is still behind the urbanisation rate of the United States, is moving forward and should have a vast impact in many sectors of the economy. Although we experience a slowing in China’s growth rate, is expected to continue to outpace global growth by a wide margin.
Equities were mixed on Friday with the Euro Stoxx 50 up 0.7 %, the Dow closed off 1.05 % and Asia was generally bearish with Japan's Nikkei down 1.41 %, the Hang Seng off 1%, the CSI 300 is down 0.5 %, the ASX 200 is down 0.57 % and the Kospi is down 0.5 %.
Elsewhere in Commodities, WTI Crude Oil descended to 46.21%.
In Nickel, the Finnish government is planning to inject around 100 million euros into Talvivaara nickel mine, which would keep the mine open until the end of the year. However, a closer of the mine is an option that would be considered, as mentioned in Reuters.
In the meanwhile, Nippon Steel & Sumitomo Metal Corp., Japan’s largest steelmaker, said it will take majority control of the nation’s No. 4 mill, Nisshin Steel Co., as the industry consolidates in the face of a global supply glut. Below, the historical 1-month price graph for nickel is presented.
LME prices for non-ferrous metals in general continued their descending trend. Prices, opening stocks as well as settlement exchange rates are presented in the tables below, among with the three months chart for NAASAC.
Sources: lme, cnbc, reuters, bloomberg
Friday, 13 May 2016
Nickel Analysis - 13 May 2016
Nickel’s rally has stalled. The recent highs were being set during upward spikes, which suggested scale-up selling. So it is not surprising that prices have struggled – they ultimately failed to reach the target at $9,795, missing it by $95. Since nickel can be a volatile market, we would not be surprised if prices overshoot on the downside. For now the market is still trending higher but that is being tested now.
We were struggling with the run-up in nickel prices basis the market’s fundamentals so this price pullback is not that surprising. Current supply and demand suggest a supply deficit; International Nickel Study Group (INSG) data for January showed an 8,100-tonne deficit and its forecast for 2016 is for a supply deficit of 49,000 tonnes. Supply is likely to drop 3.5 percent while demand is seen rising 3.8 percent. At face value, that is quite a sizeable deficit but when LME and SHFE (Shanghai) stocks amount to around 500,000 tonnes there is enough stock to cover 10 years of similar deficits. Such a massive stock overhang should cap nickel prices well below levels that encourage idle capacity to be reactivated. The INSG forecast for demand growth may look tame, however, should consumers restock. Restocking phases in stainless steel and nickel can have significant impact on nickel demand.
Unlike many of the other metals where higher prices are likely to prompt a supply response, especially in the case of aluminium, we expect Chinese NPI production to continue to fall – falling output is more a reflection of the lack of higher grade Indonesian ores (now that stockpiles in China have been run down) than the price.
With two-way stock flow continuing, either the market is not in a supply deficit yet or there is still ample stock around outside the LME. Despite the cash-3 months being in contango, stocks inflow is seen on most days. There is little sign of shortage or tightness – the c-3s spread is not that tight at $45-32.5 contango and there are no large holders of nearby metal. Despite a not-too-bullish fundamental picture, the bullish price action that started in February may be a warning of a change in sentiment.
All in all, although NPI output may be falling, which could have a significant impact on supply, there seems no shortage of nickel in the short term. In theory, this is likely to cap the upside on the LME – the recent pull-back in price suggests that is happening.
To conclude with, despite some improvement in the fundamentals and the INSG forecast for a deficit, it is difficult to be bullish for nickel overall, especially when stocks are high and there is still inflow into listed LME and SHFE warehouses. Key now will be where the market finds support and whether the overall upward trend remains intact. With iron ore and steel prices falling in China, other steel alloying metals, such as nickel, may well suffer too.
Source: Fast Markets
Thursday, 12 May 2016
Wednesday, 11 May 2016
Tuesday, 10 May 2016
A Brief look at commodities today
Commodities Today:
WTI crude climbed 0.5 percent to $43.67 a barrel. On Monday it was lower 2.7 percent.
Nickel rallied as much as 2 percent in London, after sliding more than 5 percent on Monday. The market will face a shortage this year as Chinese smelters are joined by other producers in lower output.
Investing in Commodities - Everything you need to know about the risks involved
Investing is all about risk management and monitoring of the risks involved in generating returns. Bellow is a short description of the common risks you might face when investing in commodities and some advices on how to minimise these risks.
Geopolitical risk
One of the innate risks of commodities is that the world’s natural resources are allocated in various continents and the jurisdiction over these commodities depends on governments, international companies, and many other entities.
Global disagreements over the control of natural resources and international miscommunications should be taken as a fact. Sometimes a host country will simply kick out foreign companies involved in the production and distribution of the country’s natural resources.
So what kind of activities should you take to secure yourself from this geopolitical uncertainty? One way to minimize it is to invest in experienced companies and economies of scale. For example, if you’re interested in investing in an international oil company, go with one with an established international track record.
A company like BP, for instance, has the scale, breadth, and experience in international markets to manage and minimize the geopolitical risk they face. A smaller company would be much more exposed in this kind of risks than a big one. In this occasion, size makes a difference.
Speculative risk
The commodities markets, just like the bond or stock markets, are dominated by traders whose primary interest is in making short term profits by speculating whether the price of a security will go up or go down.
A way to minimize your exposure to this risk is by constantly checking the pulse of the markets and trying to recognise as many as possible of the market participants, so to distinguish the commercial users from the speculators.
There are many online databases and reports that can give you an in depth analysis on the market participants, like the Commitment of Traders report, issued by the Commodity Futures Trading Commission (CFTC).
Frauds
Even though the Commodity Futures Trading Commission (CFTC) and other regulatory bodies do a great job on recognising market frauds and protecting investors from them, there is always the threat of fraud.
One way to prevent becoming a victim of a fraud is to be extremely scrupulous about where you are allocating your money. Make sure that you meticulously research the background of a firm before you invest your money.
Monday, 9 May 2016
Commodities: An Introduction
Commodities are the raw materials humans use to create a liveable world. It is the energy to sustain humanity, metals to build tools, and agricultural products to provide food. These — energy, metals, and agricultural products — are the three core classes of commodities, and they are the foundation of the global economy.
Commodities are characterised by the following qualities:
Tradability: A commodity has to be tradable. To put it simply, there needs to be a viable investment mechanism to help you trade it. For example, something is considered as commodity if it has a futures contract assigned to it on one of the major exchanges, or if a company processes it, or if there’s an Exchange-Trading Fund that tracks it.
Deliverability: All commodities have to be physically deliverable. Crude oil is considered to be deliverable since it can be delivered in barrels, and wheat because it can be delivered by the bushel.
Liquidity: By liquidity we mean that every commodity should have an active market with buyers and sellers constantly transacting with one another. This criterion is crucial to commodities, because it gives you the choice of getting in and out of an investment easily, since there is an established market with buyers and sellers for your securities.
Sunday, 8 May 2016
Wednesday, 4 May 2016
Tuesday, 3 May 2016
China stats bureau halts some commodities data amid probe
China has suspended the release of output data for several key commodities amid a crackdown on the illegal sale of state statistics by government officials, raising further concerns about transparency in the world's second-largest economy.
With Chinese economic growth at a 25-year low, the lack of such data makes it increasingly difficult for economists to gauge the strength of local demand as Beijing tries to avert a faster slowdown.
Key monthly output numbers for several oil and metal products over the first quarter have still not been published, and the National Bureau of Statistics (NBS) has also failed to release regional data for products like coal, steel and electricity since the turn of the year.
Officially, the NBS only releases a few key commodities statistics through its website (www.stats.gov.cn), though more detailed numbers have been made available through unofficial channels, including third-party distributors and industry consultancies.
Most of those numbers have now dried up after China's corruption watchdog, the Central Commission of Discipline Inspection (CCDI), launched a probe into "disciplinary violations" at the NBS last October.
The bureau head, Wang Baoan, was removed from his post in late February after being put under formal investigation.
CCDI said last week that hundreds of staff working for the statistics bureau had been using official data for personal gain.
It said "individuals were not permitted to receive any royalties, editorial fees or labor fees" for the publication of NBS data, and 313 officials were now in the process of being indicted.
"Since the inspection team moved in to the statistical bureau, there were apparently some investigations into the various ways key economic data was distributed," said a researcher with a state-backed industry association.
"We are not getting them either," said the researcher, who did not want to be named.
Production numbers for gasoline, diesel and kerosene for the first three months of the year have now been released after long delays.
But other figures, including data supplied by the bureau to third-party agencies has not been made available since November 2015. The data still missing includes monthly production figures for base metals as well as oil products like liquefied petroleum gas, naphtha and fuel oil.
"It is crucial to help gauge oil demand from China, and this lack of transparency makes it harder to gauge the strength of the demand side," said Miswin Mahesh, analyst with Barclays Capital.
"It would mean that import data and ship tracking will have to pay a larger role, although it would still not be able to give a good estimate for local demand, given China is now also a net exporter of refined products," he added.
An official at the National Bureau of Statistics said the data releases had been "temporarily suspended", adding that it was likely that the amount of data made available to the public would be restricted.
Other missing numbers include provincial breakdowns for steel production and power generation. The suspension has affected news agencies such as Reuters as well as Chinese consultancies such as Mysteel, Antaike and ICIS, and industry bodies like the China Petroleum and Chemical Industry Federation.
(Additional reporting by Polly Yam in HONG KONG and Florence Tan in SINGAPORE,; Writing by David Stanway; Editing by Will Waterman)
BEIJING |
Read More at: Reuters
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Daily Bulletin May 3rd 2016
FX – The dollar continues to consolidate considerably.
The yen is strengthening sharply, with the dollar trading now below 107 against the yen, its lowest since October 2014, because investors continue to digest BoJ under-delivery. The yuan has also appreciated remarkably against the dollar since April 27, with the dollar trading at 6.47 against the CNY, after witnessing some weakness around mid-April.
The clear depreciation of the dollar is recent days is putting upward pressure on most commodities, including base and precious metals. Nickel at $9,450 was up $155 and nearing last week’s highs when it broke above $9,500 for the first time since November. Market participants said the metal could even get above $9,700 on month-end fund valuations. Stocks rose 1,686 tonnes to 417,438 tonnes. The International Nickel Study Group (INSG) has projected a 49,000-tonne deficit in the nickel market in 2016, an increase from its October forecast of a 23,000-tonne deficit for this year.
Sherritt International said that refined nickel production at its Ambatovy Joint Venture in Madagascar came in below expectations in the first quarter due to a number of unrelated reliability issues on equipment at its high-pressure-acid-leaching (HPAL) plant.
Base metals could continue to strengthen on weaker dollar despite the resurgence of a risk-off environment. The resilience of base metals since week-start suggests that sentiment remains positive.
The ongoing weakness in the dollar despite a slightly less dovish Fed has made shorts increasingly vulnerable, suggesting that the wave of short-covering is likely to continue in the coming days.
But should this risk-unfriendly environment prevail for longer and the consolidation in the dollar end, negative pressure in base metals could reappear later in May.
The London Metal Exchange is shut Monday.
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