Commodity Market Headline News (30th of Dec)

[곰이좋아]

마무리되지 않은 소망과 새희망들은 다가오는 새해에 이루어지기를 진심으록 기원합니다. 

크리스마스 휴가때 찍은 저와 제 두자녀입니다 (FROM PORT DICKSON AVILLION ADMIRAL YACHT CLUB )

Daily Summary of Baltic Exchange Dry Indices
BALTIC INDICES	INDEX		T/C LEVEL
BDI	2,277	+30	-
BCI	4,078	+82	38,999
BPI	1,825	-10	14,556
BSI	1,453	-15	15,195

The Indonesian ore export ban: What would Sukarno do?  

If Sukarno were still alive and leading the country now, perhaps he would have banged the table in a Cabinet meeting in fury, screaming his frustration right into the faces of his ministers on how they had been so weak  and bowed to pressure exerted by foreign mining firms in the new mining law.

 

The law, which will ban exports of raw minerals starting Jan. 12 next year, was initially introduced to help Indonesia curtail its dependency on exporting raw natural resources by promoting the development of value-added industry, at the same time stopping the country’s highly priced raw minerals from being exploited by foreign mining giants.

 

The 2014 raw ore export ban has been on the table for years, long enough for foreign mining firms operating here to prepare themselves, yet they have been kicking the can down the road, crying foul over the obligation to build mineral-processing smelters because such an idea, in their view, was not commercially feasible.

 

Truthfully speaking, the foreign mining firms have taken the issue lightly. Perhaps the perception that all Indonesian bylaws are negotiable, that all government officials would be easy to persuade, that this country might need foreign investors more than the other way around, have made them to think that such a ban might be no more than a bluff.

 

So as the deadline draws near and the House of Representatives showed its seriousness to enforce the law, the foreign mining firms were shocked.

 

They then did everything from lobbying top economic ministers, to giving counter-bluffs in the media over the potential layoffs and huge economic losses that could materialize if the ban on raw mineral expoerts took place.

 

What foreign mining companies like Freeport-McMoran Copper & Gold Inc. forget is that an Indonesian law is still a law.

 

No matter how seemingly weak the country and the officials who enforce it, and now matter how powerful and influential your company is, an Indonesian law is something that all firms operating on this country’s soil must comply to.

 

Imagine that today the 21st century Sukarno surfed the Internet using his gadget and unexpectedly bumped into the news published by Bloomberg newswire on Dec. 17, titled “Indonesia’s Cabinet to Discuss Ore Ban Amid Freeport Queries”.

 

What would Indonesia’s first president say to Coordinating Economic Minister Hatta Rajasa, Energy and Mineral Resources Minister Jero Wacik, Industry Minister MS Hidayat and Finance Minister Chatib Basri?

 

“I, together with the other founding fathers, sacrificed soul and blood for the independence of Indonesia…but now you lads allow this country to be dictated and steered by a US company like Freeport,” Sukarno might say. “What kind of ‘independent’ nation is this?”

 

In many cases during his presidency, Sukarno was known for overindulgent nationalism and excessive hatred toward foreign firms (especially to the US: He was legendary for his “go to hell with your aid” remark).

 

However, Sukarno’s nationalistic viewpoint couldn’t be more relevant today. This is because in the case of the new mining law, many foreign mining firms have crafted strong propaganda of how their contribution to the economy is so immense, and that Indonesia needs them more than they need us and our natural resources — while in reality, it may be the other way around.

 

Nationalism can breed both bad and good policies. For instance, nationalistic sentiment that threatens to impede the plan to revise negative investments’ list (DNI) can be seen as bad, as it could limit the foreign direct investment inflows that Indonesia needs for strong, sustainable economic growth in the long run.

 

But, the nationalistic plan to ban raw mineral exports next year is a good policy, as it could help Indonesia climb up the supply chain by exporting more value-added goods, which eventually would lead to higher export earnings in the long-run, followed by other positive multiplier effects to the economy, such as higher absorption of skilled labor in the mining sector.

 

Of course, there shall be short-term pains if the law really proceeds. A potential loss from the implementation of the export ban would be US$6 billion, which would add to the country’s current account deficit by at least 0.6 percent of gross domestic product (GDP) next year, according to the World Bank.

 

But even the international organization acknowledged that the mineral exports ban would be beneficial for Indonesia in the long-run.

 

“From 2015, the ban would result in a relatively neutral impact on the trade balance, relative to the baseline, as […] gains from higher value processed exports begin to offset the loss of unprocessed mineral exports arising from the ban,” the World Bank wrote in its quarterly economic report released this week.

 

In other words, the implementation of the raw ore export ban to Indonesia will be like medicine injected into the body: It is bitter and painful in the near-term, but will turn out to be very beneficial for us in years to come.

 

Indonesia’s economy has stagnated at the middle-income level for a really long time, and critics have pointed out that only a bold, out-of-the-box policymaking mind set could help this country to jump up to the manufacturing level and thus avoid the “middle-income trap”. For our policymakers, now may be the right time to do just that.

 

If mining firms complain that smelters to process raw minerals cannot be completed until 2016 or 2017, then it’s their fault for underestimating the issue — Indonesia has given them enough time, now they need to think on how to expedite the smelters’ building process, if they want to avoid incurring bigger economic losses.

 

It is important for government officials to maintain credibility in its policymaking and law formulating process, because what’s at stake here is our country’s reputation in the eyes of foreign investors.

 

Were Sukarno still alive, there’s no doubt that he would have shouted to his ministers to go ahead with the law, and then motivated the people to rally behind the government.

 

Afterward, the whole international community shall know that a law in this country is non-negotiable and Indonesia can get really tough on that — hence, they will never take any issues with the government lightly again in the future.

Source: Jakarta Post

 

 

Commodity prices see out downbeat year; oil rises but Brent steady in 2013  

Commodity prices largely rose this week in quiet trade, but with gold set for its first annual drop since the start of the millennium. The complex was dominated by gold, which barring a late price surge, will suffer a first yearly loss since 2000. Sister metal silver, which tends to track gold's movement, has shed a third of its value in 2013.

 

PRECIOUS METALS: Gold's value has slumped 27 percent this year on weaker demand and easing inflation - snapping twelve years of uninterrupted annual price growth. "The risk is for further price downside ahead," said analysts at Barclays. "The main problem for gold is that with Indian demand soft because of the weak rupee plus new import duties, the physical market is struggling to offset investor liquidation, even during recent festival seasons when physical demand is usually strong." The government of top gold consumer India has hiked the metal's customs duty three times this year to curb imports and rein in its current account deficit.

 

Gold had in June hit a three-year low at $1,180.50 an ounce on the prospect of stimulus tapering by the US Federal Reserve. It came close to matching that level at the end of last week as the US central bank ended months of speculation by finally announcing it would start to scale back its stimulus next month. Gold has fallen back sharply from a record high of $1,921.15 an ounce recorded in September 2011, when investors rushed to snap up the precious metal on fears of a fresh global recession amid the eurozone debt crisis.

 

By late Friday on the London Bullion Market, the price of gold rose to $1,214.50 an ounce from $1,195.25 a week earlier. Silver climbed to $19.92 an ounce from $19.33. On the London Platinum and Palladium Market, platinum increased to $1,374 an ounce from $1,328. Palladium advanced to $711 an ounce from $700.

 

BASE METALS: Industrial metals prices rebounded strongly this week, in some cases reaching multi-month highs, putting a shine on a turbulent year for the likes of aluminium and nickel. "Unless some kind of miracle happens, metal prices will end the year 2013 significantly down, the losses having been incurred in the first half of the year," noted analysts at Commerzbank. "Essentially, there were two reasons for this: firstly, China presented disappointingly weak economic data (...) Secondly, a discussion began about the fact that the US Federal Reserve might already begin scaling back its bond purchasing programme in the near future. This also put metal prices under pressure even though they hadn't previously profited from" the latest stimulus. By Friday on the London Metal Exchange, copper for delivery in three months rose to $7,385 a tonne from $7,241 a week earlier.

 

---- Three-month aluminium decreased to $1,784 a tonne from $1,789

 

---- Three-month lead grew to $2,265 a tonne from $2,205.

 

---- Three-month tin gained to $22,949 a tonne from $22,871.

 

---- Three-month nickel fell to $14,344 a tonne from $14,360.

 

---- Three-month zinc advanced to $2,096.75 a tonne from $2,032.

 

OIL: Crude futures rose this week, with support coming from positive US economic data and violent unrest in South Sudan, traders said. US oil prices rose above $100 a barrel ahead of the Department of Energy's weekly release on the nation's oil inventories.

 

Traders have been keeping an eye on developments in South Sudan, which has been rocked by a wave of deadly ethnic violence. Analysts say the conflict threatens the young nation's oil output. Robert Yawger, director of energy futures at Mizuho Securities, said South Sudan usually exports about 220,000 barrels a day to Japan, Malaysia and China.

 

Oil gained also this week after a US Department of Labour report showed first-time claims for unemployment benefits fell to 338,000, below the 350,000 forecast by analysts. The better jobless claims report came on the heels of other recent strong US data on third-quarter growth, durable goods orders and other items that suggest a healthier economy.

 

"The improving US economy and signs the global economy is steady has been driving prices higher," said Gene McGillian, broker and analyst at Tradition Energy.

 

Brent crude is virtually unchanged over the year, while New York futures have risen more than 12 percent, amid tight supply concerns earlier in the year caused by the threat of US military action on Syria. But prices were kept in check by weaker Chinese economic data that raised doubts about global demand.

 

By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in February grew to $111.83 a barrel from $111.44 a week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for February rose to $99.62 a barrel from $98.92.

 

COCOA: Futures ended the year by recording the highest points since September 2011 - at ￡1,809 a tonne in London. "In contrast to the prices of many other agricultural products, cocoa prices have risen sharply in 2013 and meanwhile reached two-year highs in both New York and London. This is attributable to the growing conviction that both in 2012/13 and the current year 2013/14 there will be an undersupply in the cocoa market." Cocoa prices rose by a quarter during the year. By Friday on Liffe, London's futures exchange, cocoa for delivery in March dipped to ￡1,788 a tonne from ￡1,791 a week earlier. On ICE Futures US, cocoa for March increased to $2,815 a tonne from $2,801.

 

SUGAR: Prices traded narrowly mixed this week, having fallen by around 15 percent in 2013. "Although the 2013/14 production surplus will probably be only half the size of the previous year, the sugar market will remain very well supplied for the time being," said analysts at Commerzbank. "Given the outlook for a further reduction of supply in 2014/15, there could be a moderate rise in prices in the course of 2014." By Friday on Liffe, the price of a tonne of white sugar for March climbed to $444.10 from $442.40 a week earlier. On the ICE Futures US exchange in New York, the price of unrefined sugar for delivery in March fell to 16.32 US cents a pound from 16.42 cents.

 

COFFEE: Prices were mixed this week. "Following a strong year of production in 2013, Arabica prices are expected to experience further downside during 2014," Rabobank said in a note to clients.

 

"Following a record large crop in Vietnam, Robusta prices will likely weaken during the first half of 2014," it added. By Friday on the ICE Futures US exchange, Arabica for delivery in March climbed to 117 US cents a pound from 115 cents a week earlier. On Liffe, Robusta for March fell to $1,699 a tonne from $1,711.

 

RUBBER: Prices dipped this week on slow trade amid the festive season and on rising inventories, trader said. The Malaysian Rubber Board's benchmark SMR20 slipped to 229.25 US cents a kilo from 230.20 cents the previous week.

Source: AFP

 

 

Rising demand-supply gap to lift iron ore prices  

Global iron ore prices are expected to ease as China, which is the largest consumer of the commodity slows down. Increase in supplies by global mining giants, such as Rio Tinto and BHP Billiton, is also expected to keep a check on prices.

 

However, in the domestic market prices are expected to rise. Following the Supreme Court ban on mining in Karnataka two years ago and the State Government-imposed limit on production in Odisha in 2012, India’s iron ore production in 2012-13 declined 16 per cent to 140 million tonnes (mt). Demand during the year totalled 136 mt (of which 3 mt was met through imports) while exports from the country were 18 mt.

 

While a partial resumption of mining in Karnataka from April will help boost supplies, the impact will be felt only one or two years from now on. On the other hand, demand for the steelmaking raw material is expected to see a robust pick-up next year.

 

Green shoots

 

NMDC, which is the largest iron ore miner in the country, produces over 40 per cent of India’s output from its mines in Karnataka and Chhattisgarh.

 

It sells iron ore to the steel and sponge iron makers in Karnataka through e-auctions. But, as demand from customers has been subdued, NMDC has cut prices. It has brought the price of lumps down to Rs 4,300 a tonne and the price of fines to Rs 2,510 a tonne in August, from Rs 6,100/tonne and Rs 3,000/tonne in September last year. Throughout the past one year, the company either cut or left prices unchanged in the monthly price revisions as demand was lacklustre.

 

During 2012-13, domestic steel consumption grew 3.5 per cent, the slowest in many years, amid weak demand from end-user industries, such as automobiles, construction and consumer durables. However, there is a silver lining now. In October, NMDC hiked prices by Rs 100 a tonne, for the first time in the past one year.

 

In December again, it increased prices by another Rs 200 a tonne, given the recovery in demand and lower supply.

 

Iron ore production in Karnataka, which contributes to a fourth of India’s steel making capacity, is currently only about 15 mt (including 9 mt from NMDC), as against the 30 mt cap imposed by the Supreme Court. Many mines in the State are yet to restart operations as they await environmental clearances and approval of expired leases. With demand from local steel and sponge plants totalling 30 mt, only half of the existing demand is being met.

 

Gap to widen

 

The existing demand-supply gap will only widen in the coming year, since domestic steel demand is expected to rise next year while iron ore supplies would pick up only a year or two from now. According to Business Monitor International, iron ore output is expected to increase at an annual average rate of 0.5 per cent only, reaching 156 mt by 2017.

 

The World Steel Association has forecast India’s steel demand to grow at a faster rate of 5.6 per cent in 2014. Approval of infrastructure projects worth Rs 1.9 lakh crore by the Cabinet Committee on Investment will help drive steel demand. Recovery in the global economy too, even though modest, will boost steel production. With capacity expansions (aggregate capacity to rise by 24 mt by 2017-18 from the current 90 mt) lined up by Indian steel makers, demand for iron ore is only expected to trend further upwards.

 

Global prices to drop

 

Global iron ore prices, which witnessed a decline in the early half of 2013, have begun to pick up since July.

 

Following stock replenishments by China, iron ore (62 per cent Fe) spot prices at Tianjin port rose 24 per cent between June and November to close at $139 a dry metric tonne. However, a moderation in prices is likely from here on.

 

According to the World Steel Association, the Chinese steel demand will grow at a slower pace in 2014 as the Government’s efforts at rebalancing the economy will keep investment activities under check. Iron ore supplies, on the other hand, are likely to rise. According to the Canberra-based Bureau of Resources and Energy Economics, iron ore shipments by Australia, the world’s largest iron ore exporter, are expected to rise 17 per cent to a record 669 mt next year.

Source: Hindu Business Line

 

 

Vale Declares Force Majeure on Iron-Ore Contracts After Storms  

Vale SA (VALE5), the biggest iron-ore producer in the world, declared force majeure on supply contracts that may represent as much as 4 million tons of the steelmaking ingredient after storms in southeastern Brazil.

 

Vale is working to resume operations safely in the next few days and also to reduce impact of the rain, the Rio de Janeiro-based company said today in a Brazil regulatory filing. The company estimates between 3 million metric tons and 4 million tons of iron-ore shipments may be lost this year, while 2 million of them could “potentially be recovered in the first quarter of 2014,” it said.

 

Floods and landslides this month are curbing Vale’s iron-ore train and port deliveries in the southeastern state of Espirito Santo. Heavy rain in Espirito Santo has caused 23 deaths, according to the state’s government website.

 

Vale rose 1.4 percent to 32.36 reais in Sao Paulo at 5:01 p.m. The stock has dropped 21 percent this year.

 

Force majeure is a legal clause that allows companies to miss deliveries because of circumstances beyond their control.

Source: Bloomberg

 

 

Gold price collapse is the worst for 30 years  

Gold will finish the year as one of the worst-performing asset classes, bringing to an end a decade-long rally in the precious metal.

 

Gold has suffered its sharpest fall in 30 years, down almost 28pc over the past 12 months to close 2013 at about $1,200 (￡725) an ounce.

 

That compares badly against other assets, with the S&P 500 up 28pc, the FTSE 100 gaining around 13pc and Brent crude oil futures up about 2.5pc in the same period.

 

“Equities have won the battle over gold for investors’ money this year,” Ole Hansen, head of commodity strategy at Saxo Bank, said. Last year, Mr Hansen correctly predicted that gold would finish the year at $1,200 and for 2014 he is forecasting that prices may have already bottomed out.

 

“We won’t see a year of big movements after the recent 10-year rally ended. In fact, we could see some consolidation,” he said. Although he expects gold to continue to be sold early next year, Mr Hansen does not foresee prices below $1,090 an ounce.

 

“A year down the line, we could be around $1,250 an ounce,” he said.

 

Demand for gold had led the charge in resources demand that became known as the commodities “super-cycle”, but no longer.

 

Gold was the biggest loser after the US Federal Reserve announced that it will taper its bond purchases by $10bn a month from next year.

 

The metal fell almost 3pc immediately after news of the taper hit the market. Central banks globally are already following the Fed’s lead and easing back on the money printing that has been the primary policy tool to lift the developed world out of recession, and a major factor behind investors seeking higher yields in gold.

 

“Sentiment is stacked against gold,” said Mark Bristow, chief executive of African-focused gold mining company, Randgold Resources. “Globally, economic policy has been driven by popular politics and not sound business sense.”

 

Mr Bristow said that not all of the downward pressure on gold prices is due to global economic forces. Over-production is now a major problem, especially among miners operating on low margins.

 

Despite, falling prices, global output of gold is forecast to increase by 3.5pc to a record 3,000 tonnes next year, up from about 2,900 tonnes this year and 2,860 tonnes in 2012.

 

“There is a lot of pain ahead,” said Mr Bristow. “A lot of miners are going to have to deal with the market very differently. There is too much unprofitable production and this will have to result in reduced [price] levels.”

 

Oversupply comes at a critical time, not just in terms of institutional investors cutting their exposure in exchange traded funds (ETFs) but also in traditional jewellery-focused markets such as India. By the end of the third quarter of 2013, almost 700 tonnes of gold had left ETFs as total demand slumped by 21pc, the World Gold Council reported.

 

According to the investment bank, Macquarie, the ETF sell-off has been just one of the shocks to hit gold this year.

 

India’s efforts to curtail borrowing against gold purchases and other measures designed to rein in speculation have hit one of the world’s largest markets for physical gold.

 

Macquarie expects imports to India, usually the world’s highest, to be even lower next year as the Delhi government continues to squeeze the domestic market.

 

But despite the ever-growing number of reasons for investor caution, gold remains the ultimate hedge against economic turmoil. “The global economy is not as it seems and there is still a lot of risk out there,” said Mr Bristow.

Source: Telegraph

 

 

Most Australian Iron-Ore Exports Halted Due to Cyclone Threat  

The bulk of Australia's iron-ore exports have been halted Sunday as key ports and mines in the resource-rich Pilbara region close ahead of an expected battering from Cyclone Christine in the next few days.

 

Rio Tinto PLC and BHP Billiton Ltd., Australia's two biggest iron-ore exporters, separately ceased shipments of the steel-making ingredient as their ports were shuttered ahead of Christine, which is due to cross the Pilbara coastline late Monday.

 

Australia is the world's biggest exporter of iron ore, which is one of the key raw materials used to produce steel for construction of high-rise apartment buildings, the manufacture of luxury cars and other uses.

 

The cyclone currently lies west of the seaside resort of Broome in the northern part of Western Australia state, and is expected to intensify as it moves southwest toward the Pilbara coast, Australia's Bureau of Meteorology said in an update.

 

A severe impact on the Pilbara is likely late on Monday or early Tuesday, and this may include very destructive winds with gusts in excess of 165 kilometers an hour (102.5 miles per hour) near the cyclone center, the bureau added.

 

Port Hedland, Australia's biggest iron-ore port, completed the evacuation of shipping vessels ahead of the official closure early Sunday morning, the port's authority said in a statement.

 

BHP Billiton is the major user of Port Hedland, alongside Fortescue Metals Group Ltd. and Atlas Iron Ltd.

 

"Port Hedland and our Yarrie mine are on Blue Alert, and we are progressively securing port, rail and mine infrastructure and tying-down equipment at these sites," BHP said in a statement.

 

Rio Tinto, meanwhile, said its mine and rail operations continue to operate but ship loading has stopped at the Cape Lambert and Dampier ports near Karratha.

 

"We are closely monitoring the situation," a spokeswoman said.

 

Alongside Rio's two iron-ore ports, Karratha houses an important oil and gas hub that includes the Woodside Petroleum Ltd.-operated North West Shelf and Pluto liquefied natural gas export ventures.

 

"Woodside is taking all necessary steps to safeguard its people and assets in response to Tropical Cyclone Christine," a spokeswoman said.

 

Source: Dow Jones

 

[운영위원장]

2013 수고 많으셨습니다.
애들이 국화빵이네.
2014 지금까지 준비하고 다듬어 온 일이 크게 빛이나길!