Commodities mostly rose this week as traders kept watch on simmering
tensions in Ukraine, with star performer nickel striking a two-year peak on the
back of supply woes.
President Vladimir Putin visited Crimea on Friday for the first time since
Russia annexed the Ukrainian peninsula.
Oil: The market rallied on Ukraine-linked supply risks and
stronger-than-expected US crude demand, but ended the week on a stable note as
some traders cashed in their gains.
“Oil prices pushed higher on both sides of the Atlantic amidst increased
geopolitical risks after pro-Russian separatists in the Ukraine announced they
would go ahead with an autonomy vote scheduled for eastern Ukraine this
weekend,” said Tradition Energy analyst Eugene McGillian.
The oil market had jumped Wednesday by more than $1 after US crude
inventories unexpectedly fell from a record high last week, suggesting that
demand may be picking up the world’s leading crude consumer.
The US government’s Department of Energy said crude reserves sank by 1.8
million barrels in the week to May 2. That confounded expectations for a gain of
1.2m barrels, signalling solid demand.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for
delivery in June eased to $108.09 a barrel from $108.71 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet
crude for June jumped to $100.70 per barrel compared with $99.93.
Base metals: Star performer nickel surged on Friday to $20,500 per tonne,
hitting the highest level since February 2012 following a supply outage at a
huge mine in New Caledonia.
“A perfect storm appears to have blown up on the nickel market,” said
Fritsch at Commerzbank.
The facility, with a capacity of 60,000 tonnes per year, is one of the
world’s biggest nickel mines.
By Friday on the London Metal Exchange, copper for delivery in three months
advanced to $6,736 per tonne from $6,648 a week earlier.
Three-month aluminium dropped to $1,765.50 a tonne from $1,775.25.
Three-month lead rose to $2,102.50 a tonne from $2,078.25. Three-month tin
increased to $23,120 a tonne from $22,930. Three-month nickel soared to $20,100
a tonne from $18,150. Three-month zinc gained to $2,040 a tonne from
$2,012.
Precious metals: Gold hit a three-week peak as Ukraine fears boosted demand
for the precious metal, which is seen as a haven in times of geopolitical
turmoil.
The glamorous metal rose as high as $1,315.70 per ounce on Monday, before
pulling lower as Putin attempted to de-escalate tensions.
By Friday on the London Bullion Market, the price of gold rose to $1,291.25
an ounce from $1,281.25 on Friday of the previous week.
Silver increased to $19.25 an ounce from $19.17.
On the London Platinum and Palladium Market, platinum advanced to $1,429 an
ounce from $1,425.
Palladium slipped to $804 an ounce from $816.
Sugar: Prices fell, but losses were capped by weather-related supply
concerns in Brazil.
By Friday on LIFFE,London’s futures exchange, the price of a tonne of white
sugar for delivery in August fell to $467.80 from $476.30 a week earlier.
On ICE Futures US, the price of unrefined sugar for July eased to 17.17 US
cents a pound from 17.79 US cents.
Coffee: The coffee market fell as traders set aside worries over
drought-hit production in key producer Brazil.
“The situation regarding the (drought) damage to the coffee (crop) has not
changed, however the tone of the market has for the moment turned a little
negative and we will go through a period of weak prices,” said Citi analyst
Sterling Smith.
By Friday on the ICE Futures US exchange, Arabica for delivery in July fell
to 192.45 US cents per pound from 204.65 cents a week earlier.
On LIFFE, Robusta for July dipped to $2,124 a tonne from $2,163.
Cocoa: Futures slid to their lowest levels since late January, hit by
speculative selling.
By Friday on LIFFE, cocoa for delivery in July dropped to £1,789 a tonne
from £1,816 a week earlier.
On ICE Futures US, cocoa for July retreated to $2,873 a tonne from
$2,914.
Rubber: Prices in Kuala Lumpur fell on lacklustre demand, with sentiment
dented also by poor manufacturing data from top consumer China.
The Malaysian Rubber Board’s benchmark SMR20 fell to 166.75 US cents a kilo
from 173.90 cents a week earlier.
Source: AFP
Coal prices to remain low due to healthy
supplies and slowing demand
Thermal coal prices are unlikely to rise over the next two years due to
oversupply and stagnating demand, with analysts forecasting prices in a range of
$70-85 per tonne.
Prices of coal for use in power generation have dropped around 40 percent
during the last three years due to healthy supplies, especially in Australia and
Indonesia, and slowing demand in Europe and China.
"We cannot see prices gaining ground anytime soon, with short-term risk
more to the downside and sustainable upside capped above $80 per tonne into
2016," South Africa's Standard Bank said in a research note published this
week.
"The thermal coal market remains well supplied. Coal supplies to Europe
will increase as Drummond (in Colombia) ramps up its ... load facilities. Other
Colombian suppliers are also increasing shipment rates, leading to an improving
6-10 million tonnes run-rate from Colombian miners across Q2," the bank
added.
At the same time, low industrial growth rates across Europe as well as the
expansion of renewable power capacity especially in Germany, Europe's biggest
coal importer, are expected to keep a lid on demand growth.
Germany's output of renewable power in the first quarter of 2014 rose by
12.6 percent from a year earlier to 40.2 billion kilowatt hours, energy industry
group BDEW said on Friday, citing favourable weather patterns and capacity
additions.
The share of renewable energy in national electricity consumption rose by 4
percentage points to 27 percent in the first three months of 2014 compared with
the same period last year, BDEW said.
"WAR ON POLLUTION"
"We fail to envisage any significant price rallies, apart from short-term
Black Swan events (e.g. strikes; rebels; geopolitics) or unplanned seasonal
squeezes (and) we continue to see coal trading between $75-85 a tonne," Standard
Bank said.
Other analysts have given similar forecast ranges, with many expecting
prices of $70 or even below this year.
European physical coal prices are currently at around $74 per tonne.
Coal researchers Perret Associates said this week that it expected a sharp
fall in European coal imports this year, putting further downward price pressure
on coal.
Asian demand, which has been the main driver for coal over the past decade,
could also peak soon, analysts said.
"We maintain our forecast of a peak in Chinese net steam coal imports in
2016-17. Demand is increasing at a slower rate due to slower GDP growth and the
fact that the boom period in the urbanisation and electrification of the country
is now behind us, at least in the east of the country," Perret Associates
said.
Beyond slower Chinese growth, the government in Beijing has also declared a
"war on pollution" which includes a plan to reduce the country's dependency on
coal and bring down its share in China's energy mix from 70 percent to 65
percent.
Source: Reuters (By Henning Gloystein, Editing by Pravin Char)
Japan steelmakers to step up overseas expansion
despite Asia's oversupply
Japanese steelmakers, fresh from a bumper year of profits amid an upswing
in their home market after massive government stimulus, are looking to step up
expansion overseas despite the prolonged supply overhang that now grips
Asia.
The fresh drive overseas means top Japanese steelmakers will be producing
more than half of the total output of their mainstay automotive steel sheets in
factories outside Japan by 2016, as their home market stagnates with a falling
population.
Executives at steelmakers such as Nippon Steel & Sumitomo Metal Corp
and JFE Holdings are faced with little choice but to accelerate their push
abroad as the effects of the stimulus led by Prime Minister Shinzo Abe wane and
spending on autos falls after a sales tax hike from April.
"As for automotive steel, Indonesia is a key area where we would consider
to invest," Executive Vice President Katsuhiko Ota said at an earnings briefing
on Friday, adding that expansions of plants in India and China are other issues
to tackle.
"We'll be also studying various investment options overseas including
upstream (crude steel production). But we need to figure out which investments
are the most beneficial when the supply-demand gap is so huge," he said.
Given the excess supply fuelled mostly by Chinese output of about 780
million tonnes of crude steel a year, Japanese mills are reluctant to invest in
blast furnaces, but they are eager to enlarge their processing plants and
clientele in Asia.
Nippon Steel, which on Friday reported for the year ended March 31 a return
to net profit that was the highest since the start of the global financial
crisis in 2008, plans to set aside about $1 billion a year in extra strategic
spending, mainly for overseas expansion.
It spent about $0.78 billion to buy a U.S. plant from German rival
ThyssenKrupp with ArcelorMittal in the $1.55 billion deal that was completed in
February.
Some analysts say cheap acquisition targets may arise for Japanese firms as
foreign competitors are suffering from prolonged oversupply and falling steel
prices.
Japanese steel executives say they need to boost their output outside of
Japan to grab a bigger slice of growing overseas markets over the long
term.
They have benefited from a falling yen over the last year and a half, which
boosted volume and margin of exports for their biggest customers, the
automakers, but that is unlikely to last.
"We need to be able to supply materials in Asia and the rest of the world
as the globalisation of Japanese automakers won't stop even after the yen turned
weaker from the super high levels," JFE Executive Vice President Shinichi Okada
said at an earnings briefing late last month.
JFE plans to focus on expansion of overseas processing facilities for now,
but it is also willing to look into any good opportunity in owning a blast
furnace abroad, he said.
JFE has said it was considering taking a majority stake in a project to
construct a plant in Vietnam with steel sheet production capacity of 3.5 million
tonnes that could go onstream in 2016, but decisions have been pushed back due
to the oversupply.
PROFIT RECOVERY
Earnings results released by Friday showed Nippon Steel's recurring profit
- pretax and before one-off items - jumping 4.7-fold to 361 billion yen ($3.55
billion) for the year through March on solid demand for construction and
automobiles at home, while JFE's profit grew 3.3-fold to 174 billion yen.
Kobe Steel Ltd, Japan's No.3 steelmaker, returned to the black with 85
billion yen in recurring profit, against a loss of 18 billion yen a year
earlier.
By contrast, South Korea's POSCO last month cut forecast for sales and
investment for this year after its first quarter profit missed estimates.
China's Baoshan Iron & Steel Co Ltd posted a 7 percent fall in its
first-quarter net profit due to a weak economy and over-capacity.
Japanese mills, about 30 percent of whose demand comes from automakers,
have been gradually boosting overseas production in the wake of the yen's jump
after the 2008 financial crisis as it pushed manufacturers to transfer their
plants outside of Japan.
A strong yen raises operating costs at home and makes Japanese exports less
profitable, while making overseas investments more affordable.
To cope with rising demand in Asia, Nippon Steel built processing plants
for automotive steel in Thailand and Mexico last year. Its annual overseas
output capacity of automobile steel sheet, combined with the recently purchased
U.S. plant, is expected to hit 9 million tonnes this year, surpassing domestic
capacity of 8 million tonnes.
JFE also added processing plants in Thailand and India over the past year
and is building another one in Indonesia by 2016. Nippon Steel and Kobe Steel
plan to add new facilities in China by 2015 and 2016, respectively.
Source: Reuters (By Yuka Obayashi, Editing by Aaron Sheldrick and Tom
Hogue)
Commodities remain best performing asset
class
Commodities have remained the best performing asset class since the end of
last year aided by better returns on livestock and agriculture sectors.
Deutsche Bank noted that energy and industrial metals continue to under
perform while precious metals stagnated for a second quarter.
"We expect precious metals returns to remain sensitive to US growth reports
and any positive growth shocks would tend to sustain downside risks to gold
returns heading into the summer," the bank observed in its weekly report.
Since the end of last year excess returns on the DBLCI-MRE are up 9.1%
compared to returns of 8.4% for the DJUBSCI. As a result, for the first time
this year, the DBLCI-MRE is outperforming the DJUBSCI, the report said.
A signficant part of the DJUBSCI outperformance relative to the DBLCI_MRE
was attributable to the gains in US natural gas, coffee, lean hogs, and grains,
where the DJUBSCI had larger allocations.
In this quarter, DBLCI-MRE is up 3.2% versus 1.3% in DJUBSCI.
Thisi due to large allocation of the former to industrial metals especially
nickel. In repsonse to Indonesian ban, nickel has rallied 30% over past two
months.
The ability of DBLCI-MRE to continue to outperform will in some part be
contingent on the performance of energy returns during the remainder of the
year. Indeed in terms of sector allocations, the DBLCI-MRE is underweight energy
and livestock relative to the DJUBSCI.
Source: Commodity Online
Iron Ore Slumps to Lowest Since 2012 as Surplus
Deepens
Iron ore retreated to the lowest level since 2012, heading for a fourth
weekly loss and nearing $100 a ton, as increased seaborne supplies of the
steel-making raw material boosted a global glut.
Ore with 62 percent content delivered to the Chinese port of Tianjin fell
1.3 percent to $103.70 a dry ton yesterday, the lowest level since September
2012, according to data from The Steel Index Ltd. The commodity has lost 23
percent this year, extending a 7.4 percent decline in 2013.
Iron ore entered a bear market in March as the world’s biggest mining
companies including BHP Billiton Ltd. (BHP) expanded output from low-cost mines
in Australia, betting that rising exports to China would more than offset lower
prices. The commodity may decline below $100 going into next year as the surplus
builds, Goldman Sachs Group Inc. said this week.
“We expect prices to go below $100 before the end of the year,” Ivan
Szpakowski, a Hong Kong-based analyst at Citigroup Inc., said by phone today,
forecasting averages of $102 for the third quarter and $100 in the final three
months. “The biggest factor is probably still supply-side.”
Shares of BHP, the world’s third-largest iron ore exporter, fell 0.8
percent to A$37.34 at the close in Sydney, while Rio Tinto Group (RIO) declined
0.8 percent to A$60.95 and Fortescue Metals Group Ltd. lost 0.2 percent to
A$4.81. In Brazil, Vale SA, the biggest exporter, declined 1.5 percent
yesterday, taking this year’s retreat to 18 percent.
Goldman’s Forecasts
The global surplus will jump from 14 million tons last year to 77 million
tons in 2014 and 145 million tons in 2015, Goldman Sachs said in a May 7 report.
The increase led by new, low-cost output from Australia and Brazil will displace
higher-cost supplies in China, Michiel Hovers, vice president of iron ore
marketing at BHP, said at a conference in Singapore this week.
Prices of less than $100 a ton are too bearish, Claudio Alves, Vale’s
global director of marketing and sales, told the same conference. Long-term
prices are unlikely to go below that level, he said.
While spot prices could easily trade below $100 for a short time, they
aren’t expected to maintain a six to 12-month average below that level for 12 to
18 months, said Lachlan Shaw, an analyst at Commonwealth Bank of Australia. A
significant amount of high-cost Chinese capacity is still needed over the next
year or two to meet China’s steel demand, Shaw wrote in an e-mail.
Operating costs at about 80 percent of China’s domestic iron ore mines are
$80 to $90 a ton, according to Xia Yang, a Shanghai-based analyst at Mysteel,
China’s biggest steel researcher. That compares with A$39 ($37) for Rio Tinto,
A$41 for BHP and A$56 for Fortescue, according to UBS AG.
April Shipments
China’s imports jumped 24 percent to 83.4 million tons last month, figures
from the customs administration showed yesterday. The country, the world’s
largest steelmaker, and accounted for 68 percent of global shipments last year,
Goldman estimates.
Iron ore dropped for a fifth month in April as stockpiles at ports
increased, economic growth in China slowed and the government tightened credit.
Gross domestic product is projected to expand 7.3 percent this year, according
to a Bloomberg survey, compared with China’s official target of about 7.5
percent.
Steel production growth in China may slow to single-digit rates as mills
face tight credit conditions as well as stricter environmental measures,
according to Wang Xiaoqi, vice president of the China Iron and Steel
Association. Steel output is expected to grow 3 percent to 4 percent this year
and in 2015, Vale’s Alves said.
BHP last month raised its full-year production guidance to 217 million
tons, while Rio Tinto reported record quarterly output. Fortescue (FMG)
completed an expansion to almost triple capacity to 155 million tons.
“Early signs of a structural surplus are already evident,” Goldman analysts
Christian Lelong and Amber Cai wrote in the May 7 report. “The Chinese cost
curve will not prevent seaborne iron ore prices from crashing through the $100
level going into 2015.”
Source: Bloomberg
China's robust commodity imports boosted by
stockpiling, financing: Clyde Russell
How long can strength in China's commodity imports co-exist with weakness
in other key indicators, such as manufacturing?
If you accept the argument that China can't continue to import record, or
near-record, levels of major commodities while experiencing slowing growth, then
one of two outcomes becomes inevitable.
Either commodity imports start to moderate to align more closely with other
economic data, such as the HSBC Purchasing Managers' Index, which fell for a
fourth straight month in April, or China's growth shows evidence of
re-accelerating.
So far this year, strength in commodity imports has tended be put down to
either one-off factors, or demand unrelated to actual consumption, for example,
buying iron ore in order to secure financing to use in unrelated
investments.
If these factors are the reason behind the seeming disconnect between
natural resource imports and the overall economy, then the most likely outcome
will be for imports of crude oil, iron ore, copper, soybeans and other
commodities to ease in coming months.
Crude oil imports jumped 22 percent in April from March to 27.88 million
tonnes, equivalent to 6.78 million barrels per day (bpd), which exceeds the
prior record high of 6.65 million bpd in January.
The strength in crude imports comes amid slowing oil demand, with a
calculation of implied consumption coming out at 9.96 million bpd in the first
quarter, a decline of 0.6 percent from the same period a year earlier.
April's record oil imports also came amid maintenance at several
refineries, which normally trims demand.
The most likely explanation is that China has been adding to commercial
stockpiles, and the start up of two new refineries certainly supports this
view.
However, the extent of the strength in crude imports suggests that
strategic stockpiles are also being filled, although this cannot be known for
certain as this information isn't disclosed.
PRICE A FACTOR FOR IRON ORE, COPPER
Iron ore imports were the second highest on record in April at 83.89
million tonnes, and the first four months of the year has seen a jump of 21
percent from the same period in 2013.
While some of April's strength could be put down to higher steel
production, it also appears likely that some of the imports were related to
shadow financing deals, even though anecdotal reports suggest the authorities
are making it harder for traders to use commodity imports as collateral for
credit.
It may be that April represents the peak of imports for credit purposes,
implying that iron ore shipments may slow in the next few months, or at least
become more linked to steel output.
The other factor with iron ore is that weaker prices tend to boost imports,
irrespective of the state of steel demand.
Spot iron ore hit $104.70 a tonne, the lowest so far this year, on March
11, just around the time many cargoes for April delivery would have been
booked.
Cheaper prices may also help explain the 7.2 percent gain in copper imports
to 450,000 tonnes in April from the previous month.
London copper dropped to its closing low for the year on March 13, making
it attractive for Chinese traders to import the industrial metal.
China's State Reserves Bureau, the official stockpiler, was also buying in
April, which helped support local premiums and thereby boosting the appeal of
imports, Zhou Jibe, dealer and senior analyst at China International Futures
(Shanghai) Co Ltd, told Reuters.
Looking at the major commodity imports and it seems that imports haven't
been driven by strength in actual consumption, with stockpiling boosting crude
and copper, and shadow financing doing the same for iron ore.
Whether strategic stockpiling continues apace is in the realm of
speculation, but it does seem likely that the boost to commodity imports for
financing deals will be lower in the next few months.
However, if the Chinese economy does start to pick up slightly, some real
demand for commodities may offset any decline from stockpiling and financing.
첫댓글 자료 감사 합니다