Archive | Commodity Super-Cycle and Decline

Commodities Slide as U.S.-China Spat Hits Soy to Steelmakers – by Thomas Biesheuvel (Bloomberg News – June 19, 2018)

https://www.bloomberg.com/

A rout in commodities deepened as the threat of a trade war between the world’s two biggest economies intensified, hitting markets from steelmakers to soybeans.

As the tit-for-tat trade dispute between the U.S. and China stepped up, a Bloomberg gauge of commodities fell to the lowest since early April, with agriculture being the worst hit. . Almost all raw materials fell after President Donald Trump threatened tariffs on another $200 billion of Chinese goods.

A Bloomberg agriculture index fell to the lowest since at least 1991, while global mining stocks sank to the lowest in 18 months. Industrial metals fell, with copper, nickel and zinc all giving up more than 2 percent. Continue Reading →

Commodities of the future – by Molly Lempriere (Mining Technology – June 13, 2018)

https://www.mining-technology.com/

The latest Deloitte mining trends report identifies ‘commodities of the future’ as one of the key turning points for the industry. MINE presents the commodities likely to make a splash on the market in the future, and those that may be better left in the past.

Deloitte’s report, Tracking the trends 2018: The top 10 issues shaping mining in the year ahead, ended with a section on the commodities of the future. Choosing which commodities to invest in and which to divest is an important challenge for mining decision-makers, especially as industrial needs change and environmental concerns come to the fore. Deloitte, therefore, presented its predictions, taking into account technological developments.

“Given how inextricably socioeconomic trends link to commodity demand, mining executives have long had to double as futurists,” says the Deloitte report. “To assess which commodities to invest in, and which to divest, miners need to keep their fingers on the pulse of fluctuating consumer demands, global demographic and economic shifts, and the effects of environmental change.” Continue Reading →

Top global miners’ profits to rise to $76bn in 2018 – by Esmarie Swanepoel (MiningWeekly.com – June 5, 2018)

http://www.miningweekly.com/

PERTH (miningweekly.com) – New data from advisory firm PwC has found that the top global mining companies were reaching near boom profits, with net profits up 126% in the last year. Net profits for the top 40 mines reached $61-billion in 2017, and are forecast to climb further to $76-billion in 2018.

Market capitalisation also increased by 30%, to $926-billion in 2017, while revenue for the top miners increased by 23% to $600-billion, and earnings before interest, taxes, depreciation and amortisation (Ebitda) rose 38% to $146-billion.

PwC Australia mining leader Chris Dodd said on Tuesday that strong balance sheets were tempting the top 40 mining companies to pursue bold investment and growth opportunities, but many remained focused on maintaining a robust and flexible balance sheet to avoid the misgivings of the past. Continue Reading →

Has the commodities cycle now reached its peak? (Australian Mining – May 21, 2018)

https://www.australianmining.com.au/

The commodities industry downturn from 2013–2016 had a massive effect on companies in Australia and around the globe – with most mining companies going into survival mode. Since mid-2016 though, the market has been in a strong recovery cycle and, some say, it has now reached its peak.

Where we are now is really at an inflection point and, depending on where the global economic cycle moves, commodities will follow accordingly. There are exciting opportunities emerging as well, coming from new technologies especially that can help drive more sustained growth for the industry.

Ernie Thrasher, Chief Executive Officer at Xcoal Energy & Resources explained that “we are at a point where either the global demand will sustain this commodities cycle, or we’re at a point where the recovery cycle has reached its end and we may see another downturn up ahead.” Continue Reading →

The Goldman wake-up call: It’s time to tilt towards commodities in your portfolio – by Ian McGugan (Globe and Mail – May 5, 2018)

https://www.theglobeandmail.com/

Goldman Sachs loves commodities. You may want to at least like them. The Wall Street investment bank argued in a research note this week that the case for owning the raw materials of the global economy has “rarely been stronger” than it is right now.

Not everyone agrees, of course. But investors fretting about stock-market turbulence and the punishing impact of rising interest rates on bond prices should take a look at the case for unloved commodities. These overlooked assets can diversify your portfolio, shield you against inflation and allow you to benefit from the late stages of a long-in-the-tooth economic recovery.

The simplest case for them is this: They’re due. While Wall Street stocks have delivered a steady stream of pleasant surprises in recent years, commodities have brought nothing but pain – at least, until the past few months. Continue Reading →

The 800-pound gorilla effect: Donald Trump is sending shockwaves through global commodities markets (The Economist – April 26, 2018)

https://www.economist.com/

THE notion that the gentle flap of a butterfly’s wings can cause chaos on the other side of the world is well known. But commodity markets have been tested in recent weeks by what could be called the 800-pound-gorilla effect: the idea that chest-beating in the White House can unleash turmoil in global metals, agricultural and energy markets.

President Donald Trump has slapped sanctions on Russia’s biggest aluminium producer, Rusal, intensified a trade tiff with China and tweeted a gibe against OPEC, the oil-producing cartel.

His actions have shaken commodity markets at a time when speculation in futures is near the record heights of 2012, making markets even more volatile (see chart). Aluminium, nickel and palladium prices have soared and then plummeted. Soyabean markets are under threat. Oil prices are at their highest levels for more than three years. Continue Reading →

[Opinion] Commodities Are Flashing a Once-in-a-Generation Buy Signal – by Frank Holmes (U.S. Global Investors – April 23, 2018)

http://usfunds.com/

Since the commodities supercycle began unwinding 10 years ago, many investors have been waiting for the right conditions to trigger mean reversion and lift prices. I believe those conditions are either firmly in place right now or, at the very least, in their early stages.

Among them are factors I’ve discussed at length elsewhere—a weaker U.S. dollar, a steadily flattening yield curve, heightened market volatility, overvalued U.S. stocks, expectations of higher inflation, trade war jitters, geopolitical risks and more.

In addition, nearly 60 percent of money managers surveyed by Bank of America Merrill Lynch believe 2018 could be the peak year for stocks. A recent J.P. Morgan survey found that three-quarters of ultra-high net worth individuals forecast a U.S. recession in the next two years. Continue Reading →

COLUMN-China’s Q1 imports of major commodities lose some momentum – by Clyde Russell (Reuters U.S. – April 16, 2018)

https://www.reuters.com/

LAUNCESTON, Australia, April 16 (Reuters) – China’s imports of major commodities may be losing some of their strong growth momentum, with gains in the first quarter of this year failing to keep pace with those from the same period in 2017.

At first glance, China’s imports of crude oil, iron ore, coal and copper looked to have bounced back in March after a poor showing in February.

However, the first two months of the year generally result in some distortions in the data, depending on the timing of the Lunar New Year. This year’s holiday fell entirely within February, resulting in weaker import numbers. Continue Reading →

Goldman Sachs Says You Must Own Commodities in These Tense Times – by Pratish Narayanan (Bloomberg News – April 13, 2018)

https://www.bloomberg.com/

The case for owning commodities has rarely been stronger, according to Goldman Sachs Group Inc. With raw materials rallying on escalating political tensions across the globe and economic growth remaining strong, the bank’s analysts including Jeffrey Currie doubled down on their “overweight” recommendation.

They reiterated a view that commodities will yield returns of 10 percent over the next 12 months, according to an April 12 note.

The Bloomberg Commodity Index is up more than 2.5 percent this week, the most in two months. Another raw materials gauge, the S&P GSCI Index, has rallied over 5 percent this week to levels last seen in 2014. Continue Reading →

Trump threatens more China tariffs as Beijing vows ‘fierce counter strike’ (Reuters/Globe and Mail – April 6, 2018)

https://www.theglobeandmail.com/

China warned on Friday it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if the United States follows through on President Donald Trump’s threat to slap tariffs on an additional $100 billion of Chinese goods.

Trump, in light of what he called China’s “unfair retaliation” against earlier U.S. trade actions, had upped the ante on Thursday by ordering U.S. officials to identify extra tariffs, escalating a tit-for-tat confrontation with potentially damaging consequences for the world’s two biggest economies.

China’s Commerce Ministry spokesman, Gao Feng, called the U.S. action “extremely mistaken” and unjustified, adding that the spat was a struggle between unilateralism and multilateralism. He also said no negotiations were likely in the current circumstances. Continue Reading →

COLUMN-Damp squib or next commodity super-cycle? The Belt and Road dilemma – by Clyde Russell (Reuters U.S. – April 4, 2018)

https://www.reuters.com/

HONG KONG, April 4 (Reuters) – China’s Belt and Road Initiative (BRI) is one of those rare things that virtually everybody seems to have heard about, but equally, very few people can actually claim to have a detailed understanding of what it means.

This dichotomy was in evidence at the Belt and Road conference, hosted by Mines and Money, in Hong Kong on Tuesday, with views ranging from the BRI will be the driver of a new super-cycle for commodities to that it’s more of a marketing slogan aimed at boosting the image and influence of the government in Beijing.

On the side of thinking of the BRI as a sort of a Marshall plan for Asia, Africa and even Europe are a set of impressive sounding numbers, which dwarf the scale of the U.S. initiative that helped to rebuild Europe after World War II. Continue Reading →

What the escalating U.S.-China trade battle means for Canada – by David Parkinson and Barrie McKenna (Globe and Mail – April 4, 2018)

https://www.theglobeandmail.com/

China’s latest escalation in its trade skirmish with the United States may present more a murky complication than a clear opportunity for Canadian pork and scrap aluminum exporters who look to be in the crossfire, industry watchers and trade experts said.

China announced this week that it would impose tariffs of up to 25 per cent on a list of 128 U.S. export goods, valued at US$3-billion, in retaliation for the tariffs announced by the United States last month on steel and aluminum from China and other countries.

Among the key products named in China’s action are pork and scrap aluminum – two areas where Canada is a significant competitor to the United States in the Chinese market. China will apply a 25-per-cent tariff on both U.S. pork and scrap aluminum. Continue Reading →

COLUMN-Two risks threaten commodities, one bullish, one bearish – by Clyde Russell (Reuters U.S. – March 26, 2018)

https://www.reuters.com/

LAUNCESTON, Australia, March 26 (Reuters) – It’s not quite time to run up the red flags, but some recent developments in commodity markets suggest it may be time to start looking for them in the locker.

The are two main factors that appear to be emerging that may threaten an end to the current quite rosy picture surrounding demand for commodities such as iron ore, steel and the metals most exposed to the battery boom, cobalt, lithium and nickel.

On the supply side, there is a renewed rush of optimism that may set off another round of mining companies over-paying for assets or sinking way too much capital into projects approved on the back of too bullish forecasts. Continue Reading →

Trade war looms as U.S. hits China with $60-billion in tariffs – by Adrian Morrow and Nathan Vanderklippe (Globe and Mail – March 23, 2018)

https://www.theglobeandmail.com/

U.S. President Donald Trump’s plan to hit US$60-billion worth of Chinese goods with tariffs threatens to spark a protracted trade war between the world’s two largest economies and send a shudder through international commerce.

The move – which may also include restricting Chinese investment in the United States and launching a World Trade Organization case against Beijing – is retaliation for China forcibly taking, and sometimes allegedly stealing, U.S. technology.

It is also meant to start erasing Washington’s US$385-billion trade deficit with Beijing, which Mr. Trump blames for the hollowing out of the U.S. manufacturing sector. Continue Reading →

U.S. Trade Battle Fuels Metals’ Longest Weekly Slump Since 2015 – by Mark Burton (Bloomberg News – March 23, 2018)

https://www.bloomberg.com/

Base metals posted a fifth straight weekly loss in London as the trade conflict between the U.S. and China escalated, with nickel bearing heavy losses amid fears the rift will derail global growth and dent usage in China’s steel-making sector.

Most metals slumped on the London Metal Exchange after U.S. President Donald Trump ordered tariffs on $50 billion worth of imports from China on Thursday, and Beijing announced retaliatory duties shortly afterward.

Copper and aluminum hit fresh three-month lows and mining majors including Glencore Plc and Rio Tinto Group dropped in London. Gold rallied as investors flocked to haven assets. Continue Reading →