Archive | Commodity Super-Cycle and Decline

Copper, iron ore price jump sparks rally in mining stocks – by Frik Els ( – February 14, 2018)

Mining and metals investors were piling into the sector’s big names on Wednesday as gold jumped, base metals prices surged and iron ore continued to rally on optimism about global demand for raw materials ahead of a holiday week in top consumer China.

Gold enjoyed its best trading since the Brexit vote in June 2016 on Wednesday. Copper bounced to above the $7,000 a tonne ($3.24 per pound) level bringing the bellwether metal’s gains just this week to more than 6%. Nickel surged 4.8% to $14,100 a tonne, the highest since May 2015, while zinc ended nearly 3% higher to exchange hands for $3,567, a near decade high.

The iron ore price which has been defying expectations of a pullback for months gained on Wednesday with benchmark Northern China import prices rising to a five-week best of $78.25 a tonne. Continue Reading →

Commodities Escape Worst of Market Rout on Robust Demand Outlook – by Jake Lloyd-Smith and Heesu Lee (Bloomberg News – February 6, 2018)

Commodities are escaping the worst of the global market rout as losses in raw materials are capped by speculation that the bullish outlook for demand remains intact.

The Bloomberg Commodity Index pared its decline to only 0.1 percent by the end of the Asian day as gains in precious metals and U.S. natural gas helped offset lower oil and industrial metals.

While some raw materials were dragged lower as investors eschew risk, the reaction was muted compared with other assets. Stock markets from Hong Kong to Tokyo tumbled more than 4 percent following Monday’s collapse in U.S. equities and bond yields. Continue Reading →

Pile-of-Cash Dilemma for Mining Industry Once Crippled by Slump – by Thomas Biesheuvel and Thomas Wilson (Bloomberg News – February 5, 2018)

Three years after a commodity slump left their finances in shambles, mining companies are swimming in so much cash that investors aren’t sure where the industry will spend it all.

With metals from zinc to palladium trading at multi-year highs, four of the world’s top producers generated combined free cash flow last year of about $87 million a day. Some of the unprecedented windfall is earmarked for dividends, which companies including BHP Billiton Ltd. and Glencore Plc cut or eliminated during the slump.

Where the rest of the money goes — into new mine projects, acquisitions or a bank account — remains one of the big unanswered questions for executives, investors and bankers attending Africa’s biggest mining conference, which begins Monday in Cape Town. Companies may be reluctant to spend too much, given the disastrous results of rapid expansions a few years ago. Continue Reading →

Goldman’s Most Bullish on Commodities Since Supercycle Ended – by Mark Burton (Bloomberg News – February 1, 2018)

Goldman Sachs Group Inc. is more bullish on commodities than any time since the end of the supercycle in 2008. As economies around the world pick up, factories are humming, eating into stockpiles of raw materials and driving demand at miners and oil producers already facing limits on output.

Copper, iron ore and crude prices will extend gains this year, Goldman analysts Jeffrey Currie and Michael Hinds said. “The environment for investing in commodities is the best since 2004-2008,” they wrote in a research note.

Rising commodity prices will create a virtuous circle, improving the balance sheets of producers and lenders, and expanding credit in emerging markets that will, in turn, reinforce global economic growth, according to the bank. Continue Reading →

From Alcoa to Freeport, Metal Producers See Cost Creep Set In – by Joe Deaux and Danielle Bochove (Bloomberg News – February 2, 2018)

Mining and metal companies are rediscovering the downside of rallying prices: higher costs. A sharp rebound in commodity markets in the past two years put producers in a profitability sweet spot after years of cost-cutting to cope with low prices.

Now, as the upturn matures and the higher cost of energy and other materials starts to bite, some companies are beginning to struggle to maintain margins.

As the quarterly earnings season unfolds, companies from Alcoa Corp. to AK Steel Holding Corp. have seen their shares slump amid signs that cost creep is eating into profit. Continue Reading →

COLUMN-Five stand-outs in China’s base metals trade last year – by Andy Home (Reuters U.S. – January 29, 2018)

LONDON, Jan 29 (Reuters) – China’s base metals imports stopped offering a simple, over-arching story line several years ago. The country has built out ever more processing capacity over the last decade, meaning that the “real” story is often what’s happening at the raw materials stage of the supply chain.

In cases such as aluminium, China has arguably constructed too much smelter capacity, to the point that the rest of the world has stopped caring about how much it imports but rather how much it exports.

Across the rest of the metallic complex, individual market dynamics have become ever more important, fracturing the Chinese trade picture into multiple, sometimes contradictory parts. Against an increasingly kaleidoscopic backdrop, here are five key take-aways from last year’s trade flows. Continue Reading →

As Global Economy Hums, Davos Turns Bullish on Commodities – by Javier Blas (Bloomberg News – January 26, 2018)

The last two editions of the World Economic Forum were somber affairs for oil industry chieftains and commodities tycoons. The consensus in Davos was that oil was going to stay low, OPEC would fail to lift prices, and the mining industry faced a difficult time.

Roll forward to 2018 and there’s been a near-universal shift in sentiment as strong and synchronized global economic growth drives demand for raw materials. “We have not seen this kind of growth since before the global financial crisis,” OPEC Secretary-General Mohammad Barkindo said in an interview.

In panel discussions, interviews, and conversations on the evening cocktail circuit at the Steigenberger Grandhotel Belvedere, it was hard to find a bearish voice. The Bloomberg Commodity Spot Index, a gauge that tracks raw materials from oil to wheat, has risen 41 percent over the last two years to trade at highs last seen in November 2014. Continue Reading →

COLUMN- Industrial metals bull party on hold; will restart shortly – by Andy Home (Reuters U.K. – January 18, 2018)

LONDON, Jan 18 (Reuters) – After the party must come the hangover. Industrial metals went on something of a bull bender over the course of December and have done no more than stagger into the New Year.

Copper went on an 11-day binge of consecutive highs as London Metal Exchange (LME) three-month metal powered through the $7,000 a tonne barrier to a four-year peak of $7,312.50 on Dec. 28. It’s now back below $7,100, with another New Year just around the corner.

The Chinese Year of the Dog starts on Feb. 16 and the onshore Chinese markets are chilling the bull party even further with long liquidation across the metallic board. But the analyst consensus is that this is no more than a pause in the two-year, 60 percent rally in the LME index of core contracts. Continue Reading →

Metals Power Higher as Sickly Dollar Spurs Copper-to-Gold Rally (Bloomberg News – January 15, 2018)

Copper jumped by the most in two months and zinc hit a fresh decade-high as base metals rallied on a potent combination of a softer dollar, dwindling inventories and continued robust outlook for demand. Palladium rallied to a new record as all precious metals climbed.

Copper surged as much as 2.1 percent, the most since Nov. 13, to $7,262 a metric ton on the London Metal Exchange. All metals climbed as the Bloomberg Dollar Spot Index fell to the lowest since September, reinforcing sentiment in a market that’s being buoyed by signs of supply constraints and rebounding demand across the globe.

The improving demand outlook has helped lift the Bloomberg Commodity Index toward the highest level in 11 months. Gold climbed as the dollar weakened and investors weighed the risks of a potential U.S. government shutdown at the end of the week. Palladium hit a fresh all-time high, extending gains seen on Friday amid supply constraints. Continue Reading →

Mining Profits Are Super-Charged and BlackRock Wants to Get Paid – by Thomas Wilson, Anna Edwards and Manus Cranny (Bloomberg News – January 11, 2018)

The world’s mining sector is firing on all cylinders again, and one of it’s biggest investors can’t wait to get paid.

After five years of under-performance, a combination of synchronous global growth and under-investment in new supply has driven up commodity prices, increasing cash flow and profit margins for the world’s biggest mining companies, according to BlackRock Inc.’s Evy Hambro.

“When those things converge you get a pretty explosive price response, and that’s what we’ve seen,” Hambro, who manages BlackRock’s $6.4 billion World Mining Fund, said in a Bloomberg TV interview on Thursday. Continue Reading →

Commodities Are on Their Longest Winning Streak in History – by Mark Burton and Jake Lloyd-Smith (Bloomberg News – January 4, 2018)

Commodities are forging a record-setting run of gains that straddles the end of 2017 and the start of the new year as crude oil notches multiyear highs and investors bet that booming global manufacturing output will help to sustain rising demand for raw materials.

The Bloomberg Commodity Index, which tracks returns on 22 raw materials, posted an unprecedented 14 days of gains to Wednesday, closing at the highest since February.

The index is poised for further gains as metals and oil climb higher, supported by supply disruptions, a weaker dollar and improving demand. Palladium, a metal used in car exhaust systems, is approaching an all-time high. Continue Reading →

A New Commodities Boom Doesn’t Mean Ecological Doom – by Mac Margolis (Bloomberg News – January 2, 2018)

The world’s renewed appetite for natural riches once again tests Latin America.

Demand is surging again for oil, minerals and grains – the basic goods to which Latin America`s fortunes have long been tethered. After a year of graft scandals and political whiplash, you can just about hear the sighs of collective relief. Or is that just a giant sucking sound?

Since the voyages of discovery, raw materials and farm goods have been Latin America’s blessing and its trap, filling official coffers but too often despoiling the environment and condemning economies to boom and bust.

Through last decade’s swoon, hopes ran high that China’s demand would help clients climb the value chain and become developed nations. Yet Latin America still relies on grains, minerals and raw energy for half its export revenues, the same share as three decades ago. Continue Reading →

After a rollercoaster ride, commodities show their mettle – by Jon Yeomans (The Telegraph – January 2, 2018)

After the rollercoaster ride of recent years, commodity markets enjoyed a strong year in 2017, with investors and mining companies adjusting to the new normal – and banking the gains.

If 2016 saw a broad recovery in prices from calamitous lows, the year just gone laid the groundwork for what the next half-decade may hold. But which commodities bounced back the strongest in 2017?

“We’ve been in a bull market for base metals for quite some time,” says Dr Guy Wolf, head of market analytics at broker Marex Spectron. “But it will be a long, shallow bull market.” Continue Reading →

Can electric cars and an expanding global economy power the next commodity supercycle? – by Geoffrey Morgan (Financial Post – December 27, 2017)

Besides the expected ramp-up in electric vehicle manufacturing, economists are predicting that rising global economic growth will make 2018 the year when base metals shine

Mining executive Russell Hallbauer is palpably excited about the components that go inside electric cars.

The chief executive of Vancouver-based Taseko Mines Ltd. can give a detailed description of the length and thickness of the solid copper bus bar that transmits power from each Tesla car’s lithium ion battery to its wheel motors. “That piece of copper probably weighs 50 pounds,” he said.

Hallbauer’s enthusiasm for electric cars is warranted. The market for such vehicles is expected to grow to 11 million cars sold in 2025 from 330,000 in 2015 , according to Morningstar forecasts, and copper miners such as Taseko expect that will create a lot of demand for copper bus bars. Continue Reading →

Value of top 50 mining companies surge $140 billion in 2017 – by Frik Els ( – December 20, 2017)

Heading into 2018 the world’s 50 largest listed firms are worth a collective $896 billion, adding $141 billion in combined market capitalization year-to-date, with the bulk of those gains recorded since July.

Go back to the start of the mining industry’s upswing around 18 months ago and $227 billion of wealth has been created for shareholders of the Top 50.

The top 10 make up more than half the sector’s market value and after underperforming the rest of the field during the first half of 2017, the big diversified and base metals companies caught up rapidly. Continue Reading →