Archive | Commodity Super-Cycle and Decline

China seen sustaining recovery in global mining M&A – by Tom Daly (Reuters U.S. – October 18, 2018)

TIANJIN, China (Reuters) – A rebound in mining mergers and acquisitions is set to continue into 2019, led by companies from top metals consumer China, as a dearth of exploration spending leaves the industry in need of fresh investment, delegates told a conference on Thursday.

Sector M&A in mining powerhouse Canada had its best quarter in more than seven years in July-September, spurred by Barrick Gold Corp’s (ABX.TO) planned $6.5 billion acquisition of Randgold (RRS.L) and Chinese firm Zijin Mining’s (601899.SS) C$1.86 billion ($1.43 billion) deal to buy Nevsun Resources (NSU.TO).

“We think that this year and next year will be the years of consolidation,” Keith Spence, president of Canada-based Global Mining Capital Corp, told the China Mining conference in Tianjin. Continue Reading →

COLUMN-China’s resilient commodity imports show trade war yet to factor – by Clyde Russell (Reuters U.K. – October 15, 2018)

LAUNCESTON, Australia, Oct 15 (Reuters) – It’s tempting to look at the relative resilience of China’s imports of major commodities in September and conclude that the world’s second-biggest economy is weathering the trade dispute with the United States quite well.

The problem with this view is that while the trade conflict certainly looms as an issue in China’s commodity trade, it’s not yet the driving factor and any strength, or weakness, in various imports is largely a result of different dynamics.

Take copper for example, where imports of unwrought metal in September were 521,000 tonnes, up 24 percent from the 420,000 tonnes in August to the highest in 2-1/2 years. Continue Reading →

Commentary: LME Week metals puzzle is how to trade a trade war – by Andy Home (Reuters U.K. – October 12, 2018)

LONDON (Reuters) – Donald Trump didn’t make it to LME Week, the annual jamboree of the global metals trading community. But the U.S. president was the hot topic at the myriad seminars, cocktail parties and private meetings across London this week.

The industrial metals traded on the London Metal Exchange (LME) have found themselves at the heart of the escalating trade tensions between the United States and China. Physical supply chains have been stressed by tariffs and, in the case of aluminum, by U.S. sanctions against Russian producer Rusal.

Futures prices have been rocked by waves of speculative selling since the first round of trade tariffs was announced in June. The tension between macro doom and micro strength in markets such as copper has become extreme. Continue Reading →

COLUMN-China’s credit loosening may not do much for commodity demand – by Clyde Russell (Reuters U.K. – October 8, 2018)

LAUNCESTON, Australia, Oct 8 (Reuters) – China’s commodity imports may get a shot in the arm from Beijing’s decision to ease credit conditions in the world’s second-largest economy, but it may not be as big a boost as followed prior monetary loosening.

The People’s Bank of China on Sunday announced a steep 100 basis point cut in the level of cash that banks must hold as reserves, matching a similar move in April.

The easing of the reserve requirement ratios (RRRs) will inject a net 750 billion yuan ($109 billion) into the banking system, making it easier for banks to extend credit. Continue Reading →

LMEWEEK-Macro disquiet drowns out signs of base metals shortages – by Eric Onstad (Reuters U.K. – October 4, 2018)

LONDON, Oct 4 (Reuters) – Uncertainty about how metals demand will be hit by trade wars, rising U.S. interest rates and a slowdown in China is weighing on industrial metals prices, submerging signals pointing to potential shortages.

The index of copper and five other top industrial metals traded on the London Metal Exchange has shed 11 percent this year while prices for the worst-performing metals, zinc and lead, have tumbled by about a fifth.

But as speculators pile on bearish positions and investors flee from the metals market during tit-for-tat trade volleys, signs of metals shortfalls are building. Continue Reading →

Hot prospects: the biggest mining mergers to rock the industry – by Talal Husseini (Mining Technology – October 2, 2018)

With annual revenues often in the tens or even hundreds of billions, mining companies are big business. When mergers or acquisitions occur, they create some of the largest mining powerhouses in the world and can have an everlasting impact on the industry. Here are six of the biggest mining mergers in history.

With annual revenues often in the tens or even hundreds of billions, mining companies are big business. When mergers or acquisitions occur, they create some of the largest mining powerhouses in the world and can have an everlasting impact on the industry. Here are six of the biggest mining mergers in history.

Shenhua Group and China Guodian Corporation: $272.96bn

Two of China’s largest state-owned enterprises (SOEs), Shenhua Group and the China Guodian Corporation, completed a merger on 20 November 2017, valued at almost $273bn. The resulting entity, the China Energy Investment Corporation, became the world’s largest organisation in the coal mining, thermal power, renewable energy, and coal-to-liquid conversion industries. Continue Reading →

Top Miner Sees U.S.-China Trade Spat Limiting Global Growth – by David Stringer (Bloomberg News – september 18, 2018)

Rising U.S.-China trade tensions threaten to curb consumer purchasing power, crimp productivity growth and limit global economic expansion, according to the world’s biggest mining company.

The confrontation between the world’s top two economies, “along with an increasingly unpredictable policy formation process” in some nations, serves to reduce consumer confidence and business certainty, BHP Billiton Ltd. said Tuesday in its annual report. Protectionist policies and political uncertainty lower the achievable ceiling for global economic growth, it said.

Melbourne-based BHP released the report before the Trump administration’s decision to impose a 10 percent tariff on about $200 billion of Chinese goods next week and to more than double the rate in 2019. Continue Reading →

Base Metals Drop as Trade War Angst Spurs Concern About Demand (Bloomberg News – September 17, 2018)

Industrial metals fell for a second day on concern that the escalating U.S.-China trade war will hurt prospects for demand in the biggest users.

The Bloomberg Industrial Metals Subindex, which tracks aluminum, copper, nickel and zinc, slipped 0.8 percent as the market braced for a new round of U.S. tariffs on about $200 billion more in Chinese products that’s seen spurring retaliation from Beijing.

Aluminum’s losses also came as the U.S. Treasury softened the impact of sanctions on Russian supplier United Co. Rusal. Metals have been under pressure for months as the U.S.-led trade war fans concern that the showdown will derail otherwise-strong economic growth in the world’s two largest economies. Continue Reading →

Crunch time coming for minerals supply as economic powerhouses drive demand (Mining Review Africa – August 30, 2018)

Mining Review Africa

China will remain a key driver of global commodity demand but India – the world’s fastest growing economy – and Indonesia’s emergence as Asia’s new rising tiger – will put added pressure on minerals supply.

Speaking at the Paydirt 2018 Africa Down Under mining conference in Perth, EMR Capital Executive Chairman, Owen Hegarty, warned that future resources supply would be constrained. “Investment in the sector remains at trough levels,” Hegarty said.

“Future supply constraints will parallel the more than halving in minerals exploration spend, particularly for the global non-ferrous exploration budget. “And this at a time the global economy itself remains healthy.”

Hegarty pointed to genuine fears about impacts on resources commodities of a trade war between majors and the United States – with copper pundits pricing in a greater than 0.5% drag on global growth due to the uncertainy about economic policy within the resources powerhouses. Continue Reading →

Seven new powerhouses to drive mineral demand: EMR exec – by Valentina Ruiz Leotaud ( – August 30, 2018)

China, India, Brazil, Mexico, Russia, Indonesia, and Turkey will be leading the world’s mineral demand in the coming decades, Owen Hegarty, Executive Chairman of Australian private equity manager EMR Capital, predicts.

Speaking at the Paydirt 2018 Africa Down Under mining conference taking place in Perth, Hegarty said that the new top seven economies will lead the expected doubling of the global economy by 2050.

“You have to look at China – a country rebalancing, reforming and transforming – and that will make it the key driver of minerals commodity demand,” the investment expert said. Continue Reading →

Which mining supercycle? – by David Robinson (Sudbury Mining Solutions Journal – August 20, 2018)

Growing talk of a new supercycle for mining is encouraging, but a totally different kind of supercycle may be more important for mining supply firms.

The supercycle of the first years of our new millennium was a sustained period of rising commodity prices, supported by population growth and infrastructure expansion in emerging markets. The broader economic boom collapsed with the global financial crisis of 2007–2008.

The mining sector saw an orgy of investment and acquisitions that left major players over-extended and created excess capacity that held prices down for years. The past decade was nothing like a slump. Global output of metals continued to rise, only prices dropped. It is an oddity of GNP accounting that increased production can appear as lower GNP when prices drop. Continue Reading →

Weaker dollar boosts metals – by David Hodari and Benjamin Parkin (Wall Street Journal/Toronto Star – August 22, 2018)

Copper prices rose on Tuesday, with a drop in the U.S. dollar allowing the industrial metal to recover from heavy selling last week. Contracts for September rose 0.9% to $2.6915 a pound at the Comex division of the New York Mercantile Exchange, on track for the highest close in more than a week.

Analysts pointed to the weakness in the dollar, which fell after President Trump criticized the Federal Reserve for raising interest rates. The WSJ Dollar Index, which measures the greenback against a basket of 16 others, fell 0.1%.

Prices for gold, aluminum and various other metals were also mostly higher. Gold prices for August climbed 0.3% to $1,190.50 a troy ounce, with the more-active October contract rising 0.1%. Continue Reading →

Miners navigate uncertainty of currency crises, trade war – by Gabriel Friedman (Financial Post – August 21, 2018)

The U.S. dollar surge is only part of the problem

Vancouver-based First Quantum Minerals Ltd. entered the summer with copper prices on the rise, and investors enthusiastic about its stock.

But the summer has not been kind to Canadian miners, and the company is now contending with plummeting copper prices — which have fallen 19 per cent since June to about US$5,820 per metric ton.

As the U.S. dollar rises in value, and fears of a U.S.-China trade war take root, many Canadian mining executives are seeing ripple effects, as the commodities they produce, from copper to gold, and currencies in some of the markets where they operate, get pummelled. It’s all creating a difficult environment for mining companies. Continue Reading →

RPT-COLUMN-Best commodity bets? Exposed to China and less open to trade – by Clyde Russell (Reuters U.S. – August 16, 2018)

LAUNCESTON, Australia, Aug 16 (Reuters) – The recent gyrations in the world economy around Turkey’s currency and the escalating U.S.-China trade dispute have taken a toll on commodity prices, especially industrial metals.

However, while news-driven sentiment can clearly pummel markets, over a longer period of time not all commodities will be equally affected by the changing global economic dynamics. The key to which commodities are likely to perform better is China, which is the world’s largest commodity importer.

Even if the Chinese economy does struggle under the weight of the trade barriers erected by U.S. President Donald Trump, there are still likely to be commodities that can hold their own. The key is to look for commodities that are likely to remain in relatively high demand, and are subject to supply constraints. Continue Reading →

Metals Poisoned by Turkey Contagion as Copper Nears Bear Market – by Mark Burton (Bloomberg News – August 15, 2018)

From Turkey’s financial crisis to China’s trade war, the emerging-market contagion is infecting metal markets.

Base metal markets tumbled on Wednesday, with most contracts falling more than 2 percent in London. Copper sank below $6,000 a metric ton and is now approaching a bear market. Not even gold, the usual safe haven, was spared from the selloff. Bullion prices sank 0.7 percent to $1,186 an ounce. Natural resource shares were also in the red.

“It’s going to be difficult to shake this bearish sentiment,” Nicholas Snowdon, a metals analyst at Deutsche Bank AG, said by phone from London. “When you look at the broad selloff across metals, the key drivers are clearly macro factors.” Continue Reading →