Commodity Super-Cycle and Decline – Page 25

Hedge Fund Bets Signal There’s More Pain Ahead for Commodities – by Lydia Mulvany (Bloomberg News – Janaury 17, 2016)

January 18, 2016

http://www.bloomberg.com/

The commodity meltdown that pushed oil to a 12-year low and copper to the cheapest since 2009 isn’t over yet. At least, that’s how hedge funds see it.

Money managers increased their combined net-bearish position across 18 raw materials to the biggest ever, doubling the negative bets in just two weeks. A measure of returns on commodities last week slid to the lowest in at least 25 years. Metals, crops and energy futures all slumped amid supply gluts and an anemic outlook for the global economy.

Market turmoil in China, the biggest commodity buyer, is adding to worries over consumption. A stronger dollar is also eroding the appeal of raw materials as alternative investments.

COLUMN-Don’t worry (too) much about China’s commodity demand – by Clyde Russell (Reuters U.S. – January 13, 2016)

January 15, 2016

http://www.reuters.com/

Jan 14 Just how worried should the commodity sector be about China? On the surface the answer would appear to be very worried indeed, given the multitude of issues confronting the world’s second-largest economy, coupled with rising concerns about the rest of the world.

The 16 percent drop in the Shanghai Composite Index since the start of 2016 up to Wednesday’s close is the headline act in a wall of worry over the Chinese economy.

To equity weakness, add in concern about yuan devaluation, reform of state-owned enterprises, a slowing and less globally competitive industrial sector, the limitations of monetary policy easing and bad debts at regional and local government level.

Oil Slides, Deepening Gloom in Stocks as Bond Buyers Celebrate – by Stephen Kirkland and Jeremy Herron (Bloomberg News – January 15, 2016)

January 15, 2016

http://www.bloomberg.com/

Stocks fell around the world, with U.S. equities headed for the lowest since August, and bonds jumped as oil’s plunge past $30 sent markets reeling. Treasuries extended gains as U.S. data did little to calm nerves frayed by concern that global growth is slowing.

The Dow Jones Industrial Average sank more than 400 points, European stocks fell to the precipice of a bear market and the Shanghai Composite Index wiped out gains from an unprecedented state-rescue campaign. Oil plunged past $30 a barrel as Iran prepares to export into a global supply glut.

A measure of default risk for junk-rated U.S. companies surged to the highest three years. Yields on 10-year Treasury notes dipped under 2 percent, while the dollar extended a rally. Gold surged with the yen on haven demand.

Going Home; Chinese Mining Companies Losing Billions Of Dollars As They Retreat – by Tim Treadgold (Forbes Magazine – January 14, 2016)

January 15, 2016

http://www.forbes.com/

Expansion has flipped to contraction for Chinese miners as the global commodities glut overwhelms demand and the ability of the mainly state-owned companies to pay.

From Africa to Australia there is evidence of retreat as mining projects are abandoned in a rush to go home which is almost as hectic as the rush to expand during the commodities boom.

The flip from expansion to contraction is likely to force heavy losses on the companies involved, especially when the time comes to write-down asset values.

But it is also costing foreign workers and foreign governments dearly as work ends especially in the once red-hot iron ore sector which is feeling the heat of a collapse in Chinese demand for steel caused by a slowdown in the construction industry.

Commodity Returns Fall to Lowest Since at Least 1991 on Oil Rout – by Agnieszka De Sousa and Eddie Van Der Walt (Bloomberg News – July 12, 2016)

January 13, 2016

http://www.bloomberg.com/

A gauge of returns on raw materials tumbled to the lowest since at least 1991, extending the agony that producers of energy, industrial metals and agricultural commodities faced in 2015.

The Bloomberg Commodity Index, a measure of returns from 22 raw materials, fell as much as 1.5 percent to 74.02 on Tuesday. A roundup of the bearish numbers: Crude oil in New York dipped below $30 a barrel, copper fell to less than $2 a pound and natural gas as low as $2.24 per million British thermal units.

The expansion of the global economy has faltered, supplies of everything from oil to copper to grains are ample and a stronger dollar has eroded the appeal of raw materials as alternative investments.

Alberta’s history shows economic downturns don’t last forever – by Jeffrey Jones (Globe and Mail – January 13, 2016)

January 13, 2016

http://www.theglobeandmail.com/

CALGARY – A grainy TV news item from a previous economic bust in Alberta found new life on social media this week. it’s worth a look, and not just for the hairstyles.

The CBC report from the 1980s showed Calgary business leaders kicking off a campaign to try to lift the city out of its economic funk with a toe-tapping jingle, and a slogan: “Yes We Can!” (This predated U.S. President Barack Obama’s first campaign slogan by a quarter-century.)

The idea behind the campaign was to try to reverse the negative mindset that came along with falling oil prices, runaway inflation and the stagnant local economy. The climax of the report showed former mayor Ralph Klein talking about improving the “mental climate” before climbing into a front-end loader and driving it right through a “barricade of negativity” fashioned out of two-by-fours.

Mining Ready for M&A Revival, Producers Fight for Survival – by Jesse Riseborough, Brett Foley and Agnieszka De Sousa (Bloomberg News – January 12, 2016)

January 12, 2016

http://www.bloomberg.com/

Nothing drives change like necessity.

The $1.4 trillion collapse in the value of mining stocks since 2011 is poised to reshape the industry as all but the strongest companies are squeezed by the lowest commodity prices in six years. Rio Tinto Group and BHP Billiton Ltd. are among the best placed to grab assets sold by rivals desperate to stem losses or pay down debt.

“We would be supportive,” Martin Gilbert, chief executive officer of Aberdeen Asset Management Plc, said in an interview with Bloomberg Television on Tuesday.

Aberdeen has more than $400 billion of funds under management and is the second-largest investor in BHP’s London shares and the fifth-largest holder of Rio’s London stock.

Economic mood darkens as rout spreads beyond oil patch – by Barrie McKenna and Bill Curry (Globe and Mail – January 12, 2016)

January 12, 2016

http://www.theglobeandmail.com/

OTTAWA — The worsening price rout in commodities is hitting home far beyond the oil patch, darkening the mood of Canadian consumers, businesses and investors.

As the price of crude slumped to near $31 (U.S.) on Monday, two new confidence surveys suggest the main drivers of the economy – consumers and businesses – may be stalling. That points to weaker spending and hiring this year.

In spite of optimism from the Liberal government, the glum mood was on full display in financial markets on Monday. The Standard & Poor’s/TSX composite – already 20 per cent off its 2014 high – lost more ground, falling 1 per cent to 12,319.25. Meanwhile, the oil industry took another hit when the B.C. government said it has not been given enough information to allow it to support the expansion of Kinder Morgan’s Trans Mountain pipeline.

China’s Hunger for Commodities Wanes, and Pain Spreads Among Producers – by Clifford Krauss New York Times – January 9, 2016)

January 11, 2016

http://www.nytimes.com/

Chile is expanding its largest open-pit copper mine below the northern desert to dig up 1.7 billion additional tons of minerals, even as metal prices plummet around the globe.

India is building railroad lines that crisscross the country to connect underused coal mines with growing urban populations, threatening to dump more resources into an already glutted market.

Australia is increasing natural gas production by roughly 150 percent over the next four years, as energy companies build half a dozen export terminals to serve dwindling demand.

Across the commodities landscape, this worrisome mismatch mainly traces back to the same source: China.

Copper hammered, falls below $US2 a pound – by Luzi Ann Javier (Bloomberg News/Australian Financial Review – January 8, 2016)

January 8, 2016

http://www.afr.com/

Copper futures fell below $US2 a pound for the first time in more than six years as a slump across industrial metals deepened on concern that China’s economic slowdown is worsening.

The retreat in prices helped send a gauge of world mining companies to the lowest since 2004 on Thursday, led by Freeport- McMoRan and Anglo American. The Bloomberg Industrial Metals Subindex tumbled 27 per cent in 2015, the worst loss since the global recession of 2008.

Weak Chinese economic reports this week triggered turmoil across global markets and billionaire George Soros warned of a crisis.

Mining’s $1.4tr plunge like losing Apple, Google, Exxon – by Thomas Biesheuvel and Jesse Riseborough (Bloomberg News/Mineweb.com – January 8, 2016)

January 8, 2016

http://www.mineweb.com/

The $1.4 trillion lost in global mining stocks since 2011 exceeds the total market value of Apple Inc., Exxon Mobil Corp. and Google’s parent Alphabet Inc.

When you’ve spent a decade building new mines from the Andean mountains to the West African jungle, it’s bad news when a downturn in China, your biggest customer, shows no signs of stopping. Investors have been unforgiving and concerns that it will only get worse pushed the Bloomberg World Mining Index to an 11-year low.

“It’s terrible, there are no two ways about it,” said Paul Gait, a mining analyst at Sanford C. Bernstein Ltd. in London. “A lot of people were hoping at the start of 2016 to see at least some stabilization in the commodity performance in these stocks. Essentially people were looking to close the consensus short that has characterized 2015. This has clearly not happened.”

Anglo Leads Mining Collapse as China Woes Driving Vicious Spiral – by Agnieszka De Sousa and Jesse Riseborough (Bloomberg News – January 7, 2016)

January 7, 2016

http://www.bloomberg.com/

Anglo American Plc led a slump in mining stocks to the lowest in more than a decade as market turmoil in China, the biggest consumer of metals, ignites a vicious spiral of tumbling equities and collapsing commodity prices around the world.

The 80-member Bloomberg World Mining Index sank as much as 4.1 percent on Thursday, with Anglo sliding 12 percent at one point to a record low and Glencore Plc down as much as 7.9 percent in London trading.

The Bloomberg Commodity Index, a gauge of returns on raw materials, dropped to its lowest level since 1999 as industrial metals and oil declined.

Global Stocks Decline, Bonds Rise as China Moves Unnerve Markets – by Kelly Gilblom and Jeremy Herron (Bloomberg News – January 6, 2016)

January 6, 2016

http://www.bloomberg.com/

Stocks fell around the world, with the Dow Jones Industrial Average dropping more than 150 points, while bonds gained with the dollar on haven demand as China’s unexpected weakening of its currency once again raised fresh concern about the strength of the global economy.

U.S. stocks headed for a three-month low and emerging-market equities fell to the cheapest since 2009. Developing-nation currencies sank to a record, with Korea’s won weakening after North Korea’s claim of a nuclear test added to geopolitical risks already heightened by Middle East tensions. Brent crude reached its lowest level since 2004. The yen strengthened and Treasuries rose for a fifth session.

“This is risk aversion right now,” Benjamin Dunn, president of Alpha Theory Advisors, which works with hedge funds overseeing about $6 billion.

China Halts Stock Trading After 7% Rout Triggers Circuit Breaker – by Kyoungwha Kim (Bloomberg News – January 4, 2016)

January 5, 2016

http://www.bloomberg.com/

The worst-ever start to a year for Chinese shares triggered a trading halt in more than $7 trillion of equities, futures and options, putting the nation’s new market circuit breakers to the test on their first day.

Trading was halted at about 1:34 p.m. local time on Monday after the CSI 300 Index dropped 7 percent. An earlier 15-minute suspension at the 5 percent level failed to stop the retreat, with shares extending losses as soon as the market re-opened. Traders said the halts took effect as anticipated without any major technical problems.

The world’s second-largest stock market began the year on a down note after data showed manufacturing contracted for a fifth straight month and investors speculated that the end of a ban on share sales by major stakeholders may come as soon as this week.

China Investment Corp. closes Toronto office in wake of commodity rout – by Jeff Lewis and Tim Kilaze (Globe and Mail – December 31, 2015)

January 5, 2016

http://www.theglobeandmail.com/

CALGARY and and TORONTO — For the first time in five years, China’s massive sovereign wealth fund is starting the new year without a Canadian head office, a symbolic exit that underscores the fading fortunes of Canada’s battered resources sector.

China Investment Corp. has closed its Toronto headquarters, shuttering its only Canadian outpost – and its first on foreign soil – after nearly five years in the country.

CIC, which manages $747-billion (U.S.), said in December that it would use a new location in New York to scout for potential investments in the United States and the Americas, including opportunities in Canada.

The move comes as Canadian energy and mining firms reel from tumbling oil and metals prices, crimping returns on some of CIC’s holdings.