(Bloomberg) — As the worst quarter for emerging-market dollar bonds in 24 years comes to an end, a deep divide is opening up as investors focus their hopes on commodity exporters in the Middle East and Latin America.
The rapid rise in energy and food costs as the war drags on is weighing on the more vulnerable markets, becoming the latest surprise for money managers who went into 2022 expecting inflation to peak as the Federal Reserve embarked on its tightening cycle.
Low-carbon policies stoke demand for lithium, cobalt and copper, but investors must judge whether the boom will last
For years BHP has focused on investing in safe and stable countries such as Australia, Chile and Canada. But faced with the challenge of supplying the metals and minerals that will be needed in the shift to the low-carbon economy, the world’s biggest mining company is starting to take on more risk.
It has already taken a stake in SolGold, a London-listed explorer seeking to develop a huge underground copper deposit in Ecuador and last month threw its considerable weight behind a huge nickel project in a remote part of Tanzania as part of a strategy to “capture opportunities in future-facing commodities”.
https://www.washingtonpost.com/
Think your life has been unadventurous over the past few years, as the pandemic and closed borders have kept you bottled up at home? Spare a thought for the mining sector.
An industry built on the romance and horror of finding riches on the wild frontier — from the Klondike to Kimberley, Kolyma and Katanga — has for years barely needed to get out its passport.
LONDON, Feb 17 (Reuters) – Glencore’s decision to sell its warehousing and logistics business looks like a well-timed call on the metals storage market.
It bought Access World in 2010 in the wake of the financial crisis, which generated a surge of metal, particularly aluminium, into London Metal Exchange (LME) warehouses. Total LME inventory of all metals mushroomed from 3.41 million tonnes at the start of 2009 to a peak of 7.75 million in June 2013.
Commodities were on fire in 2021 and there is no let-up this year amid low inventory levels, an investment squeeze hindering supply and soaring demand in emerging markets, according to a new report.
“We anticipate this demand leadership trend to continue over the next several years,” wrote Orest Wowkodaw, analyst at Scotiabank Global Equity Research, in a report titled ‘Tight commodity markets ahead of impending super cycle.’
(Bloomberg) — Industrial metal markets are marching higher again, as production outages and shrinking inventories revive worries about global supplies of some of the key building blocks of the economy and the green-energy transition.
Metals from aluminum to zinc surged in 2021 after the pandemic hit production at mines and smelters, wreaked chaos in global logistics networks, and sparked a boom in demand. In both copper and tin, London Metal Exchange inventory levels collapsed in squeezes that drove spot prices to records in wild trading.
COP26’s climate goals necessitate massive new investments in mining, but how does today’s boom stack up to the aughts? Supercycle or no? is a favourite parlour game in mining and there is no shortage of opinions and arguments on whether the industry can party like it’s the aughts or if the mid-2010 hangover is just around the corner.
The latest entry in the genre is by Julian Kettle, senior VP and vice chair of Woodmac’s metals and mining business (read it here). Kettle’s first exhibit in Supercycle demand. Are we there yet? would be rather dispiriting if you’re in the bull camp. (A bull? Me?)
https://www.investorschronicle.co.uk/
The ‘green’ economy will need massive amounts of metals and while reusing materials such as copper, steel and aluminium are critical to global metals supply, there just isn’t enough scrap to keep up with demand. But there also aren’t a sufficient number of mines in development to keep up with forecast needs, especially as the metals-intensive energy transition ramps up.
One recently announced solar project in Australia demonstrates just how much copper the energy transition could need. Sun Cable plans to export electricity to Singapore from the Northern Territory through a 4,200km undersea cable.
Tin is in the grips of one of the longest-running squeezes ever seen in commodities markets, and there’s little sign of it letting up. A relatively small market — used mainly for soldering in electronics — tin is often overshadowed by metals like copper and aluminum that are more widely used in manufacturing, infrastructure and the green-energy transition.
This year, though, tin has been red hot. Demand is booming and supply is sputtering, creating a chronic shortage of metal that’s been exacerbated by global logistics snarl-ups.
Julian Kettle is Senior Vice President, Vice Chair Metals and Mining at Wood Mackenzie.
To the uninitiated, rugby is a technical and complicated game. As young schoolboys it was all a wee bit confusing and we invariably ended up on the wrong side of the score line. However, we had a wonderful Welsh coach called Billy, who, when the chips were down, would always roll out his go-to phrase: “back to basics!”
These wise words seem quite pertinent right now. With COP26 underway, the world awaits tangible evidence that the huge expense and carbon footprint of the conference will be worthwhile. With that in mind, delegates do need to go back to basics in terms of what must be achieved: clear commitments that will put us on the pathway to net zero.
The surge in commodity prices has been impressive since mid-2020, predictably resulting in calls that a new “supercycle” is underway. We have questioned that narrative, given the apparent supply-demand imbalances plaguing the globe and boosting prices in the process.
But one theme we do agree with is the long-term secular tailwinds behind a number of commodities required in the transition to a green economy in order to address climate change.
The aggregate annual global exploration budget is expected to increase between 5% and 15% year over year for 2022, according to a new report by S&P Global Market Intelligence.
The market researcher’s prediction is based on its own data that show that in 2021, the aggregate annual global nonferrous exploration budget has increased by 35% year over year to $11.2 billion from $8.3 billion in 2020, signalling that the sector has emerged from the downturn caused by the covid-19 pandemic.
Base metals surged, led by zinc which spiked to the highest since 2007 after European smelters became the latest casualties in a global energy crisis that’s knocking supply offline and heaping pressure on manufacturers.
Zinc rose as much as 6.9 per cent on the London Metal Exchange, and a gauge of six industrial metals rapidly closed in on an all-time high. Aluminum, one of the most energy-intensive commodities, is at the highest since 2008.
This year’s London Metal Exchange (LME) Week was a subdued affair by comparison with past excess. Put on ice last year due to covid-19, the annual metals party returned in slimmed-down form with many opting for virtual over physical drinks. Analysts were in equally sober mood. Everyone’s still positive on the longer-term energy transition story but more immediately worried about China.
The debt problem faced by real estate developer China Evergrande Group is no Lehman Moment, to quote Bank of China’s head of commodity strategy Amelia Fu, speaking at the LME Seminar. But weakening Chinese property sales spell trouble for what is a big metallic demand driver.
Find your favourite indicator of fossil fuel prices. Let’s begin with the price of coal in China, where futures have surged to US$212 a metric tonne, up 20 per cent through September and 300 per cent over the past year.
Natural gas futures approached US$6 per British thermal unit. A litre of gasoline at some Toronto stations hit $1.40, a new high in nominal dollars as the price of crude oil hit US$80 a barrel. So what’s going on and what does it mean?
