In essence one of the things we have accomplished with these three products is to reduce the volatility inherent in all markets, and in particular very volatile markets like the real asset sectors.
But let’s think about maybe more actionable items in terms of growth, because it’s clear that at least there are now some signs on growth inflection, maybe not globally, but at least in some parts of the world.
While commodities generally follow the underlying supply-demand dynamics in the long term, according to some observers, copper prices also tend to reflect macro developments.
There are expected, and possibly more aggressive, interest rate hikes over the next several years, and potential commodity supply constraints resulting from years of capital expenditure reductions in the metals and oil industries.
Economic/business cycles are never exactly the same, and the current cycle is no exception. But we are most likely entering the late stages of this expansion.
Commodities and interest rates both tend to rise late in the economic/business cycle. As a normal cycle develops, the economy expands and gains momentum.
The repercussions of the equity market carnage are evident in commodity markets. Copper, which some analysts see as an indicator of the global economy’s health, has come off its 2018 highs.
Among the stocks under review in this series, Vale SA (VALE) has given the highest trailing-three-month return of 36.4%, while Rio Tinto (RIO) has generated the lowest return of 15.4%.
After its split, Alcoa (AA) became a pure-play aluminum producer (S32) (CENX). Like other aluminum producers, Alcoa’s fortunes are tied to metal prices.
In this series, we’ll look at the key developments that impacted mining companies last week. We’ll also look at some of the company-specific developments that impacted mining stocks.
The final Russia Manufacturing PMI (Purchasing Managers’ Index) rose marginally in September 2017. It was 51.9 in September compared to 51.6 in August.
The Brazilian economy (EWZ) (BRZU) has faced a series of problems such as lower economic growth, higher inflation, political uncertainty, and higher unemployment.
Copper prices have shown strength over the last few trading sessions, which has helped the upwards price action of miners including Freeport-McMoRan (FCX), Glencore (GLNCY), and Southern Copper (SCCO).
Copper’s 2017 demand-supply dynamics As noted previously, copper prices have shown strength recently, piggybacking the weak US dollar. However, we should remember that in the medium-to-long term, demand-supply dynamics are a key driver of copper prices (TECK) (GLNCY). In this article, we’ll see how copper’s demand-supply balance looks in 2017. Demand China’s car sales regained momentum […]
Colombia, an important Latin American (ILF) economy, is currently facing sluggish growth due to a decline in commodity prices (DBC) and political instability.
As we noted previously, Alcoa is now a pure-play aluminum producer. The company is an integrated aluminum producer with bauxite mining, alumina refining, and aluminum smelting operations.
Brazil’s exports stood at $19.7 billion in May 2017, a 12.6% increase year-over-year, boosted by sales of semi-manufactured products and basic products.
Qatar was expected to grow at a faster pace in 2017. However, economic sanctions by its neighbors are expected to impact its economic activity in 2017.
Steel prices are a function of demand and supply in the long term. The construction, automobile, and energy sectors are among the largest steel consumers.
Recently, some market participants have been concerned that the 30-month high iron ore prices in February 2017 were enough for some of the idled capacity in China to come back online.
Copper closed at $5,741 per metric ton on March 23. Copper has risen 4.0% in 2017. In 2016, copper prices rose 17.4% and ended a five-year price drought.
According to the median compiled by Bloomberg on February 13, 2017, iron ore prices could drop in every quarter in 2017 to an average of $55 per ton in 4Q17.
With higher steel production and subdued demand, one would expect a tsunami of Chinese steel exports, but this wasn’t the case last month. So what did China want with so much steel?
Steelmaking is raw material intensive in nature, and raw material pricing tends to impact steel prices. In this article, we’ll discuss how steel scrap prices are playing out in the United States.
The service sector is the main contributor to Brazil’s GDP and job creation, but it’s currently suffering from structural weakness and poor international performance.
Balance sheet position For commodities (DBC), including iron ore, 2015 was nothing short of a nightmare. Iron ore stocks such as Rio Tinto (RIO), BHP Billiton (BHP) (BBL), Vale (VALE), and Cliffs Natural Resources (CLF) fell to multiyear lows. While 2016 held up much better in commodity prices, the financial concerns for these companies are […]
Technical indicators In this article, we’ll discuss the technical indicators for Cliffs Natural Resources (CLF) and its peers. Traders and investors look at technical indicators when making market entry or exit decisions. Moving averages and the RSI (relative strength index) score are among the most widely used technical parameters. Generally, an RSI score below 30 […]
Iron ore’s stellar run in 2016 In the previous part of this series, we discussed how BHP Billiton (BHP) produced record iron ore volumes in the half-year ended December 2016. This production has come at an opportune time for the company. During 4Q16, iron ore prices surged ahead. While the momentum built during the whole […]
Iron ore prices remained stubbornly high in 2016 despite most analysts’ expecting the contrary. In this article, we’ll see how analysts view iron ore’s prospects in 2017.
Alcoa made a 52-week low on January 20, 2016, and joined the ranks of other mining companies to hit fresh 52-week lows such as BHP Billiton, Rio Tinto, and Vale.
Higher Rates Not Always Negative for Gold A Fed rate hike in December appears almost fully priced in already. The common argument is that higher rates are negative for gold given that it is a non-yielding asset. Yet, following the first rate hike of the current tightening cycle in December 2015, gold has advanced more […]
For commodities (DBC), including iron ore, 2015 was nothing short of a nightmare. Rio Tinto, BHP Billiton, Vale, and Cliffs Natural Resources fell to multiyear lows.
With a Donald Trump win in the US presidential election, steelmakers can expect imports to fall. This should help them with much-needed price increases.
China’s steel prices Among the most dominant factors driving the recent iron ore price rally are higher steel production and the rise in steel prices in China (FXI). Although these factors have helped iron ore prices YTD (year-to-date), the question remains as to whether steel prices can remain buoyant for the remainder of 2016. The answer […]
Originally, Trump planned to spend more than $500 billion on the infrastructure sector. It would boost the demand for metals like steel and aluminum (DBC).
In this article, we’ll see what Donald Trump’s presidency could mean for Alcoa and other aluminum producers, which include Century Aluminum and Norsk Hydro.
