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Thu, Feb. 4, 12:41 PM
- The dollar (UUP -0.6%) is retreating again today, continuing a move which began at the start of the week and picked up steam yesterday morning when New York Fed President Bill Dudley called out the greenback's strength as a cause for concern.
- Not coincidentally, commodity stocks are bouncing off of sharply discounted levels, with names like Freeport McMoRan, Vale, and Cemex up double digit percentages over the last day-plus.
- Turning to countries, Brazil (EWZ +3.7%) is on a two-day tear of about 6%, and Canada (EWC +2%) of just under 3%. In its first chance to respond to Dudley's remarks, Australia (EWA +2.1%) gained 2.1% overnight.
- ETFs: DBB, BOM, RJZ, BOS, JJM, BDD, UBM, BDG, HEVY
Fri, Jan. 15, 10:34 AM
- Shares in global mining companies face their biggest back-to-back weekly losses in four years after signs of slowing growth in China, plunging oil prices and asset writedowns at BHP Billiton spark a selloff.
- Copper prices hit a six-year low for the fifth time in a week in London, -1.9%, amid worries about China’s economy, and are now down nearly 9% YTD; aluminum, lead, nickel and zinc all fell more than 1%.
- Long-dated “copper prices adjusted for producer country FX are mostly unchanged, which underscores the macro nature of the recent declines,” according to Goldman Sachs.
- "No lasting price recovery appears possible at present, neither on the metal markets nor on the commodities markets in general," Commerzbank says.
- BHP -7.7%, RIO -6.4%, OTCPK:AAUKF -5.7%, VALE -5.5%, FCX -5.4%, OTCPK:GLCNF -4.4%, TCK -4.3%, SCCO -1.1%.
- ETFs: JJC, DBB, JJN, JJU, CPER, JJT, BOM, RJZ, BOS, FOIL, JJM, LD, BDD, NINI, CUPM, LEDD
Oct. 12, 2015, 9:20 AM
- "We do not believe that any data releases or company announcements over the past two weeks suggest a change in commodity fundamentals," says Goldman.
- Oil: The numbers continue to point to an oversupplied market, even with a gradual decline in U.S. production.
- Metals: Announced production cuts fall way short of what's needed to balance a market at risk from further slowdown in China.
- via Brenda Kelly
- ETFs: DJP, DBB, GSG, RJI, GCC, DBE, RJN, GSP, GSC, BOM, RJZ, DJCI, LSC, CMD, BOS, JJM, UCI, BDD, JJE, ONG, UCD, UBM, BDG, UBN, CSCB, HEVY, CSCR
- Previously: Goldman on oil: Sell the rip (Oct. 8)
Oct. 9, 2015, 7:49 AM
- Glencore's (OTCPK:GLCNF, OTCPK:GLNCY) planned cuts to its zinc production sends zinc prices soaring 9% overnight and bringing other base metals including copper along for the ride.
- The move is good news for Glencore's stock price too, with shares up more than 11% in London and more than doubling since reaching a record low last week.
- Glencore's reduced operations in Australia, Kazakhstan and South America will reduce global zinc supply by 500K metric tons/year, not a trivial amount in a 14.5M tons/year global market.
- Zinc has, along with nearly all commodities, been under pressure from oversupply, sliding to a five-year low of $1,601.50/ton on Sept. 28.
- Further destocking of zinc and a more visible recovery in China’s industrial activities will be needed to propel a more sustained price rally, says Xiao Fu, head of commodity markets strategy at BOCI Global Commodities.
- ETFs: JJC, DBB, JJN, JJU, CPER, JJT, BOM, RJZ, BOS, FOIL, JJM, LD, BDD, NINI, CUPM, LEDD, UBM, BDG, HEVY
Sep. 9, 2015, 11:19 AM
- Industrial metals continue their recent climb, with aluminum, zinc and lead trying to play catch-up with copper, which has gained 5% this week as more miners mothball operations at loss-making mines.
- Glencore's (OTCPK:GLNCY, OTCPK:GLCNF) Monday announcement that it will cut 400K metric tons of copper production over the next 18 months at two mines in the Democratic Republic of Congo and Zambia comes in the wake of closures or cutbacks at mines controlled by Freeport McMoRan (FCX +4.3%) and others; shortly after Glencore’s decision, the Chinese operator of the Baluba mine in Zambia said it was suspending operations and cutting jobs.
- The closures follow a high level of production outages across the copper industry this year because of bad weather and labor disputes, with the combined effect helping to tighten the difference between supply and demand.
- ETFs: JJC, DBB, JJN, JJU, CPER, JJT, BOM, RJZ, BOS, FOIL, JJM, LD, BDD, NINI, CUPM, LEDD
Aug. 11, 2015, 11:35 AM
- Commodity metals are getting hammered by China's devaluation, with aluminum trading down nearly 2%, copper prices lower by 2.5% and nickel plunging more than 3.5%.
- Hardest hit of the mining stocks is Freeport McMoRan (FCX -14.1%), which has completely surrendered yesterday's 10.8% surge; shares now are down 72% over the past year and 57% YTD.
- Iron ore miners are sharply lower: BHP -5.5%, RIO -4.2%, VALE -7.8%, CLF -7.3%.
- Steel companies: X -9.7%, MT -5.1%, AKS -5.7%, NUE -2.9%, STLD -3.5%, CMC -4%.
- Also: AA -6%, CENX -4.9%, TCK -8.2%, SCCO -4.9%.
- ETFs: XLB, JJC, XME, SLX, PEO, VAW, COPX, DBB, UYM, CU, IYM, JJN, SMN, JJU, PICK, MATL, CPER, JJT, BOM, RJZ, FXZ, PYZ, BOS, FOIL, JJM, LD, BDD
Jul. 22, 2015, 12:44 PM
- The number of requests to withdraw copper from London Metal Exchange warehouses relative to the level of global inventories fell this week to the lowest since March 2013, signaling the meltdown sweeping through commodity markets could get even worse.
- Commodity investors see it as a bad omen because copper historically has been used as an indicator for what is to come in raw materials and as a gauge of global expansion.
- "Concerns about copper prices and Chinese demand for copper [are] reason to be worried more generally about demand for industrial metals and a wide variety of other commodities as well," says Natixis head of commodity research Nic Brown.
- Comex copper futures recently -1.7% to $2.433/lb., heading for the biggest loss in two weeks.
- ETFs: JJC, DBB, CPER, BOM, RJZ, BOS, JJM, BDD, CUPM, UBM, BDG, HEVY
May 5, 2015, 5:24 PM
- Copper prices have risen to a 2015 high and their highest levels since November, as global demand is seen driving prices.
- A series of stimulus programs from China in recent months has helped convince investors that the world’s largest copper consumer is serious about steadying its economic slowdown; at the same time, disruptions in copper mining and supplies have sparked a belief that the market may end the year with global production and demand nearly balanced, rather than with a supply surplus.
- Glencore (OTCPK:GLCNF, ]]GLNCY]]), the world's no. 3 copper miner, reported its Q1 copper production fell 9% Y/Y, partly due to a planned shutdown for maintenance at its Collahuasi mine in Chile; disruptions at operations owned by BHP Billiton (NYSE:BHP) and Freeport McMoRan (NYSE:FCX) also have fueled speculation that a global surplus will shrink this year.
- ETFs: JJC, DBB, CPER, BOM, RJZ, BOS, BDD, JJM, CUPM
Feb. 3, 2015, 10:24 AM
- Copper prices are on track for their biggest gains since September on speculation that China would use stimulus measures to jump-start its economy and boost demand for the metal.
- Rising oil prices and Chinese stimulus speculation “have changed the focus to the upside and the short-covering has done the rest,” says Saxo Bank's Ole Hansen, adding that “energy is such a big and important part of the commodity sector, and the somewhat improved sentiment there also helps other” raw materials; aluminum and nickel also are rising to multi-week highs.
- "We’re in this perverse world where bad news is good news,” says BNP Paribas analyst Stephen Briggs, and "a lot of people are thinking China’s going to join the rest of the world and lower interest rates or [offer] some kind of monetary response."
- Raw materials companies are off to a strong start today: FCX +5.8%, BHP +3.9%, RIO +2.4%, VALE +3.9%, SCCO +3.4%.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM
Jan. 23, 2015, 4:56 PM
- Copper prices extended their rout today, with the Comex March contract tumbling 3% to just above $2.50/lb. and the lowest close since July 2009.
- Much of copper’s recent slide has been ascribed to a worsening outlook for the global economy, and the dollar's push to an 11-year high against the euro following the ECB's plans for a major bond-buying program exacerbated the move today.
- Copper’s decline also reflects falling production costs, and a Goldman Sachs report today said further losses are on the way.
- ETFs: JJC, DBB, CPER, BOM, RJZ, BOS, BDD, JJM, CUPM, RGRI, UBM, BDG, USMI, HEVY
Jan. 23, 2015, 8:21 AM
- "The primary reason for the changes to our forecasts is cost deflation," says the team, noting "actual and anticipated U.S. dollar strength, cheaper energy and other input costs and our expectation of an improvement in mining productivity."
- The bank cut its expectations for metals and mined raw materials over the next three years by between 10 and 20 percent.
- Bearish on copper (NYSEARCA:JJC) even after a 20% decline over the last year, Goldman cuts its forecast for this year to $5,542 per metric ton from $6,400.
- Facing a sustained period of oversupply, iron ore is now seen averaging $66 per ton vs. $80 previously. Gold's forecast is trimmed to $1,089 per ounce from $1,200.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM, RGRI, LEDD, UBM, BDG, USMI, HEVY
Jan. 14, 2015, 10:28 AM
- Freeport McMoRan (FCX -10.8%) sinks to a 52-week low as copper prices fall 4.5% to collapse to 2009 levels, though it is off overnight lows after prices were down nearly 9% at one point in London.
- Other big global miners also are sharply lower: SCCO -7.3%, RIO -2.5%, BHP -4.4%, VALE -3.8%, CLF -5.8%.
- Concerns over a supply glut and slowing consumption in China have weighed on copper prices in recent months; copper is often seen as an omen for the global economy because it is used in a wide array of construction and manufacturing activities, so today's precipitous drop explains much of the weakness in global equity markets.
- The iPath Dow Jones UBS Copper Subindex Total Return ETN (NYSEARCA:JJC) is trading so heavily that nearly 60% of the average full-day volume traded in the first 10 minutes this morning.
- ETFs: CPER, CUPM, DBB, BOM, RJZ, BOS, BDD, JJM, RGRI, UBM, BDG, USMI, HEVY
Apr. 29, 2014, 7:15 PM
- U.S. government forecasters predict a more than 65% chance for an El Niño weather phenomenon by the end of the year, a development that threatens to drive up prices for food and other staples.
- El Niño has a reputation for triggering sharp run-ups for prices in markets as diverse as nickel, coffee and soybeans, and commodities investors, traders and analysts are bracing for impact at a time when global supplies of many raw materials already are stretched.
- Global food prices - which at the start of 2014 were expected to be largely flat this year - could easily climb 15% to record highs in as a little as three months after an El Niño occurs, says World Bank economist James Baffes.
- But Société Générale analysts say it is miners, not farmers, who have the most to worry about; since 1991, nickel prices rose the most (13.9%) during El Niño years among commodities the bank tracks.
- ETFs: DBA, CORN, DBC, JO, JJC, RJA, JJG, WEAT, SOYB, DJP, SGG, DBB, COW, NIB, GSG, RJI, CAFE, BAL, GCC, DAG, USCI, JJA, GRU, CHOC, CANE, JJN, RGRA, AGA, JJT, RGRC, CPER, AGF, GSP, BOM, RJZ, JJU, GSC, LSC, FUD, DJCI, USAG, BOS, SGAR, JJM, DEE, BDD, UCI, LD, WEET, UAG, DYY, DIRT, BCM, CMD, DDP, NINI, JJS, CTNN, TAGS, UBC, CUPM, FOIL, UCD, ADZ, RGRI, LEDD, UBM, CMDT, BDG, SBV, USMI, DPU, LSTK, CSCB, GRWN, HEVY, CSCR
Mar. 12, 2014, 6:56 PM
- While steep drops in copper, iron ore and coking coal prices have spooked investors, KGHM chief Derek White says there's no need for mining executives to panic - at least not yet.
- There's no real threat to copper mining operations at a long-term copper price ~$3/lb., White says, but that could change if the price drops below $2.50 for a prolonged period.
- Iron ore prices have performed better than expected in recent years, and this week’s drop brings them closer to many forecasts; analysts believe most iron ore projects are fine at a long-term price above $100/metric ton.
- Coking coal's current $110/metric ton is still not low enough to disrupt most operations, with some exceptions; TD Securities expects Teck Resources (TCK) to defer its Quintette project in British Columbia until the market recovers.
- ETFs: XME, COPX, CU, JUNR, PICK, JJC, DBB, CPER, RJZ, BOM, BOS, JJM, BDD, CUPM, RGRI, UBM, BDG, USMI, HEVY
Dec. 27, 2013, 4:29 AM
- The WSJ shines a light onto "shadow warehouses," a hidden system of facilities that store tens of millions of tons of aluminum, copper, nickel and zinc across the globe for banks, hedge funds and commodity merchants.
- The warehouses operate outside the London Metal Exchange's system, are unregulated, and don't provide details of their holdings. As a result, it's unclear how much metal is held in the shadow system. This lack of visibility could cause major price swings.
- The WSJ article follows allegations that warehousing companies have artificially boosted the price of metals, particularly aluminum.
- Companies that operate metals warehouses include Goldman Sachs (GS), Glencore Xstrata (GLCNF) and JPMorgan (JPM), although the latter is looking to sell its commodities unit.
- Relevant tickers include VALE, AA, AWC, KALU, MNSF, CENX, NOR, BHP, RIO, ACH.
- ETFs: DBC, JJC, DBB, DJP, GSG, RJI, GCC, USCI, CFD, JJN, JJT, BOM, RGRC, CPER, CTF, RJZ, GSC, LSC, GSP, JJU, DEE, BDD, BOS, JJM, DYY, DDP, DJCI, LD, CMD, BCM, CUPM, UCI, RGRI, UCD, UBM, FOIL, BDG, LEDD, CMDT, SBV, USMI, DPU, NINI, FTGC, CSCB, CSCR, HEVY
Sep. 12, 2013, 7:48 AM
- The gathering pace of infrastructure projects and consumers' need to restock will fuel a rebound in China's commodity usage through the end of the year, says Goldman. "People are getting more positive, but they’re not super bullish, not yet,” said Goldman's Julian Zhu. “You’re going to see further upside. If you look at the early indicators in September; it seems like the overall economic activity is picking up."
- Steel prices in particular are expected to be stronger, says Zhu. Re-bar futures in Shanghai closed at $3,713 per metric ton last night, continuing a 3-month run of higher prices, the longest streak since 2010/11.
- Broad commodity ETFs: DJP, GSP, LSC, RJI, GSC, GCC, GSG, DBC, DPU, DJCI, UCI, USCI, DYY, UCD, DEE, CMD, DDP, RGRC, CTF, CFD CSCR, CSCB.
- Broad base metal ETFs: JJM, RJZ, BDG, DBB, UBM, BDD, BOM, BOS, USMI, RGRI.
- Steel: SLX.
The DB Base Metals Double Long ETN provides 2x exposure to an index that tracks the performance of futures contracts on copper, aluminum, and zinc.
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