Entering text into the input field will update the search result below

Despite falling commodity prices, Glencore’s IPO is still set to be a blockbuster

May 19, 2011 3:39 PM ET
IBISWorld profile picture
IBISWorld's Blog
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

By IBISWorld Energy Analyst Justin Molavi

Glencore’s IPO marks its feeling that the commodity market has already hit its peak and that it's time to cash in. This forecast comes on the back of the IMF downgrading GDP forecasts for the US and other developed economies as consumers pull back spending amid higher prices for energy and food.

What does this mean for energy markets in the US ?
Glencore’s IPO marks the beginning of the end of incessant energy price increases. With the dying down of political tensions (for the most part) in the Middle East and gasoline demand falling in the US, crude oil and other commodities have declined from their highs during the first quarter of the year. However, this does not necessarily mean prices are going to drop dramatically because emerging economies like China are still demanding energy at increasing rates and QE2 is still pushing the value of the dollar lower. As such, energy prices will stay elevated as China continues to provide a floor on energy demand. Crude oil prices are likely to stay above $90 a barrel throughout 2011.

Glencore operates in a variety of growing industries, and its IPO is a testament of US industry growth expectations over the next five years. The Oil Drilling and Natural Gas Extraction industry is anticipated to grow 5.5% annually to $432.0 billion in the five years to 2016. Mining Services in the US is expected to grow 3.8% annually to $95.9 billion in the five years to 2015. Crop Services are also projected to increase 3.7% annually to $16.1 billion in the five years to 2015. 

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.