Is the commodities boom over?

[Sean K]

Is USD strength just a blip, or does it have legs?

A lot of dirty linnen has been exposed in the US, with more to come probably.

But now a lot of attention has gone to the UK/Eurozone.

Flight to safety to a currency the world can not afford to have implode...??

Commods in USD.....

 

[Kauri]

The big question on traders minds is whether the closure of the Ospraie fund is a precursor to more unwinding of funds who have been caught wrong and long the commodities complex, or whether the fund"s closer marked a near-term blow-off after recent heavy liquidation of their positions.
and lemmings are in there looking for a cliff...

Cheers
..........Kauri

 

[sam76]

So........................................


China asks for delays on iron ore delivery

By Tony Grant-Taylor
Herald Sun
October 10, 2008 12:00am

THE mining sector is starting to feel the effects of the global financial crisis with China asking iron ore producers to postpone deliveries.
The once booming Chinese steel mills are cutting demand for iron ore as economies in other countries slow and want fewer Chinese goods.

Shares in Australia's fourth-largest producer Mt Gibson Iron plunged as much as 32.5 per cent yesterday after conceding some customers had asked for scheduled deliveries to be postponed.

Fortescue Metals also acknowledged weakening demand but said it had not had any scheduled shipments rejected.

The two giants, BHP Billiton (bhp.ASX:Quote,News) and Rio Tinto (rio.ASX:Quote,News), said shipments were proceeding as usual.

In a statement to the Australian Securities Exchange, Mt Gibson said a backlog at Chinese ports had reduced demand for iron ore.

The spot prices for iron ore, which earlier this year were well above contract prices, have slumped in recent months. Cash prices for iron ore imported by China fell 17 per cent to 1000 yuan ($214) a tonne in the last week of September - the biggest fall since June 2006.

UBS expects contract iron ore prices, which have underpinned revenues into Australia, to fall 15 per cent next year.

Until recently analysts were predicting price increases of 15 to 30 per cent.

China has an excess supply of ore with stocks of about 70 million tonnes at its 20 largest ports.

The China Iron and Steel Association said Vale, the world's biggest iron ore producer, is scheduled to meet Chinese steel mills next week to ask for a second price increase for this contract year.

Vale, Rio and BHP already have price rises of between 70 and 96 per cent for this year's exports.

Mount Gibson, a small supplier that shipped 1.43 million tonnes of ore in the September quarter, said it was not under any obligation to delay the deliveries until the second quarter as requested.

Mt Gibson shares fell 24 per cent to 87.5, Fortescue dropped nearly 9 per cent to $3.30, BHP was steady at $29.84 and Rio dropped almost 4 per cent to $78.01.

http://www.news.com.au/business/story/0,23636,24474382-14334,00.html

 

[noirua]

Is USD strength just a blip, or does it have legs?

A lot of dirty linnen has been exposed in the US, with more to come probably.

But now a lot of attention has gone to the UK/Eurozone.

Flight to safety to a currency the world can not afford to have implode...??

Commods in USD.....

Only posted about 6 weeks ago and how the World has changed. Yes indeed, they've all flown for the safety of the US Dollar. The UK/Eurozone and what attention that is getting.
Still think the Aussie$ is being unfairly trashed, but once the trend, as strong as this one, is set, there's no stopping it until we get, perhaps to AU$1.70 to US$1 - should be very helpful too many.

 

[Aussiejeff]

Only posted about 6 weeks ago and how the World has changed. Yes indeed, they've all flown for the safety of the US Dollar. The UK/Eurozone and what attention that is getting.
Still think the Aussie$ is being unfairly trashed, but once the trend, as strong as this one, is set, there's no stopping it until we get, perhaps to AU$1.70 to US$1 - should be very helpful too many.

Maybe this thread needs a re-vote, what with high profile steel maker FerroChina today going under. It says it is unable to service huge debts and is immediately stopping production and shares will remain suspended until further notice.

Great!

 

[sam76]

Rio warning sends resource stocks plummeting
Barry FitzGerald
October 17, 2008

RIO TINTO'S confession that the five-year commodities boom was unravelling has triggered a global sell-off in resource equities and mineral commodities.

The big four of the industry - BHP Billiton, Rio Tinto, Xstrata and Anglo American - took their biggest one-day share-price hits since the 1987 crash while the slide in metal prices accelerated, in some cases to below marginal costs of production.

Rio let the cat out of the bag on Wednesday in its September quarter production report. It talked about slowing new production growth, potential cuts in aluminium, the lack of buyer appetite for assets sales and most disturbingly for the equities and commodities markets, a "deceleration in Chinese growth".

In overseas markets, Xstrata plunged 19% and Anglo American 20%. In the local market, Rio tumbled $12.49, or 15.9%, to $66.01 and BHP shed $3.90, or 13%, to $25.80.

Reports from China that steel makers were prepared to cut production by up to 20% to better match demand also spooked the already skittish market in the big miners.

Rio's share-price hit came amid reports that the Chinalco-Alcoa partnership's 9% stake in the group was locked up in a Hong Kong custodial account now managed by the liquidator of Lehman Brothers.

Lawyers for the state-owned Chinalco and Alcoa have descended in Hong Kong seeking the release of the parcel of shares, acquired in a $US14 billion market raid in February.

Alcoa is confident the partnership will regain access to shares while it was reported that Chinalco had asked the Chinese Government to help it resolve the issue.

Rio's takeover suitor, BHP, is a keen observer of the possible lock-up of the parcel. It was the February raid by Chinalco-Alcoa on the Rio register that forced BHP to replace its planned 90% minimum acceptance condition in its Rio scrip bid with a 50% condition.

Prospects that BHP might yet get its hands on the Chinalco-Alcoa stake have improved in line with the global economic meltdown. Both Chinalco and Alcoa are feeling the chill wind of the meltdown in their aluminium operations and are sporting a 63% or $US8.8 billion loss on their investment.

The unlikely situation where the liquidator of Lehman's Hong Kong business takes control of the 9% Rio stake is a new wild card in the BHP tilt for Rio.

In a briefing on its disappointing profit results last week, Alcoa managing director Klaus Kleinfield said the US group's long-term view on the Rio investment was "positive".

He noted that the Australian Government had given approval for Chinalco to increase its stake to 11%, but would not comment on the intentions of Alcoa or Chinalco.

In a surprise to some analysts, Alcoa did not make any write-downs on the cost of its original $US1.2 billion investment in the February raid on Rio.

The beating taken by BHP shares has reduced the value of its 3.4-for-1 scrip offer for Rio to $104 billion. That is down by close to $20 billion in the past five trading days.

The implied value of the offer of $87.72 a Rio share still represents a record 32% premium to Rio's market price of $66.01 a share (2.55 BHP shares).

The reporter owns BHP shares.

http://business.theage.com.au/busin...resource-stocks-plummeting-20081016-52ex.html

 

[agro]

nope

china may slow down but there is always other emerging economies such as India

 

[nomore4s]

lol, agro you're so one eyed.
To me it looks like the bubble has well and truly burst, but we will see what happens over the next 12 months or so.

 

[Sean K]

lol, agro you're so one eyed.
To me it looks like the bubble has well and truly burst, but we will see what happens over the next 12 months or so.

I'm with agro.

Major correction in a LONG term story.

Chindia has only just started to develop!

Give this rec/dep/ression a few years to run itself out and commods will be back in vogue.

The 'Mina de China' as called in South America, will be pumping again.

Maybe....

 

[metric]

Re: The commodities boom is over

We are suppose to be in a resource/commodities "super cycle".

8 >10 years to run yet.

more like a 'super ramp' by the corporatocracy.....

the US is sunk.....chinas biggest customer. do you think that wont affect china..and in turn us?

ITS OVER....THINK; WAR COMMODITIES AND PRECIOUS METALS.


.

 

[Garpal Gumnut]

No way

this is the best opportunity in a generation to get set into commodities.

gg

 

[Sean K]

No way

this is the best opportunity in a generation to get set into commodities.

gg

Once in a generation crash

=

Once in a generation opportunity

 

[nomore4s]

I'm with agro.

Major correction in a LONG term story.

Chindia has only just started to develop!

Give this rec/dep/ression a few years to run itself out and commods will be back in vogue.

The 'Mina de China' as called in South America, will be pumping again.

Maybe....

lol, if it takes a few years for it to sort out, won't that then be classed as a new boom? Meaning this one is over?

How far do commodities and associated stocks have to fall before the boom is considered over?

 

[nomore4s]

Once in a generation crash

=

Once in a generation opportunity

This I agree with, once we get through this mess there will be alot of very good opportunities in alot of different sectors - not just commodities.

 

[Garpal Gumnut]

This I agree with, once we get through this mess there will be alot of very good opportunities in alot of different sectors - not just commodities.

Mate, you have to get set in before the opportunities appear.

Otherwise you are buying bhp at $40.

gg

 

[Aussiejeff]

Once in a generation crash

=

Once in a generation opportunity

Unfortunately, for many poor souls (eg: less well off retirees and poor) that might well re-read as


Once in a generation crash

=

Financial wipe-out for rest of life.

 

[Sean K]

Mate, you have to get set in before the opportunities appear.

Otherwise you are buying bhp at $40.

gg

Picking the future trend is critical in long term fundamental sector picks.

However, I seem to recall many MANY people, including me, calling Japan the boom of the late naughties.



I still find it hard to see how Chindia will not be a significant growth platform for Australia over the next 5 - 30 years, pending world war. (on the cards...)

Lets get this recession/depression over and done with and get on with it I say!

 

[Glen48]

China house prices are down 40% Shanghai SP is down 70% Consumer confidence must be down as well.
Put the boom beside Buggy Whips, Crank Handles a thing of the past
Until confidence is boosted nothing will stop the rot, you may have to go to China to see the bottom of our SP index at this stage is some where around New Guinea.

 

[Reealjrd]

The commodity boom is not over. It is for some time on break as it had been trading with some nice movements. The main commodity are the gold and crudeoil as these major commodities are falling down.

 

[Sean K]

Unfortunately, for many poor souls (eg: less well off retirees and poor) that might well re-read as


Once in a generation crash

=

Financial wipe-out for rest of life.

So be it.

That's the pool you are swimming in.