COMMODITIES – PRICES

Resources on the rebound, but is it time to get on board?

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Original article by Philip Baker
The Australian Financial Review – Page: 26 : 11-Aug-16

A rise in the spot prices of some commodities may signal a recovery in the resources sector. Investors are optimistic. The share prices of Australian-listed mining companies have risen 25 per cent since the beginning of 2016. Fortescue Metals Group’s stellar performance is particularly impressive. The stock has risen from $A1.44 in January to $A4.50 on 9 August.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, FORTESCUE METALS GROUP LIMITED – ASX FMG, AUSTRALIA. DEPT OF INDUSTRY, INNOVATION AND SCIENCE, BELL POTTER SECURITIES LIMITED

Commodities glut will last 10 years, says BHP

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Original article by John Kehoe
The Australian Financial Review – Page: 18 : 22-Jun-16

BHP Billiton CEO Andrew Mackenzie says factors such as a low cost base means the group is in a better position to ride out the downturn in commodity prices than many rivals. He has forecast that the global oversupply of key commodities could to persist for about 10 years due to the big increase in capital investment during the resources boom. Mackenzie adds that demand and supply of iron ore in particular is likely to be take a long time to return to balance.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, VALE SA, ASIA SOCIETY

Treasury’s medium-term price forecast paints unsettling picture

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Original article by Geoff Winestock
The Australian Financial Review – Page: B13 : 4-May-16

The Australian Government’s May 2016 Budget forecasts include a 1.35 per cent increase in the nation’s terms of trade in 2016-17. The Mid-Year Economic and Fiscal Outlook had forecast a 2.25 per cent decline in the terms of trade. Meanwhile, the Treasury has upgraded its forecast for the iron ore price in 2017 from $US39 per tonne to $US55. The price of metallurgical coal has been upgraded from $US73 per tonne to $US91.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

Miners feel pinch of dollar, oil switch

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Original article by Paul Garvey
The Australian – Page: 20 : 23-Mar-16

The Australian dollar has risen by about 10 per cent so far in 2016. This has offset the benefits of the rebound in the prices of key resources commodities, which are typically priced in US dollars. Mining companies have also been hit by increased fuel costs due to the rally in the crude oil price. Tom Price of Morgan Stanley says the rise in the value of the currency and the crude oil price may prompt more resources groups to reduce production or mothball mines.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG

What goes up … comes down a week later

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Original article by Barry FitzGerald
The Australian – Page: 31 : 17-Mar-16

Commodity prices and the share prices of mining companies have retreated after a brief rally in mid-March 2016, with the iron ore price shedding 18 per cent in seven trading days. However, Ricardo Aceves of FocusEconomics says analysts are generally upbeat about the outlook for commodity prices, with overall growth of 4.4 per cent by the December quarter. The consensus forecast is for crude oil to be 18 per cent higher by the fourth quarter, while the nickel price is expected to rebound by 12 per cent.

CORPORATES
FOCUSECONOMICS, BHP BILLITON LIMITED – ASX BHP, PENGANA CAPITAL LIMITED, PENGANA GLOBAL RESOURCES FUND

BlackRock’s Evy Hambro predicts more mines to close

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Original article by Peter Ker
The Australian Financial Review – Page: 15 : 2-Mar-16

BlackRock’s Evy Hambro expects bulk commodities to remain oversupplied, although he forecasts an improvement in the supply-demand balance for some base metals. Hambro also forecasts that more mining companies will discontinue production at some mines during 2016, and he says the downturn in the crude oil price is unsustainable and it will begin to rebound. BlackRock is a major shareholder of leading mining groups such as BHP Billiton, Rio Tinto and Glencore.

CORPORATES
BLACKROCK INCORPORATED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, GLENCORE PLC, FORTESCUE METALS GROUP LIMITED – ASX FMG, NEWCREST MINING LIMITED – ASX NCM, ANGLO AMERICAN PLC, HALLIBURTON INCORPORATED, SCHLUMBERGER LIMITED, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, UNITED STATES. FEDERAL RESERVE BOARD

More pain before big miners execute M&A

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Original article by Amanda Saunders
The Australian Financial Review – Page: 13 & 18 : 1-Mar-16

A growing number of large Australian mining companies are looking to capitalise on the downturn in commodity prices to pursue acquisitions. South32 CEO Graham Kerr says many companies are likely to be reluctant to offload distressed assets, adding that the real impact of lower commodity prices is unlikely to be felt for another six months. Kerr acknowledges that South32’s healthy balance sheet means it is better-placed that many rivals to seek acquisitions, but he stresses that the group will not rush into any deals.

CORPORATES
SOUTH32 LIMITED – ASX S32, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, UBS HOLDINGS PTY LTD

Heavyweight miners predict little respite

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Original article by Perry Williams
The Australian Financial Review – Page: 11 & 22 : 4-Jan-16

Former Rio Tinto CEO Leigh Clifford says commodity prices may not rebound for another 3-5 years, and mining companies with high production costs in particular face challenging conditions. Former Orica chairman Malcolm Broomhead says action is needed to boost labour productivity, and he has urged the Australian Government to pursue reforms in areas such as industrial relations and taxation in order to boost productivity.

CORPORATES
RIO TINTO LIMITED – ASX RIO, ORICA LIMITED – ASX ORI, BHP BILLITON LIMITED – ASX BHP, QANTAS AIRWAYS LIMITED – ASX QAN, ASCIANO LIMITED – ASX AIO, KKR AND COMPANY LP

BHP tipped to cut dividend to keep rating

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Original article by James Thomson, Peter Ker
The Australian Financial Review – Page: 11 : 24-Nov-15

BHP Billiton’s share price has fallen by 18.3 per cent in the last month, with the stock closing at $A20.07 on 23 November 2015. BHP’s progressive dividend policy has come under scrutiny following the downturn in iron ore and coal prices. Glyn Lawcock of UBS believes that unless prices rebound, the resources giant will have to reduce its dividend to ensure that its credit rating is not downgraded. UBS recently scaled back its 12-month share price target from $A28 to $A24.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, UBS HOLDINGS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, ABERDEEN ASSET MANAGEMENT LIMITED, STANDARD AND POOR’S CORPORATION

China mining boom last in history

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Original article by Peter Ker
The Australian Financial Review – Page: 10 : 11-Nov-15

Australian economist Saul Eslake has warned that the prices of many industrial commodities are likely to fall further in the next year or two. Eslake is particularly bearish about the outlook for the price of coal and iron ore. Eslake also told the International Mining and Resources Conference that there is unlikely to be another commodities boom on the scale of the one that was driven by China’s industrialisation. He argues that other developing countries have significantly smaller populations and are less dependent on commodity imports.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ