Archives for Commodities - Page 19
It is widely accepted that hard commodity prices (metals, minerals and energy) move in long cycles. Each leg, up and down, lasting for 10 to 15 years. It is though that the up leg of the current cycle ended around 2013 and many say we are in the early stage…
Last month I concluded that the fall in the Baltic Dry Index was demand related. The oil price (Brent and West Texas Intermediate) suffered a similar precipitous decline over the same period. We have all read numerous theories on why the oil price has declined so much. Some examples: The…
I last wrote about the Baltic Dry Index (“BDI”) in August 2014 in an article entitled “Is the Baltic Dry Index a Leading Economic Indicator”. I concluded that: “The BDI is not a crystal ball that shows the future of world growth. It is a measure of the supply demand…
The US Federal Reserve’s Free Money policies [Zero Interest Rate Policy (“ZIRP”) and Quantitative Easing (“QE”)] have favoured the provision of debt to the shale oil industry. This is one of many areas of resource misallocation within the US economy and it may be the catalyst for economy-wide disaster. The fracking…
Concrete and steel, along with abundant cheap energy, are the bedrock of industrial society. The most important raw materials for concrete and steel are cement and iron ore. The chart below shows all you need to know about Chinese industrial growth. The world had never seen such rapid industrialisation as…
Coal and iron ore are Australia’s two biggest exports. In 2013 iron ore exports earned $69 billion and coal $40 billion, 26% and 15%, respectively, of total exports. Unsurprisingly then, price declines in either commodity result infront page news here in the Land Down Under. Read more about iron ore…