Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts

Monday, August 24, 2009

China's ethnic regions also home to abundant mineral wealth

Two articles grabbed my attention from Chinamining.org this morning. They both relate to the fact China's ethnic regions also happen to be home to a great proportion of the countries commodity and energy wealth.

You can click on the titles of each respective article to access the stories in full from Chinamining.org.

--> Tibet has copper ore reserves of 30 mln t, half of China's total

Southwest China's Tibet Autonomous Region has geological copper ore reserves of more than 30 million tons, accounting for over a half of the country's total, according to the region's geological prospecting bureau.

The bureau director said that Tibet is the largest region in China by its copper resources reserves. By 2008, 329 copper ore deposits had been found in the region, including 11 large deposits and six mid-size ones. Its Qulong copper ore mine, the largest one in Asia, is estimated to possess copper reserves of more than 10 million tons.


Tibet - Potala Palace
[Photo I personally took
during a trip I made to
the region in December 2006,
Bennett A. Reiss]


--> 1st Kunming Mining & Cooperation Forum (Sept 2-4, 2009)

Entering the 21st century, the global mining industry is writing a new chapter. It is an era of resource economy. Mining market becomes more open and capitalized. Mineral exploring as well as financing becomes more diversified.

Yunnan is rich in natural resources, known as "the Kingdom of non-ferrous metals". More than 150 kinds of minerals have been proved there, accounting for 92.6% of Chinese total. Among the proved 92 minerals, 9 of them have the largest reserves in China and 21 of them are listed within top three. Mining as one of the five pillar industries in Yunnan plays an important role in the development of the local economy.


Earlier this summer another ethnic region grabbed world headlines. Does the region of Xinjiang ring any bells? Xinjiang is home to a large number of China's ethnic Muslims, is culturally quite similar to other republics in central Asia and is often referred to as East Turkestan. Xinjiang is also on track to become China's most important oil and gas producing region.

This article, "Xinjiang's oil and gas equivalent ranks first in China" is from little over a year ago (July 2008), asserts that Xinjiang has already passed Daqing (China's other oil producing region) as the number region in oil and gas output.

As one hand seizes development, the other taps into the potential to allow Xinjiang's oil output to soar. The latest statistics show that Xinjiang's annual oil and gas equivalent output has already exceeded that in Daqing and ranks the first in the country.

The third national resources evaluation shows that: Xinjiang's total oil and natural gas resource reserves exceeded 30 billion tons. Although it is rich in resources, Xinjiang still requires development and a reduction in consumption. Recently, Xinjiang has been producing 75,000 tons of crude oil daily, occupying 14.4 percent of the country's daily crude oil output. In 2007, Xinjiang's oil and gas equivalent reached 44.94 million tons, and ranked at the top.


In all likelihood, the development of commodity sectors in these regions will be controlled by Beijing...not locals. What industries can these regions develop as to diversify their economic development from commodity sector led growth?

Yunnan and Tibet have great potential for becoming tourist meccas in China. Yunnan, the less politically sensitive of the two, has already emerged as one of China's most popular tourist destinations.

Furthermore, Yunnan's strategic location in SE Asia put it in a good place to be at the center of the future growth of trade and exchange between China and the countries of Vietnam, Myanmar and Laos.

[Map courtesy of leafgovso.co.uk]

Tibetan tourism is growing as well, but remains inhibited by the sporadic changing of restrictions and the need to acquire a special internal visa or permission to visit.

When analyzing this situation from a the perspective of the people in the Chinese government determining domestic policy, China can not and will not simply let three of its most resource rich regions control the development their natural resource industries.

Sad as it may be for some members of the minority groups in these regions,
one thing is sure--Xinjiang, Tibet and Yunnan are all going to remain integral pieces of China for a long time and be subject to increased inflows of ethnic Han Chinese seeking economic opportunities.

Let me clearly state, the opinions expressed in this analysis not reflect how I the author, (Bennett A. Reiss) feel on a personal level. Allow me to try to put things into perspective with two analogies which I feel help explain the Chinese point of view.

Canada is full of resources from top to bottom. I am by no means an expert, but I highly doubt the Eskimo and Native American populations have much say about development of Canadian mining and energy companies in their ancestral territories.

Likewise, a more mainstream analogy might be the US in Iraq. To the "logic" driven Chinese bureaucrat, China is far more justified in their domestic policy towards these resource rich regions than the United States is in Iraq. On the surface the US is subjugating a foreign population in a country half way across the globe from its own territory. China in its own official opinion is not subjecting anyone, and to further add to the Chinese argument, these regions have been a part of China for centuries if not thousands of years.

Even if your feelings on the war in Iraq produce other rationalizations for the US invasion (outside of oil), try to justify this to a country with over 1.4 billion people to feed and improve the lives of.

I welcome debate in this area to any readers who would like to discuss this topic further.

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Tuesday, July 7, 2009

China to buy Repsol Assets in Argentina - Update

[China - Argentina - Spain]

China's CNPC said offering $14.5 billion for Repsol investment - Market Watch

SAN FRANCISCO (MarketWatch) -- China National Petroleum Corp. has offered up to $14.5 billion for a majority stake in the Argentine unit of Spanish oil company Repsol YPF SA, according to media reports published on Tuesday.

The South China Morning Post, citing unnamed sources, reported that CNPC has offered between $13.2 billion and $14.5 billion for a 75% stake in the unit.

Dow Jones Newswires reported that Repsol said last week that it had received proposals from a number of companies for a stake in the unit.

China has been acquiring energy assets as its growing economy demands more resources to support its needs.

Sinopec has also secured a deal with Brazilian firm Petrobras (PEFGF) to supply it with 150,000 barrels of crude a day this year, and 200,000 barrels per day for nine years starting in 2010, according to the state-run China Daily.

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Monday, June 29, 2009

[Commodities] -- Is the rally over?

Commodity Rally May Falter on Supply, Speculators

June 29 (Bloomberg) -- Commodities, heading for the first quarterly advance in a year, may struggle to repeat their gains in the next three months as supply expands and speculators sell.

Nickel may average 29 percent less in the third quarter than now, crude oil 16 percent, copper 14 percent and gasoline 10 percent, analyst estimates compiled by Bloomberg show. Hedge funds and speculators cut their bets on higher prices by 23 percent in the two weeks ended June 23, the first back-to-back drop since March, based on an index using U.S. Commodity Futures Trading Commission data. The World Bank said June 22 the global recession will be deeper than it expected three months ago.

“Commodities have gotten a little ahead of themselves,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. “As long as there’s uncertainty about growth, that’s going to be headwind commodities won’t be able to overcome.”

Commodities rose 14 percent this quarter, led by nickel, oil and sugar, after three consecutive declines, according to the Reuters/Jefferies CRB Index of 19 raw materials. This year’s 57 percent advance in oil costs, combined with widening budget deficits, may cause another global slump, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

Click here to access the full article from Bloomberg


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Friday, June 26, 2009

Newswire: China South America


[Peru - China] -- Peru, China relations "at best moment"

Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru "are at their best moment" in history.

According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.

The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.

"I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit," said Zhengyue.


[Latin America - China - Africa] -- China's new frontier

Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.

(Fortune Magazine) -- At phone operator Movistar's sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don't realize, though, that the company providing the gear for their broadband connections isn't a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.

China's telecom suppliers are coming to the Americas. Pursuing the same formula they've used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain's Telefónica: "Price is important."


[Caribbean - China] -- China's expanding relations with Latin America and the Caribbean

Commentary
By Odeen Ishmael

The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil's state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China's oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.

Brazil's two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.



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Tuesday, May 19, 2009

China and Brazil seal $10 billion deal

[South-South Cooperation] -- China, Brazil

Lula da Silva & Hu Jintao

Chinese President Hu Jintao and his Brazilian counterpart, Lula da Silva, finished writing the latest chapter in Sino-Brazilian Cooperation earlier today in Beijing.

ChinaSouthAmerica has been following this story for a few months now, and I must say, it is nice to see a classic example of South-South Cooperation / Emerging Market Cooperation (whatever you want to call it) develop and eventually get finalized.

Here are a few excerpts from a WSJ article that a great job of summing up the details.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

State-owned Brazilian oil giant Petroleo Brasileiro SA said it finalized a $10 billion loan agreement from China in return for a long-term supply of oil, another victory for China's new strategy of using its cash-rich banks to help secure the natural resources the country needs to keep its economy growing.
...

Petroleo Brasileiro, known as Petrobras, said under the terms of the 10-year loan from China Development Bank, which has been at the center of China's resources policy, Brazil would supply China Petrochemical Corp., known as Sinopec, 150,000 barrels of oil a day for the first year, rising to 200,000 barrels a day for another nine years.

...

Mr. Gabrielli said the loan's interest rate was under 6.5%, and the loan used oil revenue as collateral but would be repaid in cash -- not oil. Although the deal didn't include guarantees to buy Chinese products or services, other deals will work on exploring closer cooperation, such as moving Chinese equipment factories to Brazil.

...

China's mission to secure commodities does not stop with Brazil--as you are well aware if your a frequent reader at this site.

Beijing has struck similar agreements with energy producers world-wide in recent months, including a $10 billion deal with Kazakhstan and a $25 billion deal with Russian oil and pipeline companies.

...

Stay tuned for further developments and ChinaSouthAmerica's analysis this deal and growth of Sino-Brazilian Cooperation.


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Sunday, May 17, 2009

Weekend Newswire: Commodities


[Crude Oil] -- Oil Falls on Speculation Recovery Will Falter, Reducing Global Fuel Demand
Crude oil fell the most in almost a month on concern the global economic recovery may falter, reducing demand for fuel.


[Natural Gas] -- Nymex Gas Falls as Reports Show Industrial Demand Will Be Slow to Recover
Natural gas futures fell for a third day as reports showed that demand for the fuel from factories and power plants will be slow to recover during the recession.


[Copper] -- Copper's U-Shaped Base Signals Rise, StanChart Says: Technical Analysis
Copper may rise to levels not seen since October in the month ahead, as the metal forms a U-shaped base, Standard Chartered Bank said, citing trading patterns.


[Gold & Silver] -- Gold Advances in N.Y. on Speculation Equity Rally May Stall; Silver Gains
Gold prices rose, extending a rally to two weeks, as investment demand increased on rising consumer prices and signs that a rally in U.S. equities may be ending. Silver futures fell.


[Platinum & Palladium] -- Platinum Falls as Dim Auto Outlook Cuts Demand in N.Y.; Palladium Gains
Platinum prices fell as the U.S. auto- industry slump eroded demand for the metal used in pollution- control parts. Palladium rose for the first time this week.


[Steel] -- China Steel Industry Likely to Post Loss in 2009, Baosteel Chairman Says
China’s steel industry may post a loss this year, Baosteel Group Corp. Chairman Xu Lejiang said at a conference in Shanghai today. Xu said the Chinese steel industry is oversupplied and faces severe structural problems that have been worsened by the financial crisis.


[Soybeans] -- Soybeans Head for Third Weekly Gain as Demand Cuts U.S. Supply
Soybeans climbed, heading for a third weekly gain, on speculation that increased global demand may further reduce inventories in the U.S., the world’s biggest grower and exporter of the crop.


[Investments] -- Where Commodities Fit In Your Portfolio
Commodities are a great way to diversify your portfolio, but if you are considering allocating some money to the group, don’t expect to catch a draft in the near future, even if there are signs the worst of the global slowdown may be over.


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Wednesday, May 13, 2009

Jim Rogers: "We are going to have serious food shortages in a few years"

Jim Rogers sits down with Bloomberg host Haslinda Amin in his home base of Singapore. Haslinda gets a full twenty minutes to test his patience while she asks what his opinions are on investing in a variety of investment categories. Commodities. Currencies. North American Natural Gas. Yen Carry Trade. Agriculture. Equities. ETF's.

As usual, Jim Rogers is sticking to what he knows best-raw materials. If you're a new reader, or have not heard of Jim Rogers definitely run a search on the right of his name to bring up past posts and videos including him.


Part 1 /3




Part 2 / 3




Part 3 / 3




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Thursday, May 7, 2009

Newswire: Latin America - Region



[Venezuela] -- Oil-Services Law to Affect Some Foreign Companies
New nationalization legislation now in the hands of Venezuelan lawmakers will impact the operations of some oil-services companies but will leave out rig firms and large well-service firms.

Oil Minister Rafael Ramirez noted Wednesday that firms such as Williams Co. (WMB), a U.S. firm that operates a high-pressure gas compression facility in Venezuela, could be affected by the new law, but noted that oil rig firms and large service firms such as Schlumberger Ltd. (SLB) and Halliburton Co. (HAL) are not included.


[Bolivia] -- U.N. Team Documents Forced Labor Among Indians in Bolivia
LA PAZ – A mission dispatched by the U.N. Permanent Forum on Indigenous Issues reported Tuesday that it had verified the existence of Indian communities in eastern Bolivia that are being subjected to forced labor.


[Peru] -- Central Bank May Cut Interest Rate to 4% as Domestic Demand Stalls
Peru’s central bank will probably cut its benchmark lending rate for a fourth straight month today as slowing inflation allows policy makers to lower borrowing costs and bolster flagging domestic demand.


[Peru] -- Repsol to Invest $500 Million a Year in Peru, Complete Projects
Repsol YPF chairman and CEO Antonio Brufau said Tuesday that the Spanish energy giant would invest $500 million per year in Peru, completing $6 billion in oil and natural gas projects.

The Spanish oil company has a large stake in the development of the Camisea natural gas field in southeastern Peru and plans to begin exporting fuel to Mexico next year.


[Chile] -- Codelco Increases Reserves by 20 Percent
Chile’s state-owned National Copper Corporation, or Codelco, the world’s largest producer of the red metal, increased its proven and probable reserves by 20 percent in 2008, company sources told Efe on Wednesday.


[Mexico] --
Calderon Deploys Reserves as Swine Flu Depletes Mexico Financial Resources
As the sun sets on Ciudad Juarez, the Mexican border city’s citizens flee to the safety of their homes. The vendors who crowd Avenida Juarez to sell tacos and ice cream during the day pack up their carts and disappear. Hawkers who hand out leaflets for a local mall are gone too -- and the mall itself is a ghost town.

Monday, May 4, 2009

Brazil's President seeks new safe guards on Tulip Oil field investments

Monday, May 04, 2009 - Rigzone

Brazilian President Luiz Inacio Lula da Silva called Friday for officials to finalize new oil laws giving the country a greater stake in recent oil finds, saying the legislation was urgently needed to guarantee Brazil's future.

Click title of post to access the full article from Rigzone

Wednesday, March 18, 2009

South-South Cooperation Triangle -- Colombia, Peru & Brazil

BOGOTA -(Dow Jones)- Colombian state-controlled oil company Ecopetrol SA ( ECOPETROL.BO) said Tuesday it has agreed to buy stakes in two oil blocks in Peru from Brazilian oil company Petroleo Brasileiro SA (PBR).

In a statement, Ecopetrol said it bought 50% of a block in the eastern Peruvian Amazon jungle and 25% in a second one, located in the country's southeastern jungle.

Both companies will search for oil and gas in the two areas together. The acquisitions need to be approved by Peruvian authorities, Ecopetrol said.

Click here to read more from CNN Money ...

I know weird right??? CNN Money ran this story. Well I guess it was from Dow Jones originally hehe.

Thursday, March 12, 2009

Schlumberger-led group wins 500-well Chicontepec contract - Mexico

Back on Feb 5, 2009 I reported on this site how Sinopec was bidding in Mexico for a oil contract. Well... The Texan beast, Schlumberger has won the bid. Thought I would update.

Feb 5 article -- Sinopec competes against Schlumberger Ltd and Halliburton Co. for drilling contracts in Mexico

Monday, February 23, 2009

News line: Commodities in focus

Source of articles in this post: Bloomberg


Oil Falls on Signs Demand May Drop Faster Than OPEC Cuts Supply

Feb. 23 (Bloomberg) -- Crude oil fell 4 percent on speculation demand will decline faster than the Organization of Petroleum Exporting Countries is curbing supply...


Gold Falls After Reaching 11-Month High in N.Y.; Silver Drops

Feb. 23 (Bloomberg) -- Gold fell in New York as some investors sold the metal after a rally last week to the highest price since March. Silver also declined...


Copper Rises for 3rd Time in Four Days as Metal Inventory Drops


Feb. 23 (Bloomberg) -- Copper prices rose for the third time in four sessions after inventories of the metal dropped, raising speculation that demand may rebound...


Corn, Soybeans Rise as Cheap U.S. Crops May Boost Export Demand


Feb. 23 (Bloomberg) -- Corn rose from a 10-week low and soybeans gained for the first time in nine sessions on speculation that cheaper U.S. supplies will spur import purchases.


Cotton Falls as Plunging Equities Signal Deteriorating Economy

Feb. 23 (Bloomberg) -- Cotton futures fell as sliding global equities triggered mounting concerns that the deteriorating economy will erode use of the fiber and other commodities.


Coffee Prices Rebound as Concerns Ease That Demand May Decline


Feb. 23 (Bloomberg) -- Coffee prices rose the most in more than two weeks as concerns eased that the U.S. financial industry may collapse and destroy demand for raw materials.

Friday, February 20, 2009

"Show me the Mao's!" China goes shopping



Since the inception of this site a major goal has been to inform and sometimes personally analyze China's growing commodity demand and increasing cooperation with emerging markets (particularly South America).


If your interested in the topic Andy Hoffman, of Canada's, Globeandmail wrote a good article today worth your time. Below I've copy and pasted a few paragraphs from the article to summarize it. You can Click here or scroll to the end of this post to access the full article from the Globeandmail.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Flush with cash at a time when most countries and corporations are struggling to gain access capital, the Asian economic superpower has spent nearly $60-billion (U.S.) in less than a week in a series of deals that will secure a long-term supply of iron ore, copper, zinc and oil.

"Cash is king and China has lots of it," said Egizio Bianchini, global head of metals and mining at BMO Nesbitt Burns, which in the past, has represented state-owned Chinese firms in several mining deals.

"China is looking and saying 'We don't have a lot of competition here and we have ready cash.' [For almost everyone else] there is no public debt market and no public equity market," he said.

Desperate for financing amid stalled capital markets and investor abandonment of the sector, resource producers are turning to China for a commodity it has in spades: ready money.

Yesterday, Brazil signed a deal to supply China with 100,000 to 160,000 barrels of oil a day in exchange for billions of dollars of investment. Under the agreement signed in Brasilia, state-owned China Development Bank will provide financing to Brazil's state-run energy company Petrobras to develop its massive oil reserves.


Click here to access the full article from the globeandmail


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Links to recent posts on this topic from
ChinaSouthAmerica: News and Analysis
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

China's metals move a bright spot for sector
-- Feb 13

China-South America -- China pursues Latin America ties -- Feb 9

China-Mexico: Sinopec competes against Schlumberger Ltd and Halliburton Co. for drilling contracts in Mexico - Feb 5

News line: commodities in focus - Feb 2

Emerging Markets' Presence Grows at Davos Economic Forum - Jan 30

China goes shopping for commodities
- Jan 7


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Saturday, February 7, 2009

Venezuelans turn out in the thousands to protest Chavez reelection

Caracas was lined with people this Saturday as thousands of Venezuelans turned out ahead of the February 15th referendum to protest against the potential end to presidential term limits.

Venezuelan society remains polarized down the middle in terms of those who support Chavez and those who oppose him. However, past attempts by Chavez to change the constitution in order for him to be allowed to run for reelection in 2012 and beyond have failed.


Manifestantes participaron en marcha contra la aprobación de la enmienda
constitucional del presidente Hugo Chávez en Caracas, 7 feb 2009.
REUTERS/Carlos Garcia Rawlins (VENEZUELA)

If one thing is certain, Latin Americans have had their share of "leaders for life." Even some ardent Chavistas think it's taking things a bit too far.

This is where it seems the opposition, particularly from the Universities are focusing their campaign, passing out pamphlets of a very interesting quote by Chavez's ideological buddy Simon Bolivar.

"Nothing is as dangerous as letting the same citizen remain in power for a long time."

~ Simon
Bolivar-- 19th century leader of Latin America's struggle for independence against Spain


Click here if you can read Spanish for the Reuters story this picture came from
Click here for a article in English about this weekends protests from AP

Thursday, February 5, 2009

China-Mexico: Sinopec competes against Schlumberger Ltd and Halliburton Co. for drilling contracts in Mexico

China's Sinopec Group has become the first Chinese oil company to venture into Mexico's energy industry. Sinopec is competing for two large drilling contracts in Mexico's Chicontepec oil basin according to Compranet, the procurement website of the Mexican Government.

According to this article from the Dow Jones Newswires you can access via Rigzone, "Even if Sinopec loses the upcoming tenders, the Chinese heavyweight appears to be taking a long-term approach in Mexico. Next week, Sinopec executives will give a presentation to state-run Petróleos Mexicanos on the company's land and offshore drilling equipment, said an industry executive familiar with the meeting."

Sinopec
has already expanded into markets in Africa, South America and Russia in order to ensure Chinese refining capacity and oil supplies. If Sinopec wins the bidding process this will be China's first major energy investments in Central America.

Officially Petroleos Mexicanos (PEMEX), the state oil company of Mexico maintains a monopoly on oil sales, thus Sinopec can only be hired as a service contractor. This means, Sinopec must see winning these bids as a sound investment.

PEMEX will in effect be paying the winner cash to develop and drill for oil on behalf of PEMEX. Recent reforms in the oil industry entitle PEMEX to offer incentives to contractors who finish their work ahead of schedule. All in all, Sinopec is hoping to generate a nice chunk of cash from pursuing this deal.

It also doesn't hurt Sinopec's image if it can win the bidding at a fair market price for a assets that both Schlumberger and Halliburton would like to get their hands on.

Wednesday, January 28, 2009

Special Report: Is the Grim Commodities Outlook Prices in? -- Bloomberg



Coverage from Sao Paulo, Brazil: Emerging Markets Dropped in Second Half, Morgan Stanley's Index Plunging 55% for the Year

Friday, January 9, 2009

South-South Cooperation -- Ecuador seeks $280 million credit line from Iran

Ecuador is reaching out to its new buddy, Iran for a credit line of $280 million usd to finance pipeline and other oil-sector related projects according to what Mining and Oil Minister Derlis Palacios told the Dow Jones Newswires yesterday (click here for the article, provided via Rigzone).

Senor Palacios seems confident Ecuador will get the money too. Stating in a telephone interview "We are asking for a credit line of $280 million, especially to invest in our pipelines. We are sure that this money will come."

This is all very intriguing. I must admit Correa has done some good for Ecuador and my opinions on him have personally evolved over the years, and in a positive way. However, messing around with Iran on the heels of months of intense fighting with foreign companies and THEN causing hysteria with the country's bonds will definitely reverberate for years to come in the international community.

Yes, it is true Ecuador probably would probably have a hard time securing a loan from any normal western financial institution and that it has all the right in the world to look elsewhere. I just question the path Correa and the political big whigs in Ecuador think is best for the future of Ecuador.

If the political situation changes and new leadership seeks to pursue a different path, one less antagonistic of the international community perhaps, it will be a hard process of re-affirming confidence after all of it.

However, if the world was fair I think Ecuador should be able to go ask Iran for a loan if it wants. They are in the end both developing countries that could probably benefit from cooperating with one another. Sadly we don't live in a fair world, and considering the degree to which Ecuador is connected to the international financial system, I think it should have thought a bit more carefully about its foreign policy in the last year or so.

Commodities in focus -- Copper rises in London trading as China begins to stockpile raw materials

The commodity sector has been hit hard by the global economic crisis, especially in terms of the speed of its decline. For much of 2008 as other equities faltered, shares of commodity and energy stocks seemed immune, many times leading the major US indices into the green despite poor performance in other sectors.

When markets began to tank between September – November this all changed. Year to date (2008), oil is down around 60%, copper 50%, natural gas 20%, etc. As commodities plummeted miners profits shrank, exploration slowed, new mining projects became unfeasible in light of depressed prices and speculators who had been relying on energy and raw materials as a safe investment or inflation hedge withdrew their money.

If the stimulus packages being enacted by governments around the world successfully help to re-invigorate the global financial system and we see a recovery in confidence and economic activity the recession may end sooner than expected. If this happens commodity demand will once again explode, especially considering how so many producers and explorers have scaled back their operations.

China is not oblivious to this. Much like China's logic behind securing resources in Africa to avoid supply disruptions, China is now concerned about supply disruptions that may occur if demand picks up.

Bloomberg and Reuters reported this morning that China's Reserve Bureau, the country's stockpiling agency, is buying aluminum. Analysts seem to think (and I agree in this situation) that if they are buying up aluminum at cheap prices, they will do the same for other metals.

“Aluminum inventory in warehouses monitored by the Shanghai Futures Exchange declined 18% in the past week, the largest decline since April 2007, figures from the exchange today showed. China’s Ministry of Land and Resources said two days ago the country would build emergency stockpiles of copper and other items to guard against potential supply disruptions.”

(click here to access the full article from Bloomberg, republished by the Mining Journal)

China is smart to do this, with the country's massive foreign reserves and depressed commodity prices it makes sense for them to stockpile the resources they need to ensure their development. China is worried about its slowing economy because of the potential for political unrest in bad economic times.

Considering the fact China continued to purchase commodities when they where selling at their recent historical highs, it must feel like shopping at a giant fire sale for the Chinese who can now scoop up a huge stockpile of raw materials and energy for depressed prices.

Friday, August 8, 2008

Copper, Oil Lead Decline as Global Growth Slows reports Bloomberg LP

Aug. 8 (Bloomberg) -- Copper and crude oil led a decline in commodities on concern that slower global economic growth will curb demand for raw materials.

Copper headed for its biggest weekly drop since March, crude oil fell to the lowest compared with closing prices since May and silver reached its cheapest since January. Italy's second-quarter gross domestic product unexpectedly shrank, the statistics office in Rome said today. Japan's economy probably contracted in the three months ended June, according to the median estimate of 25 economists surveyed by Bloomberg News.

``People understand that we might face a difficult two or three quarters ahead of us,'' said Christoph Eibl, who helps manage more than $1 billion of commodities at Tiberius Asset Management AG in Zug, Switzerland. ``Industrial-related commodities will not outperform.''

....................................

Click here to access the full story from Bloomberg LP

Sunday, July 20, 2008

Investors begin re-thinking oil positions in their portfolio's

http://www.todaysfinancialnews.com -- Quietly, hedge funds and company insiders are moving into position to profit from an imminent drop in oil prices. Find out where they invest.




http://www.todaysfinancialnews.com -- Despite temporary pullbacks, crude oil prices are again setting new historic record highs. But the beginnings of an alternate money flow are becoming visible.