Why We Are in Secular Bull Market in Commodities

GAME OVER ! Amerika slow down karena persoalan internal housing dan subprime credit, China mulai mengerem laju pertumbuhan ekonominya supaya tidak overheating, apa masih berani mengharap harga2 komoditi naik terus ????? It has reached the peak of its parabolic trayectory!
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koreksi sampai 40% biasa kok … kalau ngak overheating itu kan maksudnya growthnya diperlambat .. masih ada growth kan? :-? idealnya China growthnya 7-8% aja biar sustainable … dan commodity price naiknya juga bisa sustainable :evil Jiangxi Copper, CNOOC, PetroChina, Chalco .. kutunggu anda-anda setelah koreksi :evil
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ENERGY PRICES CONTINUE UPWARD TREND\r\nby Joseph Dancy, LSGI Advisors, Inc.\r\nAdjunct Professor, SMU School of Law\r\nNovember 16, 2007\r\n\r\nAddThis Social Bookmarking Widget\r\n\r\n\r\nAs we have noted for several years now the supply and demand balance for both crude oil and natural gas remains bullish for energy sector investors. Last month the following events occurred in the sector that are of interest to investors:\r\n\r\n * Oil for heating use will cost customers nearly 22 percent more than they paid last winter according the U.S. Energy Information Administration. \r\n\r\n * "Prices of propane and heating oil have never been higher at the start of the heating season," said Jim O''Neal, energy analyst with Wisconsin’s Office of Energy Independence. He''s forecasting home heating oil costs to rise by 25% to 30% from last winter, and propane prices to rise by 10 to 15%. Prices of those fuels track closely with the price of crude oil, which touched a record above $90 a barrel\r\n\r\n * The Energy Information Administration projected the cost of heating with electricity will average 7.1 percent more than a year ago. Heating with natural gas will cost 10.1 percent more than in 2006.\r\n\r\n * China is rationing diesel at pump stations in at least four booming coastal provinces in the widest-scale rationing seen since 2003, as rising global oil prices hit output at loss-making Chinese refiners. "We are rationing. Supplies are getting short," said a sales executive with top refiner Sinopec Corp. \r\n\r\n * In an effort to ease the pressure of diesel shortages, China''s economic regulator announced an almost 10% increase in domestic gasoline and diesel prices, calling the move an "urgent step" needed to dampen demand and encourage refiners to ramp up production. The price hike is a means to alleviate the shortages in China as the worst fuel crisis in two years has spread to the capital and other inland areas.\r\n\r\n * Canadian natural gas output could skid by as much as 15 percent in the next two years because energy companies have cut back on drilling to cope with high costs, middling prices and a strong domestic currency, the country''s energy regulator said. The National Energy Board said gas delivery from Canada – the main source of imported supplies for the United States – could fall to 14.5 billion-15.8 billion cubic feet a day by 2009 from 17.1 bcfd at the end of 2006.\r\n\r\n * Leading figures from the Middle East oil industry added their voices to those warning that the world is struggling to sustain crude oil production. "There is a real problem - that supply may not be possible to increase beyond a certain level, say around 100 million barrels," Libya''s National Oil Corp chairman Shokri Ghanem said at an industry conference. "In some countries production is going down and we are not discovering any more of those huge oil wells that we used to discover in the Sixties or the Fifties" added Sadad al-Husseini, a key architect of Saudi Arabian energy production policy for more than a decade.
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THE "COMMODITY SUPER CYCLE"\r\nReady to Rumble in 2008\r\nby Gary Dorsch\r\nEditor, Global Money Trends Magazine\r\nJanuary 2, 2008\r\n\r\nAddThis Social Bookmarking Widget\r\n\r\n“A trend in motion, will stay in motion, until some major outside force, knocks it off its course.” After gyrating within a sideways trading range over the past 18-months, the “Commodity Super Cycle,” measured by the Dow Jones-AIG Commodity Index, (DJCI), resumed its upward course in the second half or 2007. Led by the agricultural, energy, and precious metal sectors, the DJCI closed at an all-time high.\r\n\r\nAccording to famed hedge-fund trader Jimmy Rogers, the 20th century has seen three secular bull-markets in commodities from 1906-1923, and from 1933-1955, and 1968-1982, spanning an average of 15-years. The current bull market for the DJCI is now six-years old, and Mr Rodgers thinks the “Commodity Super Cycle” has many more years to run, albeit with some nasty corrections along the way.\r\n\r\nThe latest commodities boom began at the end of 2001, when China’s industrial revolution was just starting. China’s voracious appetite for raw materials for its industrialization has made it the #1 consumer of copper, steel, and iron ore in the world, consuming more of theses metals than the United States and Japan combined, and ranking #2 in consumption of oil and energy products. And China’s population of 1.3 billion has become the world’s #1 consumer of soybeans.\r\n\r\nEvidence of an impressive bull-run is stacking up, with crude oil surging 60% to $96 per barrel in 2007, and tripling since late 2003. Platinum climbed 34% to an all-time record high of $1,550 /oz, and if the world’s 500 million cars were fitted with fuel cells, the world’s platinum supply would be exhausted in 15-years. Copper was a laggard, with a 10% gain, but is still five times higher since 2003, hitting a record $8,800 /ton in 2006, while lead and tin are now at historic highs. \r\n\r\nAgricultural commodities joined the party in 2007, with wheat futures in Chicago climbing +77%, as global demand outpaced supply, soybeans up +79%, corn up +16%, and rice futures were up +35 percent. A weaker US dollar makes American grain prices less expensive to buyers abroad, and US wheat exporters already have sold more than 90% of the 1.18 billion bushels the US Department of Agriculture expects will be exported during the whole marketing year, which ends in June 2008.\r\n\r\nRough rice futures in Chicago soared to all-time highs, led by strong export demand and weather-related Asian crop shortages in India, the world’s second-largest rice exporter, and in Vietnam, the third-largest shipper. Global rice supplies fell 6.5% in the fourth quarter alone to 72.1 million tons, and according to latest estimates, supplies are headed down to 50 million tons, the lowest level since 1983-84.\r\n\r\nFood prices are 18% higher in China from a year ago, and the Communist kingpins in Beijing, fear that runaway inflation could ignite social unrest. The price of pork, which forms the core of most Chinese diets, was up a staggering 56%. “We’re facing a grave situation,” said Ma Kai, the country’s top planner. China has a fifth of the world’s population, with 1.3 billion people using 7% of the world’s farmland.\r\n\r\nZheng Guogan, head of the State Meteorological Administration forecasts global warming will cut China’s annual grain harvest by up to 10 percent. That would mean about 50 million tons less grain in the current tight supply situation and a potential for further food inflation in world markets. “Given the tightened food supply in the international market, a decline in domestic grain production could lead to more price hikes,” said Song Tingmin, VP of the China National Association of Grain.\r\n\r\nThe US Department of Agriculture has also cut its estimate of world wheat stocks for 2007-08 to 112.4 million tons, a 30-year low. If sustained, sharply higher wheat prices will eventually work their way into the grocery aisle for bread, cereal, cookies and other products. Fearing a further rise in prices, India, Pakistan, Egypt, Morocco, Algeria, Indonesia and Iraq have all booked large cargoes of wheat.\r\n\r\nAnd it’s not just the Fed’s weak US dollar policy that is driving up agricultural prices to record highs these days. Growing Bio-fuel demand has pushed up corn and soybean prices, and creating a linkage with crude oil. Furthermore, the cost of transporting dry goods such as coal, iron ore, and grains overseas, as measured by the Baltic Dry Index, have doubled from a year ago. Higher transportations costs, by land or by sea, are expected to be eventually passed along to the final consumer. \r\n\r\nRiding on the wings of the “Commodity Super Cycle” and global inflation was the glittering Gold market, up 32% in 2007. Gold was energized by reckless central bankers and the explosive growth of the world’s money supply. In Australia, the M3 money supply rose 20.7% from a year ago, Brazil’s M3 +17%, Canada’s M3 +12.9%, China’s M2 +18.5%, the Euro zone’s M3 +12.3%, Hong Kong’s M3 +31.5%, India’s M3 +21.5%, and the USA’s M3 +15.8%, a 47-year high.\r\n\r\nChinese and Indian Imports fuel “Commodity Super Cycle” \r\n\r\nMaybe, the longevity of the “Commodity Super Cycle,” boils down to one simple equation. According to the latest population count by the United Nations, the world had 6.5 billion inhabitants in 2005, 380 million more than in 2000, or an annual gain of 76 million persons. By 2050, the world is expected to house 9.1 billion persons, assuming declining fertility rates. So a world of finite raw materials, along with an increasing population base, translates into higher commodity prices. China and India house one-third of the world’s population with 2.3 billion inhabitants. \r\n\r\nIn an ironic twist, China has become a victim of its own phenomenal success. China’s economy expanded at a blistering 11.5% last year, but was plagued with a 7% inflation rate, largely linked to the country’s voracious appetite for global commodities. China’s imports climbed 20.5% to $865.5 billion in the first 11-months of 2007, from the year earlier period, and Chinese demand effectively put a floor under the DJCI, whenever panicky commodity traders in London, New York, Tokyo, or Shanghai got the urge to turn paper profits into cash. \r\n\r\nTo combat consumer inflation, the People’s Bank of China (PBoC) has tightened its monetary policy, ordering banks to set aside 14.5% of their deposits as reserves, an all-time high. The PBoC also raised bank lending rates five times to 7.47%, and announced a special bond sale of 750 billion yuan to drain cash from the financial system. The latest tightening moves took some steam out of the Shanghai stock index, which still ended 97% higher last year, the world’s gold medal winner. \r\n\r\nThen on Dec 27th, China’s central bank signaled it would allow the yuan to appreciate faster in 2008, in a move designed to lower the cost of dollar denominated commodities imported from overseas. Yao Jingyuan, chief economist of the state statistics agency, explained, “The weakening dollar and rising global commodity prices would create inflationary pressures for China next year, but a quicker appreciation of the yuan would probably help offset some of those price increases.” \r\n\r\nBut a stronger yuan vs the US$ will also boost China’s purchasing power abroad, and could exert more upward pressure on commodity prices worldwide. And China must compete with India, the world’s second fastest growing economy, with one billion consumers for global commodities. India’s imports rose to $20.8 billion in October, up from $4.6 billion in February 2004, also supporting the commodity markets. \r\n\r\nInterestingly enough, India could face a supply shortfall of about 4-million tons of rice in 2008, threatening to turn the world’s largest exporter of rice into a net importer. With tight supplies of wheat this year, Indian demand for rice could grow to 96 million tons or higher, and above the rice crop of 92 million tons last year. India is also Asia’s third-largest oil consumer, and imported 9.25 million tons of crude oil in November, or 2.8 mil barrels per day, up 6.5% from a year ago.\r\n\r\nBernanke Fed Re-Ignites “Commodity Super Cycle” in 2007\r\n\r\nFor 24-months until June 2006, the Federal Reserve embarked on a long, but predictable road of lifting short-term US interest rates, to reach an unknown “neutral rate,” that would neither stimulate nor weaken the US economy. The Fed was also tracking the “Commodity Super Cycle” and appeared to have finally gotten ahead of the inflation curve with its last rate hike to 5.25% in June 2006. \r\n\r\n“The Fed will be vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained,” declared Fed chief Ben “B-52” Bernanke at the International Monetary Conference on June 6, 2006. “The Fed must continue to resist any tendency for increases in energy and commodity prices to become permanently embedded in core inflation,” he said, telegraphing the last rate hike to 5.25%. \r\n\r\nThe 2-year cycle of Fed rate hikes was the longest in a quarter of a century, and finally put a dent in the “Commodity Super Cycle.” Crude oil tumbled $30 per barrel, and gold fell $160 /oz in the second half of 2006. The Fed had finally corralled the “Commodity Super Cycle”, and put the fed funds rate on ice for 15-months. The Fed relied on other G-20 central banks to tighten their monetary policies to keep the “Commodity Super Cycle,” in check, while it sat on the sidelines. \r\n\r\nHowever, other G-20 central banks were reluctant to tighten their money spigots, and only lifted their lending rates in tiny baby-steps, that failed to rein-in double digit credit and money supply growth. Central bankers were clandestinely inflating their economies to prosperity, by pumping up stock markets with monetary steroids, and in turn, hoping to bolster consumer confidence and spending. \r\n\r\nHowever, the bursting the $1.8 trillion sub-prime credit bubble in the summer of 2007, rattled the Bernanke Fed into a series of rate cuts totaling 1% to 4.25%. The Fed’s aggressive rate cutting campaign knocked the US dollar index to 20-year lows, and ignited the fastest money supply growth in 47-years, with US M3 hitting an annualized 16% in November, while the narrower MZM money supply soared to +12.8% higher from a year earlier. \r\n\r\nBecause most international commodities are traded in US dollars, the Fed must defend the value of the US dollar in the foreign exchange market, with higher interest rates if necessary, to keep the “Commodity Super Cycle” in check. But with the Fed moving in the opposite direction, and slashing the fed funds rate to 4.25%, the US central bank let the inflation genie out of its bottle, awakening the “Commodity Super Cycle” from its 18-month siesta. \r\n\r\nThus, the finger of blame for global inflation points to the Bernanke Fed and the US Treasury, for engineering the devaluation of the US dollar in the second half of 2007. Traders should only trust the money that flows thru the commodity markets for real time indications of future inflation, and not government statistics, which are manipulated by apparatchniks and adopted as gospel by the mainstream media. \r\n\r\nMoney supply growth is explosive, at a time when inflation is rearing its ugly head across the globe, led by sharply higher food and energy prices. European and US central bankers are intellectually dishonest about food and energy prices, routinely subtracting the “essentials of life” from their inflation equations, reckoning that commodity price spikes are self-correcting, due to the laws of gravity, and shouldn’t be countered with higher interest rates. \r\n\r\nIn the US, producer prices were 7.7% higher in November from a year ago, the highest in 34-years. Consumer prices rose at an annual rate of 4.2% through the first 11-months of 2007, the most in 17-years, thanks to soaring food and energy prices. Yet remarkably, federal funds futures traders in Chicago are betting on a quarter-point Fed rate cut to 4.00% on January 30th, to bail out Wall Street bankers from massive losses in sub-prime mortgages, despite dangerously elevated inflation. \r\n\r\nThere’s a big difference between the way US households and the Fed view inflation. To the average household, food and energy prices are the most closely watched costs. To the Fed, food and energy are subject to cyclical swings and ignored. “If inflation expectations are well anchored, changes in energy and food prices should have relatively little influence on core inflation,” Fed chief Ben “B-52” Bernanke told the National Bureau of Economic Research on July 10th, 2007.\r\n\r\nSo far, investment banks and brokers have recognized $97 billion of losses, related to the collapse of the $1.8 trillion sub-prime mortgage market. That could just be the tip of the iceberg of bank write downs for 2008. But additional Fed rate cuts could weaken the US dollar, and unleash the fastest rate of inflation and money supply growth that the world has seen in decades, - leading to the “Stagflation” trap. \r\n\r\nEuropean Central Bank fuels Global Inflation\r\n\r\nUnder the leadership of Jean “Tricky” Trichet, the European Central Bank has veered far away from its monetarist roots and its original 4.5% growth target for Euro M3. Since Trichet got his hands on the printing presses in November 2003, the Euro M3 money supply has exploded from a 5% growth rate to an annualized 12.3% in October, its fastest in history, lifting the Euro zone’s inflation rate to a six-year high of 3.1%, and far above the ECB’s target of 2%.\r\n\r\nTrichet has immunized the Euro zone stock markets from record high oil prices with carefully calibrated dosages of monetary morphine. The ECB engineered an 11% Euro rally against the US dollar in 2007, by running the printing presses at a slightly slower pace than the Bernanke Fed. Still, North Sea Brent crude oil rose to a record 65 euros per barrel, and European wheat futures closed at 248 euros, posting a 68% gain on the Paris-based Euronext exchange. \r\n\r\nECB chief Trichet and his sidekick Bundesbank chief Axel Weber have forgotten the sound advice of the late ECB chief Wim Duisenberg, “Trying to use monetary policy to fine-tune economic activity or asset markets, or to gear it above a sustainable level will, in the long run, simply lead to rising inflation - not to faster economic growth,” Duisenberg warned on Sept 5, 2003, just before he retired from the ECB.\r\n\r\nWith Euro zone inflation getting out of control, Trichet and Weber are conducting “open-mouth” operations thru the media, talking tough and making bold threats, but taking no action to tighten monetary policy. European gold traders have seen through the ECB’s propaganda and empty rhetoric, and are bidding 570 euros for an ounce of gold, up 75% from just three years ago. \r\n\r\nWriting in Germany’s Bild am Sonntag newspaper on Dec 31st, Bundesbank chief Axel Weber said that high energy and food prices would keep inflation elevated through the first half of 2008, but warned European workers not to ask for higher wages to compensate for the higher cost of living. “The current, unusually high inflation rates in Germany and the Euro zone must not be the yardstick for the next wage round. A spike in prices as a result of excess wage rises can endanger medium-term price stability. We would act decisively against this,” he warned. \r\n\r\n“Our primary goal is to preserve price stability. We are alert and everybody must know that we will do whatever is needed to deliver price stability in the medium term and be credible in that delivery. The single needle in our compass is price stability,” warned ECB chief Trichet on Dec 14th. But alas, the ECB’s compass has been broken for three years, with Euro money and credit expanding at double digit rates. \r\n\r\nHow are we to interpret the ECB’s latest riddles, designed to keep commodity and gold speculators off balance. Would the ECB actually hike its repo rate to 4.25% to rein-in its money supply, when other G-7 central bankers in Canada, England, and the US are lowering their lending rates? That’s doubtful. Yet the ECB would look like a hawk, by simply resisting the temptation to follow the rate-cutting Bernanke Fed and the Bank of England, by leaving its repo rate unchanged at 4.00 percent. \r\n\r\nStill, “the persistence of the current inflation shock entails the serious risk that inflation expectations could become unhinged and our credibility as central bankers could be significantly damaged,” Bank of Spain chief Miguel Angel Fernandez Ordonez warned. Spain’s consumer price index soared to +4.1% in November. “We are monitoring the situation very closely, and are permanently alert. Central bankers, even the best ones, cannot prevent an increase of oil prices or other international commodities,” said Belgian central banker Guy Quaden on Dec 13th. \r\n\r\nThat’s music to the ears of global commodity traders, and why the world economy could be headed for hyper-inflation. “Central bankers always try to avoid their last big mistake. So every time there’s the threat of a contraction in the economy, they’ll over stimulate the economy, by printing too much money. The result will be a rising roller coaster of inflation, with each high and low being higher than the preceding one,” said Milton Friedman, the late Nobel monetarist. \r\n\r\n“Inflation is always and everywhere a monetary phenomenon. As the government increases the rate at which it prints money, the result is too much money chasing too few goods and services. Higher wages don’t cause inflation, and the whopping oil price increases between 1973 and 1980 didn’t cause the stagflation, - a stagnant economy with rising inflation. Rather, the oil price hikes were the form inflation took” from rapid money supply growth, Friedman and Anna Schwartz argued. \r\n\r\nGold is a Safe Haven during US Banking Crisis\r\n\r\nNowadays, bankers are so afraid to lend money to each other, that they prefer to park their excess cash in “safe haven” Treasury bills and notes, even at negative rates of return, after adjusting for inflation. Big banks are reluctant to lend money in the LIBOR market, because of suspicions that borrowers might be holding big undisclosed losses in toxic sub-prime mortgages. \r\n\r\nGlobal banks are also hoarding cash to plug future losses that must be written off their balance sheets in the year ahead. The fear factor in the banking system is measured by the TED spread, which is the difference for yields on US$ Libor rates (ie Eurodollar rates) and for US Treasury bills. Since August, there have been two eruptions in the TED spread that lifted US$ Libor rates to +210 basis points above 3-month Treasury bills rates, the highest since the 1987 stock market crash. \r\n\r\nGold has done a reasonable job of tracking widening credit spreads between Libor rates and Treasury bills, and acting as a safe haven in a time of risk-aversion in the stock markets. Yet the same sophisticated bankers that bought $1.8 trillion of toxic sub-prime mortgages over the past few years are now locking in 10-year bond yields below the inflation rate, even though hyper-inflation might lie on the horizon. \r\n\r\nWhen measured in “hard money” terms, the US Treasury’s 10-year Note lost 20% of its value compared to an ounce of gold since August 2007. Wouldn’t it make better sense to park excess cash in gold, rather than US Treasury IOU’s, during periods of double-digit money supply growth, and soaring commodities?\r\n\r\n\r\n© 2007 Gary Dorsch, SirChartsAlot, Inc.\r\nEditorial Archive\r\n\r\nCONTACT INFORMATION
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A Commodity-Specific Review of China Over 2007 With Predictions for 2008 By Interfax-China staff 04 Jan 2008 at 10:30 AM GMT-05:00 SHANGHAI (Interfax-China) – The year 2007 saw China taking centre stage on several fronts - industrial, political and economical. It was a year when Western media''s obsession with China reached fever pitch, fuelled by China''s growing influence in world affairs, and the rush by Western companies to grab a share of emerging markets. It was also a year when the Chinese government made its influence felt on the political arena. China''s huge foreign currency reserves, insatiable thirst for resources and status as the factory of the world meant foreign powers had to take notice. China also extended its influence in the third world in its drive to secure energy resources to maintain its rapidly expanding economy. China''s gross domestic product lifted by 11.5% year-on-year in the first three quarters of the year to RMB 16.6043 trillion ($2.2178 trillion), according to the National Bureau of Statistics. The country''s consumer price index rose 6.9% year-on-year in November, breaking a 10-year record, despite various policy attempts to cool economic growth. The People''s Bank of China, the country''s central bank, raised interest rates six times throughout 2007, and upped the domestic bank reserves ratio 10 times. The country also began to make use of its huge dollar reserves, securing more overseas investments such as its cash injection into Morgan Stanley. However, China''s successes and the upcoming 2008 Beijing Olympics have been overshadowed by foreign government backlashes to state-sponsored computer hacking and sub-standard products. In addition, China has been the target of numerous anti-dumping accusations by E.U. and U.S. manufacturers. For 2008, the Chinese government has said it will change its monetary policy from "moderately tight" to "tight", while its fiscal policy is expected to remain "prudent". With uncertainty in Western economies following the sub-prime crisis, and the price of oil hitting $100 per barrel, all eyes will be on China to see whether its growth is sustainable, and how it will weather any financial turmoil that may hit western economies. In this report, Interfax takes a look at the country''s leading industries - their performances in 2007 and what lies ahead this year, policy-wise and on the investment front. Will China''s economy continue to grow from strength to strength? What are the emerging hot investment sectors? What will the major developments be for 2008? Metals Prices of most industrial metals surged to all time highs in 2007, driven in large part by China, the world''s largest consumer and producer of metals. For 2008, China''s consumption of metals is expected to maintain its momentum due to strong anticipated economic growth, despite Beijing''s efforts to rein in expansion of most of the metals sectors. Iron Ore and Steel China, the world''s largest steel producer, drove iron ore prices and international dry bulk freight rates to historical highs in 2007, strengthening calls by international iron ore miners for higher iron ore benchmark prices in the 2008 contracts starting from April 1. Analysts predict iron ore prices for 2008 contracts will rise by up to 50% as the global supply of iron ore continues to lag behind China''s huge demand. Most Chinese steel mills saw profits grow in 2007 due to record steel product prices. However, steel mills were challenged by both the high cost of raw materials and the government''s controlling policies. The Chinese steel market is expected to stay bullish in 2008, supported by China''s firm economic growth and higher raw material prices. As 2008 advances, there will be more industry consolidation, which will be encouraged by the central government as it attempts to upgrade products and curb pollution and energy consumption. Base Metals Alumina prices increased by 50% in 2007, with profits of Chinese aluminium smelters set to be squeezed further in 2008 by energy costs. China''s aluminium consumption remained strong in 2007 and is expected to stay so through 2008, despite there being surplus capacity in the domestic aluminium market in the last two years. China''s refined copper output growth in 2007 was mainly down to major copper smelters, though expanding copper capacity tightened copper concentrate supplies. This weakened the power of Chinese smelters when negotiating benchmark annual copper concentrate treatment and refining charges (TC/RCs). The 2008 contracted TC/RCs granted for Chinese smelters were recently settled at $47.2 per tonne and 4.72 cents per pound, down 21% from 2007''s charges. The strong growth in copper demand in 2008 will soften the impact of economic slowdown in western countries on the copper market, causing copper prices to further increase in 2008. China''s huge nickel demand is set to boost global primary nickel consumption by 8.9% to 1.47 million tonnes in 2008 from 1.35 million tonnes in 2007, according to a prediction by the International Nickel Study Group (INSG). Shortage of the metal in China will remain through 2008. This will give impetus to plans by China''s Jinchuan Group, Asia''s largest nickel smelter, to raise funds through an IPO for overseas resource acquisitions. Zinc saw the biggest price drop among base metals on the London Metal Exchange during 2007, mainly due to China''s expansion of zinc capacity and exports in response to a price surge in 2006. This meant China, the world''s largest zinc producer, shifted from its net importer status to become a net exporter in 2007. The Shanghai Futures Exchange (SHFE) launched zinc futures trading on March 26, 2007, providing domestic zinc smelters a platform to hedge against losses caused by price fluctuations. Zinc futures benchmark prices fell by 52.83% from the peak of RMB 35,040 ($4,813.19) a tonne in May to RMB 16,530 ($2,270.60) a tonne in November 2007. Chinese lead smelters struggled to turn profits in 2007 despite the metal''s price reaching an all time high in 2007, the biggest gainer among base metals on the LME. The country''s 10% export tax levied on refined lead since June 1, 2007, led to supply shortages on the international market. Smelters ran significantly below capacity and mainly operated to supply domestic demand, as exports were no longer profitable. Gold The Shanghai Futures Exchange (SHFE) announced it would officially launch gold futures trading from Jan. 9, 2008, with the aim to feed growing investment demand. China''s gold mining and refining companies benefited from last year''s gold rally and accelerated their gold development programs both in China and overseas. Hong Kong-listed Zijin Mining, China''s top gold miner, recently announced its IPO plan to issue up to 1.5 billion A-shares in Shanghai in order to finance various mine development projects. The international gold spot price soared by 30% during 2007, the biggest annual gain since 1979, spurred by record high crude oil prices, concerns over recession and a record-low U.S. dollar. Experts from Goldman Sachs and Standard Chartered Bank said it is likely the U.S. dollar will strengthen in 2008. This would cause the price of gold, which is traded more when the dollar is low, to decline, though the drop in price would be tempered as supply remains lower than demand. Energy Prices spiked across China''s energy resources in 2007 due to robust domestic demand and supply shortfalls. China''s rising dependence on imports to meet domestic energy demands drove the country''s prices towards international levels. However, high inflation since the second quarter spurred the central government to stabilize energy prices on the domestic market, causing huge losses for the country''s refiners and power plants. Energy prices are expected to continue to rise in 2008 as imbalances in supply and demand continue. Oil China''s National Development and Reform Commission (NDRC) openly expressed its willingness to adopt a new oil product pricing mechanism that would peg domestic fuel prices to international crude levels at the beginning of 2007. However, such a linkage never happened as international crude oil prices continued to hit new highs. High crude costs and artificially low fuel retail prices left the country''s refiners few incentives to refine more than required, which snowballed into the most severe fuel crisis in a decade. As a result, the NDRC raised domestic fuel retail prices by around 10% per tonne from November in an effort to tame potential social unrest triggered by widespread fuel shortages. Natural Gas China raised ex-factory prices for natural gas by as much as RMB 400 ($54.95) per thousand cubic meters in mid-November, representing an increase of almost 35% from previous prices. The country''s government had previously pledged to only raise natural gas prices by a moderate 10% each year in order to gradually bring domestic prices in line with international prices. China National Petroleum Corp., the country''s dominant gas producer, recorded a 22% year-on-year increase in gas output last year. The country''s three leading energy companies continued to seek liquefied natural gas (LNG) supplies overseas to meet domestic demand but met with skyrocketing LNG prices on the international market. However, PetroChina was able to strike two long-term LNG deals from Australia in 2007. Coal The price of China''s 6,000-Kcal Datong prime blend coal rose by 18.08% on an annual basis in 2007 amid the country''s strong demand, high production costs and rising oil prices. It is estimated that China''s coal demand increased by 229 million tonnes while coal supply rose by around 215 million tonnes. Coal is still in relatively short supply in the country. The government continued eliminating small coalmines in 2007, shutting down 553 small-scale generators with a total capacity of 14,380 megawatts. The closures exceeded the government''s original target by 43%. The closure of small coalmines further added to supply shortages. Production costs also increased in 2007. Apart from levying paid utilization fees on coal exploitation in several provinces from October 2006, Shanxi Province started to levy new funds for local environmental protection activities in 2007. The strong negotiating position of coal companies allowed them to transfer rising production costs to downstream consumers, causing coal prices to rise. It is notable that China became a net coal importer for the first time in January of 2007, and returned to its net coal exporter status last July after the signing of Sino-Japan long-term coal contracts. The price of coal in China will continue to rise in 2008, and the country is likely to be a net coal importer for the majority of the year, the NDRC said in a report in December. Commodities Grain and soft commodities performed well in 2007, with some prices climbing to multi-year highs on the back of strong demand and dropping global inventories. Oil prices finally hit $100 a barrel, increasing focus on bio-fuel production. However, it became evident last year that bio-fuel development in China was competing with human and livestock food resources, particularly corn. Rising food prices in the past year helped drive inflation, which reached an 11-year high of over 6%. This led the government to take measures to cool the economy, including the auction of state stockpiled wheat and corn, and raising subsidies for farmers. However, it is doubtful that these measures will curb continued price growth in 2008 as production and labour costs continue to climb. Grains Though grain prices rose, the growth rate still lags behind prices of counterparts in international markets. The government''s release of stockpiled wheat, corn and rice last year temporarily helped to cool prices. Although China can essentially meet its own grain demand for the moment, the margin to breathe is less than comfortable. With 20% of the world''s population but only 7% of global farmland resources, the country''s grain supply capability is becoming increasingly vulnerable, due to pressures of a growing population. In 2007, urbanization eroded cultivatable land, on top of unexpected natural disasters like floods and the drought. Softs Soybean prices in China leapt over 70% in the past year. The country relies heavily on imports, which means prices are beyond the Chinese government''s control. The drought in soybean-rich northeastern China further fuelled domestic soybean price growth. China''s soybean prices will probably passively track international prices again in 2008. China''s cotton imports shrank sharply in 2007 as the government''s levy of sliding duties narrowed the price gap between domestic and overseas cotton. However, China remains the world''s largest cotton consumer and would still have roughly a domestic supply gap of 4 million tonnes that has to be filled by overseas supplies in 2008. A domestic bumper sugar harvest in the 2006/2007 season coupled with global sugar supply surplus put pressure on the Chinese sugar market in the past year. Thanks to the cyclical nature of sugarcane growth, China''s sugar output is expected to climb to a record 13.5 million tonnes for the 2007/2008 season, making sugar possibly the least valuable agricultural commodity for the country in 2008.
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di tahun 1980, populasi dunia 4.5 billion … di tahun 2006, populasi dunia 6.5 billion …. kali ini boom harga minyak akan melampaui boom sebelumnya.
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China-Australia Axis Turns on Mining, PM''s Mandarin (Update1) By William Mellor Enlarge Image/Details Jan. 4 (Bloomberg) – Andrew ``Twiggy'''' Forrest isn''t the most likely candidate to become the poster boy for Australia''s mining boom. His last big venture ended in disaster for many investors. U.S. bondholders who bet US$400 million on an Australian nickel mining company he founded in the 1990s, Anaconda Nickel Ltd., recouped only 26 cents on the dollar. Anglo American Plc, the world''s second-biggest mining company, fared even worse. It walked away with just 7 percent of its US$200 million investment in Forrest''s company. Today, Forrest, 46, has once again charmed investors, in Australia and beyond, this time with the promise that he''ll become one of the largest suppliers of iron ore to China. Leucadia National Corp., a New York-based holding company with interests ranging from wine to real estate, invested US$400 million for a 9.92 percent stake in his publicly traded Fortescue Metals Group Ltd. Russian steel billionaire Victor Rashnikov owns a 5.3 percent slice and plans to raise it above 15 percent. Birmingham, Alabama-based Harbert Management Corp. already owns 15.6 percent. Fortescue shares were the best performers in Australia''s benchmark index in 2007, rising almost sixfold. On Dec. 19, the company enacted a 10-for-1 share split. Forrest''s 36 percent stake in the company was worth 7.8 billion Australian dollars (US$6.9 billion) on Jan. 4 when the stock opened at A$7.70. So far, Fortescue hasn''t produced a single ounce of iron ore. `Feeding Frenzy'' ``There''s a feeding frenzy going on over Australian resources,'''' says David Parker, 42, director of the Chamber of Minerals and Energy in the state of Western Australia. The country''s economy has been soaring along with the global commodities boom. Emerging giants, led by China, are battling one another for a share of Australia''s natural resources to fuel their continuing economic expansion. Australia is the world''s No. 1 exporter of iron ore, coal and alumina, which is derived from bauxite. It ranks second in zinc and lead; third in gold, nickel and manganese; fourth in copper; and fifth in liquefied natural gas (LNG), according to the Australian Bureau of Agricultural and Resource Economics, a government agency. It also has the world''s biggest known uranium reserves and is the No. 1 producer of diamonds by volume. Australia may be riding a commodities super cycle in which prices will rise for decades, says Alan Heap, Sydney-based director of commodities analysis at Citigroup Inc. Per-capita steel consumption in China, with 1.3 billion people, is less than half that of other developing countries. That means it could take decades for the country''s commodities demand to slacken, he says. Ore Prices Triple Iron ore prices have tripled in the past five years. Gas prices are rising too. In September, PetroChina Co., the world''s biggest oil company, said it would buy as much as US$60 billion of Australian LNG at prices estimated to be three times those China''s Cnooc Ltd. agreed to pay in 2002. Previous predictions of a super cycle haven''t always proven correct. Australian resources fueled Japan''s industrialization in the 1960s and ‘'70s. Amid the euphoria, stocks such as Poseidon Nickel Ltd. soared to A$280 in February 1970 before plunging to A$39 the same year, when the company turned out to have less nickel than anticipated. ``It was a manic phase,’''' says Hans Kunnen, 53, who helps manage the equivalent of US$117 billion in equities at Sydney- based Colonial First State Global Asset Management, recalling that earlier boom. ``This time, the question is, Is it a super cycle or just another cycle that will end in tears?'''' Housing Costs Soar Some Australians are already suffering. Inflation hit 3.1 percent in 2007 – above the Reserve Bank of Australia''s mandated ceiling of 3 percent. The benchmark interest rate, meanwhile, jumped to 6.75 percent from 5.25 percent in the first quarter of 2005, boosting the cost of home mortgages. The average Australian family has to spend 36.6 percent of its income to keep a roof over its head, behind only New Zealand and the Netherlands among members of the Organization for Economic Cooperation and Development. The rise in interest rates was one reason voters dumped the country''s prime minister of 11 years, John Howard, 68, in a Nov. 24 general election and chose Labor Party leader Kevin Rudd instead. Rudd, 50, a former diplomat who speaks fluent Chinese, portrayed himself as better equipped to keep inflation and interest rates under control. Wary of China China, already Australia''s No. 1 minerals customer, has become its fourth-largest foreign investor as well, with A$42 billion of projects. Chinese companies have also expressed interest in buying Australian mining firms. On Dec. 7, Sinosteel Corp., China''s second-biggest iron ore trader, launched a A$1.2 billion bid for Perth-based Midwest Corp., trumping an earlier bid by Murchison Metals Ltd., a company backed by Japanese and Korean rivals. If successful, it would be the biggest overseas metals acquisition by a Chinese company. That makes some Australians wary. ``If an Australian company tried to become involved in a key aspect of the Chinese economy, the Chinese would block it,'''' says Barnaby Joyce, a senator who''s a member of the National Party, which governed with Howard''s Liberals until November. Joyce says he''ll demand that the country''s Foreign Investment Review Board intervene if Chinese government-linked companies try to acquire Australian assets. In 2001, the country blocked a bid by The Hague-based energy concern Royal Dutch Shell Plc to take over Woodside Petroleum Ltd., Australia''s biggest oil and gas company, citing national interest. `Hot Spot'' The Chinese pay as much as US$50 a metric ton less in shipping costs for iron ore they buy from Australia because of its relative proximity compared with, say, Brazil, according to the Baltic Exchange Ltd. ``Australia''s a hot spot – everyone wants to grab a deal,'''' says Moya Zhang, Chinese-born managing director of Reachco Ltd., a Sydney-based consulting firm that advises Chinese companies. ``Unlike resource-rich countries in places like Africa, Australia is also politically very stable and has a good investment environment.'''' The boom has been good for Australian investors and the economy. The benchmark S&P/ASX 200 Index almost doubled in the four years ended on Dec. 31 to 6,340 from 3,300 compared with a 32 percent rise in the Standard & Poor''s 500 Index. Australia now has the world''s fourth-largest fund management industry, with A$1 trillion of assets. Bottlenecks Gross domestic product grew 4.3 percent in the third quarter of 2007 compared with 2.6 percent a year earlier. Unemployment was hovering around a 33-year low at 4.5 percent in November, according to the Australian Bureau of Statistics. The Australian dollar, once derided as ``the Pacific peso,'''' almost doubled in value in six years, reaching a high of 93.6 cents against the U.S. dollar on Nov. 7 compared with a low of 48 cents in September 2001. There could be too much of a good thing. Bottlenecks in overcrowded ports and rail lines have sent costs of Australian minerals and energy soaring. The price of power station coal exported from the world''s largest thermal coal port, Newcastle, 100 miles (160 kilometers) north of Sydney, jumped 73 percent to US$89.69 in the week ended on Dec. 28 from US$51.84 a year earlier, according to the weekly GlobalCOAL Index. Rising prices could make shipping from Africa or Brazil comparatively more attractive, Citigroup''s Heap says, adding that the cost of mining iron ore in the Pilbara region of Western Australia has doubled. BHP Takeover Bid Melbourne-based BHP Billiton Ltd., the largest mining company in the world, cited potential cost savings as one of the reasons for its US$125 billion proposal to take over London-based competitor Rio Tinto Group. If the deal, which Rio is opposing, goes through, it would create the world''s fourth-biggest company, after PetroChina, Exxon Mobil Corp. and GE Co., with a market value of US$368 billion. BHP Chief Executive Officer Marius Kloppers is lobbying Rio shareholders. ``We are very patient people,'''' Kloppers, 45, said at the company''s annual meeting in Adelaide, Australia, on Nov. 28. The potential economies of scale are most evident in the Pilbara, a 500,000-square-kilometer (190,000-square-mile) region of northwestern Australia that holds most of Australia''s iron ore and natural gas deposits, and where the two companies have iron mines. The competing mines sit side by side in some places on the sun-scoured, rust-red landscape, so close together that miners can hear blasting from the rival camps. ``They call it the Iron Curtain,'''' says Parker of the Chamber of Minerals and Energy, gesturing out the window of an 18-seat aircraft as it makes a shuddering descent. ``It''s the dividing line between two great corporate empires.'''' Long Trains Once the iron ore is dug out of open-cut pits up to 3 kilometers wide, it''s loaded onto separate 2.5-kilometer-long trains and freighted 300 kilometers to the coast. BHP and Rio Tinto have separate railroads and ports that Kloppers says could be consolidated. ``Our customers will see more product, more quickly, at a lower cost,'''' Kloppers said at the company''s annual meeting. ``These two companies are worth more put together than they are apart.'''' Rio hasn''t ruled out accepting a higher bid. What BHP and Rio Tinto do agree on is that the industrialization of China will offer them growth opportunities for decades. BHP''s move on Rio is just one of a score of deals being proposed and struck around the outback. Billionaires from Australia, Russia, Ukraine and the U.S.; international fund managers; and Chinese, Indian, Japanese and Korean conglomerates are attempting to buy stakes, form joint ventures or win control of Australian mining companies. Mining Stocks Rise The rush for resources has driven up mining stocks. In 2007, BHP rose 59 percent to A$40.14 and Rio Tinto doubled in London to 5,317 pence. An index of nine small and medium-sized iron ore stocks tracked by Commonwealth Securities, the brokerage arm of Commonwealth Bank of Australia, soared 1,500 percent from January 2003 to November 2007. ``Even the technology boom of the late 1990s pales in comparison with the recent performance of the Australian iron ore sector,'''' says Craig James, 45, Commonwealth''s chief economist. ``And the tech boom was only built on ideas and concepts. With iron ore, it''s been something much more concrete: demand from China.'''' Chinese Investments Chinese companies are pouring money into deals to lock in supplies of natural resources. In September, Chinese President Hu Jintao witnessed the signing of a A$1.8 billion iron ore joint venture between Anshan Iron & Steel Group, the country''s third- biggest steel company, and Gindalbie Metals Ltd. to develop two iron ore projects in Western Australia. In December, Citic Pacific Ltd., the Hong Kong arm of China''s biggest state-owned investing company, said it would spend A$5.2 billion in the Pilbara region to export 27.6 million tons of iron pellets and concentrates annually for at least 25 years. Aluminum Corp. of China, the country''s biggest producer of the lightweight metal, in May won approval from local Aboriginal landowners to develop a A$3 billion bauxite mine and refinery at Aurukun, a remote community on Cape York, the northeastern tip of Australia that points toward Papua New Guinea. ``China is no longer interested in just being a buyer,'''' says John Saunders, chairman of Yilgarn Infrastructure Ltd., which has joined with five Chinese companies to bid for contracts to build a rail line and port worth A$3 billion to ship iron ore out of Australia. ``They want to control the means of production and the transportation infrastructure.'''' Fortescue''s Customers Chinese steelmakers and the government are even studying a joint bid for Rio Tinto to counter BHP''s offer, Chen Hanyu, a director at the resources office of Beijing-based Shougang Corp., the nation''s ninth-largest steelmaker, said in December. Fortescue Metals'' Forrest is well aware of China''s financial might. Fortescue counts 10 Chinese steelmakers, including its biggest, Baosteel Group Corp., among its future customers. In addition, Fortescue teamed up with Baosteel to jointly develop a mine in the Pilbara. Near the BHP and Rio Tinto iron sites in the Pilbara, Fortescue has secured 40,000 square kilometers of mining leases and is completing a mine, railway and port at a cost of A$2.7 billion. Forrest, the descendant of a pioneering Western Australian family that included the state''s first premier, says the concession will be able to produce and export 45 million tons a year to start with, rising eventually to 200 million tons – more than either BHP or Rio currently produces in the area. `Under-Explored'' Region ``It''s the world''s richest, most-under-explored mineral region,'''' Forrest said at a mining conference called the Diggers and Dealers in the outback gold mining city of Kalgoorlie in August. He declined to be interviewed for this article. In Perth, the Western Australian state capital, where Forrest and other Fortescue executives work in an open-plan office, a countdown clock ticks off the days, hours and minutes to May 15, when Forrest has promised shareholders and customers such as Baosteel that the first ore will be loaded. Once it does, Leucadia will start to receive 4 percent of the company''s revenue from two of its mines for the next 13 years. The Chinese face lots of competition for Australia''s mining assets, as Sinosteel''s bid for Midwest shows. Rival bidder Murchison Metals is backed by Japan''s Mitsubishi Corp. and South Korea''s Posco. Both Murchison and Midwest, which already has a joint venture with Sinosteel, are mining iron ore in the desert as far as 400 kilometers from the sea. Rail Lines Needed Whoever wins the day will remove competition to build a planned rail line and port via which iron ore can be shipped to China. ``You can have the best mine in the world, but without a railway and port, you have nothing,'''' says Paul Kopejtka, Murchison''s chairman. Russia and India are grabbing for Australia''s resources too. In September, President Vladimir Putin visited Australia and struck a deal with then Prime Minister Howard to buy uranium. The Russian deal is due to be completed this year. Australia in 2007 also agreed to sell uranium to China and India. Rudd''s new government supports uranium exports. In 2007, his Labor Party scrapped its policy of opposing new uranium mines. Australian miners are having trouble producing commodities fast enough to meet global demand. Transportation snafus mean Australia risks losing as much as A$7.9 billion in export revenue in the next decade if port and rail congestion can''t be resolved, the Bureau of Agricultural and Resource Economics forecast in 2007. Armadas Off Sydney Sunbathers on the golden beaches north of Sydney who once saw the occasional passing ship can now view an armada of bulk carriers that have to queue for as long as a month to enter the port of Newcastle. Coal is Australia''s most valuable export, bringing in A$23 billion in the financial year ended on June 30. On July 2, a record 79 ships were waiting in line to enter the port. BHP, Rio and Xstrata Plc are among the exporters affected. Components for mining equipment are in such short supply that tires for dump trucks and earthmovers, measuring up to 3 meters (10 feet) in diameter and normally selling for A$20,000 each, are fetching up to A$100,000 on the spot market. And a skills shortage means recruitment agencies are scouring the world to find mining professionals. ``There''s a dramatic need to create a labor pool,'''' says Jim Stitt, 60, managing director of Perth-based OSS International Recruitment, who says he''s currently searching for 1,600 mining professionals ranging from geologists to diesel mechanics – up from 400 in 2005 – to fill the void. Shortage of Workers Tracey Eckerman, 34, quit her job as a community relations officer five years ago to drive 230-ton Komatsu dump trucks inside Rio Tinto''s 250-meter-deep West Angelas mine in the Pilbara. She says she can earn as much as A$110,000 a year, almost three times what her friends working in administration make back in Perth. Mines working at full capacity, maintenance downtime and staffing shortages are increasing prices. In a single week in December, the price of iron ore arriving at China''s port of Beilun rose 4.2 percent to 1,500 yuan (US$203) a metric ton. That was four times the contract price, which doesn''t include shipping and insurance. Pricing Power BHP''s Asian and European customers fear its bid to take over Rio Tinto will give the world''s biggest miner even more power to dictate prices. BHP and Rio''s combined share of the market for iron ore would be 40 percent – the same share the Organization of Petroleum Exporting Countries has in the oil market. In November, the Brussels-based International Iron and Steel Institute, whose members include 19 of the world''s 20 biggest steelmakers, along with the China Iron and Steel Association, issued statements opposing the BHP deal. Some of Australia''s biggest fund managers remain optimistic that the resource boom will go on indefinitely despite the difficulties of getting goods to market and the pressures of inflation. ``We''re looking at a massive amount of demand,'''' says Shane Oliver, 47, who helps manage the equivalent of US$100 billion at AMP Capital Investors, a unit of Australia''s biggest life insurer, and is overweight on resources stocks. ``We are still not at the point where valuations are excessive.'''' Forrest likely would agree. Fortescue''s shares are soaring, and the company has yet to woo the big Australian investment funds. ``They''re all underweight on us,'''' says Executive Director of Operations Graeme Rowley, a former Royal Australian Air Force pilot and Vietnam veteran. Stock Split Rowley, 67, retired from a job at Rio in 2003 and bought shares in Fortescue for 8 Australian cents apiece when he joined it that same year. The stock was trading at A$59.50 on Dec. 18 before the 10-for-1 stock split a week later. By Jan. 4, Fortescue shares had risen a further 29 percent. The wariness about Forrest is evaporating, says Paul Xiradis, who helps manage A$7 billion at Ausbil Dexia Ltd. in Sydney, including Fortescue shares. ``There has been a lot of skepticism about what he could achieve, but he''s learned from the past,'''' Xiradis says. Whether investors'' faith in Forrest pays off depends on whether this Australian commodities explosion turns into the fabled super cycle or the frenzy fades.
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This year, China would be the largest exporter in the world, surpassing Germany :evil
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comodity kayaknya udah mau kelar. Kalau dilihat dari cycle…semuanya udah sampai di ujung wave 5. Beberapa ada yang melakukan extension dengan rsi yang cenderung melemah. Tadi pagi baca koran jawa pos. Lihat efek mini dari subprime morgate di cleveland. Gila bok….siapa sih yang bilang subprime gak contageous ?? comoditas..cepat atau lambat bakalan kena efek juga. Peduli amat dengan jim roger. Aku rasa sekarang lebih banyak profesional trader di komodity yang sideline dan siap-siap ambil posisi SHORT begitu support jebol Cara lihatnya gampang sih… GOLD Sedang membentuk pola dasyat pembunuh trader breakout. Ascending Wedge..pola distribusi paling mematikan. Mungkin saja pola Ascending Wendge ini bakalan terus berulang sampai tahun ini. Tapi outlook udah jelas.kalau 1100 gak lewat tahun ini..GOLD adalah BEARISH
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