Mining services in peril as commodities super-cycle dies
The commodities “super-cycle” is dead. If anyone was still in doubt about whether the era of ever-rising prices driven by rapid Chinese growth was over, events of the past week have surely dispelled it, according to the Australian Financial Review.
The dollar rally after the Federal Reserve’s hints about tapering its “quantitative easing” program, together with fears about a liquidity crunch in China, have sent a ripple of fear through the commodities industry.
Most commodity prices have already fallen dramatically. Since their respective peaks in 2011, copper prices are down 35%, iron ore prices have fallen 40% and gold has tumbled 36%.
“People have generally been positioned for the slowdown in materials demand,” says Kamal Naqvi, head of commodity sales at Credit Suisse.
“But we’re getting towards the end of that particular trade. For metals to be a conviction short from here, clients are waiting on confirmation that demand is worse and/or that supply is better than people have been factoring in.”
Rio's copper and coal shipments held up
Rio Tinto has been blocked from exporting at two separate projects in developing nations that the company went into under former chief executive Tom Albanese, according to The Australian.
Rio confirmed yesterday its coking coal operations in Mozambique had stopped railing coal because of domestic security concerns, adding to bad news from Mongolia, where the government has delayed the start of shipments from its Oyu Tolgoi copper and gold mine by two weeks.
Tweaking mining tax ‘suicidal’
The resources industry has warned Kevin Rudd not to tamper with the mining tax, calling instead for a new compact that will secure the productivity gains needed to offset collapsing commodity prices, according to The Australian.
It was Rudd who warned the miners ahead of his 2010 dumping as prime minister that the Labor Party had a "very long memory", raising concerns that payback with a tougher and extended resources tax could be in the offing.
