The BHP Group Ltd [ASX:BHP] released their quarterly activities report for the year ending 30 June 2021 today. The BHP share price today is down close to 2%…
Commodities are a vital part of the Aussie economy. And commodity stocks are heavily represented in the Aussie market, especially at the speculative end. The Rum Rebellion provides the latest news and updates on commodities so you have the information you need when Investing in Commodities.
Australia’s commodity exports are closely tied to China’s economy…
The Rum Rebellion looks at commodities for investment, money making opportunities, and to also show you what commodity prices are saying about global economic growth and the health of the Chinese economy.
When China slows, commodities take a hit. That has an impact on Australia, and flows through to the stock market and interest rate considerations. So we analyse commodities from a ‘holistic’ perspective, as well as highlight the individual investment opportunities when they arise.
At The Rum Rebellion, we are primarily interested in energy commodities and industrial commodities.
What are Australian industrial commodities used for?
With Australia’s most important commodity export being iron ore — this falls into industrial category.
Iron ore is used for making steel — which, to this day, remains the lifeblood of modern economies and a key barometer for their health.
Along with iron ore, Australia also exports significant amounts of aluminum, copper and nickel.
Aluminum has a huge range of uses which range from the transportation industry to packaging and building materials — so essentially an infrastructure commodity.
Copper is increasingly viewed as a tech metal — with electric vehicles (EVs) using significantly more copper than traditional automobiles.
Finally, nickel could be one of the critical metals for the coming li-ion battery boom as new types of batteries demand more of it.
Australian energy commodities and their destinations
Turning to energy commodities, these include oil, LNG, coal and even uranium.
ASX-listed oil stocks, like our largest oil company Woodside Petroleum Ltd [ASX:WPL], are frequently impacted by events in the Middle East, in particular OPEC production decisions.
Australian LNG producers like Santos Ltd [ASX:STO] may have a bright future ahead of them, as demand in the APAC region ramps up.
Coal remains a significant part of the Aussie economy, and despite the constant effort (in some political circles) to torpedo the Aussie coal industry — it plays a large role in our ability to maintain a trade surplus.
There’s two broad categories of coal — thermal coal and metallurgical coal.
Thermal coal is used to produce energy, while metallurgical coal is used in the production of steel and other metals.
Japan remains the largest importer of Australian thermal coal. China and India are the two main destinations for metallurgical coal.
Uranium is an outlier amongst this set of commodities as it is the most speculative.
But with China building up to 54 new reactors (11 being constructed and a further 43 planned) as we speak, a new uranium bull market could emerge.
Furthermore, the world invested $1.85 trillion in energy in 2018, so there is plenty of opportunity to be found in this sector.
We look for trends in global energy consumption to understand which companies are best suited to benefit from the massive amount of money that is spent on energy worldwide.
By reading this section of The Rum Rebellion, you can keep abreast of macro shifts in the world of commodities and the companies behind these moves. Stay up to date with the latest news on the commodities market in Australia…
But let me backtrack. As you know, oil prices collapsed during 2020 after all the lockdowns and border closures hit demand.
About 20 years ago, British Petroleum decided to rebrand. They shortened their name to BP and started using the tagline ‘Beyond Petroleum’. BP wanted to change their ‘big oil’ image and go greener.
Investing in the energy transition is one of the big opportunities out there for investors. It likely won’t be a linear path, but this is a megatrend taking shape…
Bitcoin [BTC] up, bitcoin down. Bitcoin dropped massively a couple weeks ago after hitting an all-time high of over $84,000. As I write this today (Friday), bitcoin is slightly up, with one coin at $49,385…
The market had a panic about the effect of inflationary pressures on commodity producers in particular.
The share price of Woodside Petroleum Ltd [ASX:WPL] is up 1.91%, trading at $22.95.WPL shares staged a recovery in November on ‘back to normal’ trade…
If a company can make itself more valuable by borrowing money to buy its own stock, maybe it could boost sales and profits by borrowing to buy its own products…
Located in Saudi Arabia’s Al Hasa province, Ghawar is the largest oilfield in the world. It’s huge. The oilfield, owned by Saudi Aramco, covers about 2,000 square miles. To put that in perspective, that’s roughly the size of Perth. But it’s also the world’s largest when it comes to both reserves and oil production. Ghawar … Read More