By the time you read this, oil futures will have traded post the drone attack on Saudi oil facilities that occurred on Sunday. Yep. Who knows how high prices will spike following this incident. You…
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…
This is a tricky market. There is a battle between bulls and bears. Commodities are coming off the boil. Falling interest rates have inflated many asset prices beyond reasonable value.
The last time China explicitly devalued its currency, in August of 2015, the ASX 200 (see chart below) fell 14% over the following six months. The ASX Resources index fell a hefty 35%.
Good investors understand there is nuance in the market. What’s affecting one company in the retail sector may not impact others in the same way. That’s why I always consult the charts. They help to…
Is this the start of the fear? The Dow and S&P both plunged nearly 3% overnight. The NASDAQ sank 3.5%. Yesterday, the ASX 200 fell around 2%. It could lose the same again today.
The Aussie market is finally succumbing to a bit of economic reality. Although the pullback so far is nothing more than a minor correction within an ongoing bull market. That would be the bullish viewpoint.…
What I haven’t talked about so much is the silver price. But it’s now starting to get sucked into gold’s orbit. Overnight, the price of silver surged to a 12-month high in US dollars…
Well, you’re probably not surprised to hear that commodities in general are happy recipients of the central bank sponsored global surge in liquidity we’ve seen so far in 2019.
Physical gold is the only safe haven monetary asset that is not debt. That is, it doesn’t come with counterparty risk. When central banks decide it’s normal to create money at will to ‘monetise’ existing…
Coal is a pretty big deal. Without it, we’d be an economic basket case. Yet there is a growing and increasingly vocal group looking to undermine the coal industry. If they had their way, they…