Saturday, 20 Aug 2011
WA Today reported that the contagion might be global, but it seems Australia's two biggest exports are largely immune to the mayhem that has unfolded on markets in recent days.
Iron ore and coking coal prices have held firm at near record highs and experts said that they do not expect that to change any time soon.
UBS commodities analyst Mr Tom Price said the fact those commodities were typically sold by direct negotiation between producers and consumers helped ensure that prices were determined by fundamental supply and demand factors.
He said that ''There is very minimal speculative activity in these trades and so they are isolated from the very short term dramatic shifts that we've been seeing in global resource equities and commodity prices.”
He said that there would need to be longer-term negativity in global markets before there was any impact on iron ore and coal prices.
''The raw materials for steel are still secured largely under contracts, so you would need evidence that this market weakness would persist over several months before you would see a sustained decline in the value of iron ore and metallurgical coal. So we shouldn't expect any real shock to those two markets.''
That diagnosis bodes well for the Australian economy, which is expected to export close to $80 billion worth of iron ore and close to USD 50 billion worth of coking coal in the year to June 2012.
Similar confidence was expressed by analysts at Macquarie Research, who noted yesterday that prices for iron ore and coking coal had performed solidly in recent months, despite the middle of the calendar year being a traditionally weak period for those commodities.
Despite predicting a volatile period ahead for other metals, Macquarie analysts said iron ore loomed as a safe bet.
The note said that ''The more China-exposed commodities such as iron ore are likely to outperform their exchange-traded peers.”
(sourced WA Today)
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment