Guide to Commodities 2013

The recent fortunes made by investors in rare earth metals and gold are just two shining examples of what an extremely profitable investment class commodities can be. From aluminum and platinum to zinc and silver, oil and gas to cocoa and wheat, this Guide to Commodities from the Economist Intelligence Unit is a comprehensive overview of the forces at work in the world of commodities.

The price volatility of so many commodities over the past decade has underlined their economic importance and how dependent we are on them: the price of gold has soared to new peaks (before tumbling in the last few weeks) as currencies have endured a crisis of confidence, demand from China has pushed metal prices up, instability in the Middle East and North Africa has had its effect on the oil price and food prices have been increasing in parallel with worries about whether there is enough to feed the world. Read the rest of Guide to Commodities 2013 » » »

The U.S. Natural Gas Story in 15 Charts

The story of U.S. natural gas gets referenced a lot but you may not know whats going on. Here are 15 charts that tell the story of the U.S. natural gas market which has been completely changed by the rise of horizontal drilling and hydraulic fracturing.

In the past few years, new technologies and cheaper costs allowed producers to access gas trapped in parts of the U.S. previously considered unreachable.

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The Carbon Benefits of Recycled Materials

The benefits of avoiding extraction and primary processing are usually significant, even when collection, transport and reprocessing of recycled material is taken into account.

An increasing range of recycled products are coming onto the market, such as glass, steel, aluminium, plastics and paper. Usually calculating the carbon benefit is reasonably straightforward. As the final products must perform to similar standards (whether from virgin or recycled materials) in order to compete in the market place, the carbon footprint during their ‘use phase’ will also be very similar.

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7 key factors for US reshoring

After making the case for reshoring in a previous article, PwC identified 7 key factors influencing potential US manufacturing resurgence. Obviously, labor cost is one of those factors but not the only one.

“Industrial manufacturers may increasingly rethink their U.S. strategies, including the merits of continuing to separate production and R&D and producing abroad and importing back to U.S. buyers. Depending on the industry, there may be considerable benefits to establishing regionalized supply chains and R&D facilities in the U.S.,” said Bob McCutcheon, PwC’s U.S. Industrial Products leader.

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Global steel consumption is recovering

In its Short Range Outlook published yesterday, the Worldsteel association estimates that steel consumption will rebound to 1.5 billion tonnes in 2014 but European demand will not exceed 144 million tonnes, representing less than 10% of global demand.

After an increase of only 1.2% in 2012, world steel consumption is expected to rebound by 2.9% in 2013 to 1,454 million tonnes (Mt), indicate the short-term outlook published by the Worldsteel association. 2012 was a difficult year for the steel industry, with apparent steel use increasing at the slowest rate since 2009 when demand declined by -6.5%, said Hans Jürgen Kerkhoff, President of the Economic Committee of the organization. The decline was mainly due to the eurozone where apparent steel use decreased by 9.3% to 140 Mt in 2012.

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Japan to launch first LNG futures market in 2015

Japan, the world’s biggest importer of LNG, pays about $18 per British thermal units, versus$10 in Europe and $3~4 in the U.S. It is tired of paying such a price for a resource that has become so important. So Japan is preparing to launch the first LNG futures market.

The low price in the U.S. is due to the shale gas boom in the country and to the fact that the gas does not need to be liquefied. In Europe, there are spot markets for LNG which constantly take into account the state of supply and demand.

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Shale gas blasts open world energy market

Unconventional treasure: Shale gas is trapped deep inside rock formations.

Shale gas is a new and abundant source of natural gas, trapped in rock formations. Oil companies have known about it for decades but always dismissed it because it was too expensive and difficult to extract.

In the past few years new technologies that pump water underground to fracture the rock and free the gas have been perfected. The breakthrough has opened a new frontier for the energy industry and turned long-held assumptions about the world’s dwindling supplies on their head.
via Shale gas blasts open world energy market on Propurchaser

Shale gas – Europe – The current situation

The energy revolution experienced by the United States for the past ten years will not come to Europe anytime soon. Members of the European Union are indeed very divided on the issue of the exploitation of non-conventional energy resources.

In November 2012, after 3 studies published earlier by the European Commission which concluded that Europe would not reach energy self-sufficiency, the European Parliament invited to comment on the development of shale gas, was unable to pass a binding resolution. In the end, the two resolutions adopted in Strasbourg just called for the Member States to exercise caution in this area because of environmental constraints.

A binding resolution encouraging to explore or exploit shale reserves would probably not have had a majority of votes because of many European MPs opposition, as risks associated with shale gas extraction are not perceived in the same way throughout Europe.

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Cutting Carbon in the Supply Chain

For many manufactured products, the majority of their carbon footprint comes from energy used in extracting, refining, processing, manufacturing and transportation.

There are several options for reducing the carbon footprint:
· redesign manufacturing process; use alternative raw materials and new technologies to find energy efficiency savings
· shorten supply chains; reduce CO2 from transport
· Use / purchase renewable energy; renewable energy produces (almost) zero carbon
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Propylene Prices Roller-Coaster Ride

Sky high and extremely volatile propylene prices are causing fits for buyers of many intermediate chemicals, coatings, and basic plastics such as polypropylene, nylon, ABS and polyurethane.

The forecast is for more volatility for the next two years and then improvement as significant new North American capacity to produce propylene directly from propane come on line.

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