Commodities: PMIs: Strength in numbers:: Macquarie

Visit http://indiaer.blogspot.com/ for complete details �� ��


Commodities Comment
PMIs: Strength in numbers
Feature article
 The stronger-than-expected PMIs probably should not be a surprise, given
that they have exceed expectations for the best part of six months. These
data suggest that manufacturing will head into 2011 on a strong footing after
strong growth this year.


Latest news
 Base metals were stronger in Wednesday trading, as the solid PMI data from
around the world, better US employment and construction data and relative
calm in European debt markets pushed prices higher.
 The Macquarie Chinese consumer confidence survey for November suggests
that household economic confidence fell dramatically in the month, with a
strong increase in prices making a clear dent in confidence. Property
tightening has also contributed to the change in mood, with the index on
whether it was a good time to purchase a house falling to 47 from 61.
 PWCS disclosed plans to expand capacity at Newcastle, with coal producers
nominating for 153mt of throughput by 2014. To meet this demand, PWCS is
looking to secure planning approvals for a fourth terminal (T4), with delivery of
this terminal uncertain at this stage. In addition, PWCS is performing
feasibility work on further expansion of the Kooragang Island terminals under
existing planning approvals to take nameplate capacity up to 145mt. Current
capacity is 113mt, which should rise to 133mt by the end of 2011 given
current expansions under construction.
 At the McCloskey Asia Pacific Coal Outlook, a panel of Indonesian
producers expected Indonesian exports to be 260–290mt for 2010, rising
from 270–300mt in 2011. The figures are all higher than at this time last year,
when 2010 expectations ranged from 210mt to 250mt. Philip Gasteen from
Banpu estimates that 12mt of coal had been shipped from stockpiles in 2010.
Producers saw an increase in production next year, although some of this
production upside is slated for domestic consumption.

 At a briefing held by Salva Resources in London on Wednesday, Mark
Gresswell of Salva stated that Indian coal-fired power generation capacity
would rise from 83GW this year to 237GW by 2020. Moreover, plants
designed to run solely on imported coal could rise from 4GW to 44GW during
the same period. We expect India to overtake Japan as the single-largest
thermal coal importer by 2013, with its total thermal import demand close to
150mt by 2015 versus 75mt currently.

 Rio Tinto has taken another step towards expanding its Pilbara output, with
capital committed to expand the Brockman 4 mine from 22mt to 40mt per year
and the Western Turner Syncline mine from 6mt to 15mtpa. Rio plans to have
export capacity of 283mtpa by the end of 2013 versus 225mtpa currently. We
expect Rio to be exporting 330mtpa in the latter half of this decade.