This week we recorded another month of price movements on the MetalMiner IndX. Some were up (Renewables and Grain-Oriented Electrical Steel or GOES), some were down (Construction, Aluminum and Copper) but most of them were simply flat. Steadiness: The sister-kissing tie of metal prices. Nothing lost and nothing gained.
Aside from stressing the need to invent Core-Optimized Mechanical Electrical Steel so that we can have both COMES and GOES price indexes, what can we learn from this?
Well, for one thing, oil prices are still driving down most commodities. In rapidly economically collapsing Venezuela gasoline can now, thanks to government subsidies, be purchased for 2-cents a gallon. Before you book the next flight to Caracas, red gasoline cans in hand, remember that oil exports account for more than 50% of the country’s GDP. The subsidies that once helped everyday Venezuelans are now choking them as oil continues to not bring in the revenue necessary to run their country.
How bad are things in Venezuela? Standing in line is now a profession.
While oil prices did increase a bit this week, they are still far below $50 a barrel and my colleague, Stuart Burns, warns that this rally will be short-lived. Low oil prices are dragging down all commodities and metals are no exception. Read more