Rare Earth Metals, Coal, and Copper – Uncertainty Still Reigns

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As we prepare to kick off our conference next Monday, we thought we should point at some happenings in commodity markets this week and what they might say about the broader outlook for prices heading into Q2 2012.

China’s Rare Earths Are Not So Rare

That was the headline of a Wall Street Journal opinion piece yesterday, tying up a week in which rare earths exports from China burst back onto the mainstream scene. As the Obama administration actively sought to start talks with China through the WTO to make them lift their restrictions, analysts and pundits alike wonder what this will actually do to prices — for the short- to medium-term, Morgan Stanley sees a seasonal pickup in demand in mid-2012, as Japan ups its imports, according to a recent report by the bank.

Coal and Power Sectors Not So Hot Right Now

Source: Wall Street Journal

“To the uninitiated, ‘dark spreads’ sound unpleasant—like ugly splotches found on mens’ shirts on a muggy day. And right now, they aren’t even fun for executives in the coal and power industries, especially as unseasonal warmth makes them sweat.” What a great lead from this article — the sweat is a direct result of low natural gas prices and low US electricity demand coming together to shrink margins for coal-fired power companies. Will natural gas prices stay this low forever?

Red (Metal) Scare

Copper prices rose in Q1 2012, but still lower compared to levels late last year, due in part to EU debt concerns and China’s waning demand for the red metal, but unsettling news out of Chile’s mines could get that supply-demand equation beating quickly again. Declining ore grades, reports the FT — not to mention perennial thorn-in-the-side of strike tensions — play a major role in the worrisome drops in copper production (“nearly 8 percent year-on-year in January, and by about 20 percent from December”).

Without a doubt, our expert speakers and panelists for Commodity EDGE will shed much more light next week onto how manufacturers can strategically avoid being stung by volatile commodity price trends, like the ones mentioned above.

If you’re already registered to attend — gold star. (Gold spot prices, incidentally, has been falling off, although physical gold ETF holdings reached new highs two weeks ago.)

If you’re not registered yet — why wait?

And if you can’t make it to Chicago next Monday or Tuesday, make sure to check in with here on the blog — we’ll be posting reports live from the conference!

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