Commodities in the Kamode

Commodities are breaking hard.  Who knows where they bounce, but it does feel a bit overdone here.  Note the chart illustrates when the CRB is this oversold — an RSI reading of around 20 — it sets up for a nice bounce.

The Wall Street Journal reported today resource companies are starting to question the commodity supercycle and some are pulling back on investments in emerging markets,

Signs are emerging that U.K.-listed miners are reassessing billions of dollars’ worth of expansion plans in response to a recent sharp fall in commodity prices and mutterings that a 13-year-long boom could be peaking.

The so-called commodities supercycle has largely been driven by Chinese demand. But a slowdown in the world’s second-largest economy has raised fears over whether commodities are in the middle of a correction or something more serious and long term…

The top five U.K.-listed mining companies—BHP Billiton, BHP -0.69% Rio Tinto, RIO -0.99% Anglo American, AAL.LN -3.93% Xstrata XTA.LN -4.80% and Glencore—have plans to spend around $200 billion on growth projects over the next five years, according to Liberum Capital.

Still, some miners on the FTSE 100 index are revisiting their aggressive expenditure plans.

Last week BHP Billiton, the world’s largest diversified miner by market value, said it will adjust its $80 billion, five-year capital-expenditure program while taking into account its cash-flow generation expectations.

Reports of Chinese consumers of commodities asking traders to defer cargos and defaulting on existing contracts has also added pressure on the complex.   Stay tuned.

(click here if chart is not observable)

This entry was posted in Black Swan Watch, BRICs, China, Commodities, Crude Oil and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.