Demand for mining stocks is strong, and broad, but still relatively selective.
Most stock and commodity indices are at or around 12-month highs; well known exceptions include Greece, Spain and Portugal. China is perhaps a lesser known exception of sorts; there stocks have been tripping along for months with equity investors remaining nervous over changes in domestic policy, and ongoing relative weakness in export markets.
The overall equation is increasingly ameliorated by China's growing internal consumer markets, which continue to grow as a "shock absorber", at least cushioning export demand softness. At the same time, demand in China's real economy remains firm, and continues to drive global demand for most commodities. At this fundamental level, China's economy remains robust, easily retaining its status as epicentre of the world economy.
SELECTED INDICES AND SPOTS
Among commodity markets, coal and iron ore continue to stand out as exceptional global subsectors. China has long been, and remains, the world's biggest miner of coal and iron ore, but for years has also ranked as a net importer of iron ore, and as of last year, of coal as well. Coking coal, a vital constituent in iron ore reduction, has done particularly well.
BHP Billiton, the world's biggest diversified resources group, and No 1 producer of seaborne coking coal, last month announced that it had settled contracts "with a range of customers throughout Europe, China, India and Japan", without confirming numbers, but probably around USD 200.00/tonne, 55% higher than prevailing contract rates applicable to 31 March 2010.
Coking coal prices rocketed to USD 300.00/tonne for the 2008-2009 season, and were then slashed to USD 129.00/tonne, the contract price applying to the end of last month. In the iron ore arena, seaborne prices have moved up, on a contract basis, to around USD 140.00/tonne, roughly 100% higher that the previous annual contract, and much in line with spot prices. Iron ore contracts have now been shortened from the long-established 12-month term.
Many other commodity and metal prices are running hard, with a good number up around 12-month highs, and some even at multi-year highs. Platinum has been a particular interest of late, underpinning very strong performances among platinum stocks, especially those ranked as well-established producers....MUCH MORE, including price action on the top 100.