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    International Trade Driver

    Uploaded by

    Komal Singh
    This document summarizes key drivers affecting global trade in minerals during and after the Global Financial Crisis (GFC). It discusses factors influencing demand and supply, including differing growth rates between developed and developing economies. Price is determined through negotiations considering arbitrage opportunities, affordability limits, and domestic production costs. Important indicators of economic activity mentioned are Turkish scrap metal prices and urbanization rates, which show continuing growth in developing nations. Overall the document outlines structural factors like urbanization and policy that impact two-speed global growth patterns in China versus other countries.

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    Download as PDF, TXT or read online from Scribd

    International Trade Driver

    Uploaded by

    Komal Singh
    34 views10 pages
    This document summarizes key drivers affecting global trade in minerals during and after the Global Financial Crisis (GFC). It discusses factors influencing demand and supply, including differing growth rates between developed and developing economies. Price is determined through negotiations considering arbitrage opportunities, affordability limits, and domestic production costs. Important indicators of economic activity mentioned are Turkish scrap metal prices and urbanization rates, which show continuing growth in developing nations. Overall the document outlines structural factors like urbanization and policy that impact two-speed global growth patterns in China versus other countries.

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    This document summarizes key drivers affecting global trade in minerals during and after the Global Financial Crisis (GFC). It discusses factors influencing demand and supply, including differing growth rates between developed and developing economies. Price is determined through negotiations considering arbitrage opportunities, affordability limits, and domestic production costs. Important indicators of economic activity mentioned are Turkish scrap metal prices and urbanization rates, which show continuing growth in developing nations. Overall the document outlines structural factors like urbanization and policy that impact two-speed global growth patterns in China versus other countries.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    34 views10 pages

    International Trade Driver

    Uploaded by

    Komal Singh
    This document summarizes key drivers affecting global trade in minerals during and after the Global Financial Crisis (GFC). It discusses factors influencing demand and supply, including differing growth rates between developed and developing economies. Price is determined through negotiations considering arbitrage opportunities, affordability limits, and domestic production costs. Important indicators of economic activity mentioned are Turkish scrap metal prices and urbanization rates, which show continuing growth in developing nations. Overall the document outlines structural factors like urbanization and policy that impact two-speed global growth patterns in China versus other countries.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 10

    Drivers of Global Tradeeven in a GFC

    The impact of the GFC on global minerals trade


    (the critical themes & drivers affecting the GLOBAL economy)

    Melinda Moore CleanUp Commodities


    17 November 2011

    Demand - who wants what?

    World Steel

    Demand - who wants what?


    2010 vs 2005 global steel incremental consumption delta (mt)

    Push-Pull: Developed vs Developing

    o Growth or Contraction
    o Structural vs Cyclical drivers
    o Policy prescriptions / Fire-power
    ========> 2 tones / 2 speeds

    4Q08 global growth blip

    World Steel

    Supply who has what?


    Domestic Short or Longs?
    Operating Disruptions
    Weather

    Mechanical failures
    Labour disputes
    Grade declines & mine depletions

    Cost Curve Positioning


    CFR (transport), not FOB;
    Total, not Cash cost

    Investment Disruptions
    Macro conditions (risk-off)

    Nationalistic fervour (ownership)


    Political climate (taxes)
    Approvals processes (environment)

    Equipment / Labour shortages


    Bloomberg; Note: 1 Jan 08=100

    Pricing conflicts

    Price - Negotiating a worthy outcome


    China Thermal Coal Net trade

    60
    40
    20
    0
    -20
    -40
    -60

    Turnaround from
    Surplus to Deficit

    -80
    -100

    Arbitrage beneficiaries

    -120
    -140
    2005

    250

    2006

    2007

    2008

    2009

    Newcastle Thermal Coal (6700 Kcal) CFR price

    2010

    2011E

    China domestic spot price

    beware Commodity Strangulation

    200
    Arbitrage turnaround

    150
    100
    50
    0
    Jan 08

    Affordability not limitless

    Sep 08

    May 09

    Jan 10

    Sep 10

    May 11

    Indicators to Watch or Avoid


    WATCH
    Turkish Scrap price

    real economic activity

    AVOID
    Freight rates Baltic

    Dry Index

    US and EU capacity recovery rates

    Urbanisation Rate Comparisons


    Urbanisation Rates
    US
    Vietnam
    India
    China
    S Korea
    Japan
    0%

    10%

    20%

    30%

    Japan

    S Korea

    40%
    China

    50%
    India

    60%
    Vietnam

    70%
    US

    80%

    90%

    China vs ex-China growth patterns


    300

    world ex-China

    250

    300

    200

    250

    150

    200

    China

    150

    100

    100

    50

    50

    2010
    -50

    2015

    2020

    2025

    2030

    2035

    2040

    -50
    -100
    -150

    2010

    2015

    2020

    2025

    2030

    2035

    2040

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