Global prices of raw materials soar high

Global prices of raw materials soar high
‘Dr. Copper’ — so called because its widespread use means it often offers an accurate diagnosis of the global economy — has grabbed headlines this week when it topped $10,000 a ton. (Reuters)
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Updated 03 May 2021

Global prices of raw materials soar high

Global prices of raw materials soar high
  • Copper has hit a 10-year high, while tin has seen prices double in the last year

WASHINGTON: Global prices for raw materials are soaring thanks to a boom in demand due to the recovery from the COVID-19 downturn, coupled with logistical bottlenecks.

Copper in the past week hit a 10-year high. Bloomberg’s agriculture Commodity Price Index has climbed 22 percent so far this year to its highest level since 2016, while crude oil has risen 30 percent in the past year.

Lumber has tripled over the past 12 months, and the National Association of Homebuilders said that has added $36,000 to the cost of a new house.

Tin, used in electronic circuits, automotive components and batteries, also hit its highest level since 2011, as the price doubled in the past year. The reasons for these increases are varied.

For sugar, a shortage of shipping containers and bottlenecks at ports are pushing prices up, while corn, soybeans and wheat are also experiencing delivery problems.

For oil, global demand is accelerating with the reopening of economies following the pandemic shutdowns. The price of gasoline at the pump in the US has risen to $2.89 a gallon from $1.77 a year ago, according to the AAA, an automobile association. Bart Melek of TD Securities said the price of Brent crude “appears unstoppable” as the market is expecting demand to increase massively and stocks to be further reduced in the second half of the year. “US consumers are a major reason markets remain bullish,” Bjornar Tonhaugen of Rystad Energy said in an analysis.

The Chinese and US “locomotives” far outweigh the impact of the slowdown in India, which has been overwhelmed by a resurgence of COVID-19 infections, he said. “Dr. Copper” — so called because its widespread use means it often offers an accurate diagnosis of the global economy — has grabbed headlines this week when it topped $10,000 a ton.

The gains have been driven by strong Chinese demand as well as labor protests in Chile, impacting mines and ports. The weak US dollar also means it takes more American greenbacks to buy the same amount of metal.

The price of the red metal also benefits from a transition to clean energy technologies that use more copper, said Elijah Oliveros-Rosen of S&P Global Ratings.

“When you see strong expectations for growth, and that is driven by infrastructure and decarbonization, that is great for copper,” he told AFP.

Another factor is that investors see commodities futures contracts as an attractive alternative given the very low interest rates and modest profitability of Treasury bills, analysts say.

“There is a lot of extra money floating around in the market place,” said Michael Zuzolo of Global Commodity Analytics and Consulting.

The vagaries of the climate with drought in Latin America and the late frosts in Europe also have played a role in increasing agriculture.

Among the most spectacular, pork surged 51 percent in one year, the US Department of Agriculture said in its April report.

Risings prices already have started to reach consumers: The Fed’s preferred PCE inflation index rose 2.3 percent year-over-year in March, according to government data Friday.

And big consumer product manufacturers like Procter and Gamble, Kimberly-Clark and Coca-Cola have all announced plans to raise prices.


Emirates converts 16 passenger planes to carry cargo

Emirates converts 16 passenger planes to carry cargo
Updated 09 May 2021

Emirates converts 16 passenger planes to carry cargo

Emirates converts 16 passenger planes to carry cargo
  • It comes as some big airlines are faced with competing forces of supply and demand in the cabins and bellies of their aircraft

DUBAI: Emirates has converted 16 passenger planes to transport cargo and is also using some of its fleet to carry goods in the cabin.
Nabil Sultan, Emirates SkyCargo divisional senior vice president said the airline was studying its capacity, in an interview with Bloomberg TV on Sunday.
“So far we have converted 16 passenger aircraft to fully cargo flights,” he said. “We also use the remaining fleet, where we have put cargo in the main cabin, especially to move essential PPE goods and various other medical material.”
It comes as some big airlines are faced with competing forces of supply and demand in the cabins and bellies of their aircraft — as cargo volumes accelerate while at the same time passenger numbers remain subdued.
Earlier on Sunday Emirates said it would begin shipping aid for free into India to help fight the coronavirus.
It comes as air cargo demand has risen to its highest recorded level ever in the wake of the pandemic.


Turkish research group faces criminal charges over inflation data

Turkish research group faces criminal charges over inflation data
Updated 09 May 2021

Turkish research group faces criminal charges over inflation data

Turkish research group faces criminal charges over inflation data
  • The group started publishing its own inflation data in September amid claims from opposition parties that the official agency is under-reporting price increases

DUBAI: Turkey’s statistics agency filed a criminal complaint against a group of local researchers publishing alternative inflation data, Bloomberg reported.

The government body demanded ENAGroup, an independent inflation research group, be fined for “purposefully defaming” the official statistics institution and “misguiding public opinion,” according to documents seen by the news wire.
The group started publishing its own inflation data in September amid claims from opposition parties that the official agency is under-reporting price increases, Bloomberg said
ENAGroup’s inflation figures are higher than the official data. Its consumer price index rose 2.62 percent in April from a month earlier, more than double the 1.1 percent reported by the official agency. The group reported an annual inflation rate of 36.7 percent for 2020, Bloomberg reported.
Turkey’s Treasury and Finance Minister Lutfi Elvan said that the statistics agency filed a complaint against a group “for the first time in the history of the Turkish Republic.”
The group aims to “damage and discredit the Turkish Statistical Institute” by spreading misleading data that are used by opposition parties, Elvan said.

 


Abu Dhabi's ADNOC said to invite banks to pitch for bookrunner roles for drilling unit IPO

Abu Dhabi's ADNOC said to invite banks to pitch for bookrunner roles for drilling unit IPO
Updated 09 May 2021

Abu Dhabi's ADNOC said to invite banks to pitch for bookrunner roles for drilling unit IPO

Abu Dhabi's ADNOC said to invite banks to pitch for bookrunner roles for drilling unit IPO
  • ADNOC is planning to take the unit public in the third quarter
  • ADNOC Drilling owns and operates a large fleet of rigs

DUBAI: Abu Dhabi National Oil Co (ADNOC) has invited investment banks to pitch for bookrunner roles for the initial public offering of its drilling unit, two sources told Reuters on Sunday.
The oil giant invited a handful of international and local banks to take part in the process of the public share sale of ADNOC Drilling, which is due later this month, they said.
ADNOC is planning to take the unit public in the third quarter, they added. One of the sources previously said ADNOC could raise at least $1 billion from the share sale.
ADNOC, which supplies nearly 3 percent of global oil demand, declined to comment when contacted by Reuters on Sunday.
ADNOC Drilling owns and operates a large fleet of rigs, including 75 onshore rigs, 20 offshore jackup rigs, and 11 well water rigs, according to its website.
The drilling business is critical for ADNOC’s upstream operations, helping the oil company reach its production targets.
ADNOC Chief Executive Sultan Al-Jaber has been chief architect of the transformation strategy the company embarked on more than four years ago, building an investment team to monetise assets and raise funds from international private equity groups.
It is also planning to float Fertiglobe, a fertiliser joint venture with Dutch-listed chemical producer OCI later this year.


Google-backed Firefly comes to the Middle East after Abu Dhabi deal

Google-backed Firefly comes to the Middle East after Abu Dhabi deal
Updated 09 May 2021

Google-backed Firefly comes to the Middle East after Abu Dhabi deal

Google-backed Firefly comes to the Middle East after Abu Dhabi deal
  • IHC-owned Multiply Marketing Consultancy (MMC) acquired the minority stake in the company

DUBAI: A unit of Abu Dhabi’s International Holding Company (IHC) has acquired a stake in Google-backed Firefly, which provides street-level digital media on taxis and rideshare vehicles.
IHC-owned Multiply Marketing Consultancy (MMC) acquired the minority stake in the company, it said in a stock exchange filing on Sunday.
Firefly operates across major US cities, working with major taxi and rideshare companies to install advertising displays atop their vehicles.
The proprietary screens feature content based on location, and are Internet-enabled. The platform attracts millions of impressions per month, according to a statement.
The deal will expand the company’s operations in the Middle East, and will set up an office within MMC’s Abu Dhabi headquarters.
“Investments in our communications vertical ensure that our media teams are servicing our local clients with the latest, most innovative and analytically-precise technology available on the market,” MMC chief Samia Bouazza said.
Gulf governments are ramping up their technology investments in a regional race for supremacy in the sector which is seen as a critical path to economic diversification.
Firefly will become part of Multiply Group’s communications vertical, which includes global agency MMC, Viola, as well as other minority stakes in companies such as Yieldmo, a digital advertising and attention analytics company.


ADQ-owned Senaat offers to merge Arkan Building Materials with Emirates Steel

ADQ-owned Senaat offers to merge Arkan Building Materials with Emirates Steel
Updated 09 May 2021

ADQ-owned Senaat offers to merge Arkan Building Materials with Emirates Steel

ADQ-owned Senaat offers to merge Arkan Building Materials with Emirates Steel
  • The proposed deal implies an equity value for Arkan of about 1.4 billion dirhams

DUBAI: Abu Dhabi industrial conglomerate Senaat has submitted an offer to Arkan Building Materials to merge it with its own Emirates Steel unit.
Under the proposed deal, Emirates Steel would be transferred to Arkan in consideration of a convertible instrument which would on the closing of the deal convert to 5.1 billion ordinary shares at a fixed price of 0.798 dirhams per share in Arkan’s capital.
The proposed deal implies an equity value for Arkan of about 1.4 billion dirhams, the building materials company said in a filing to the Abu Dhabi stock exchange.
Post completion, ADQ-owned Senaat would own approximately 87.5 percent of the entire issued share capital of the combined group
Should an agreement be reached between the two parties, a general assembly meeting would consider approving the transaction during the second half of this year, Arkan said in the statement.
Emirates Steel is a leading integrated steel manufacturer in the Middle East region, based in Abu Dhabi.