Registered: May 2009
05-18-12 05:41 PM
Australian press calling the end of the resource boom
Written by Adam Button
May 18, 2012 at 15:18 GMT
Iron ore prices are falling and shares of BHP Biliton and Rio Tinto are down 16% and 10% each, since the beginning of May, notes a worrisome report in The Australian.
Ships laden with iron ore are at anchor in Chinese ports and in Singapore, waiting for buyers, as Chinese steel mills defer deliveries.
Even if China slows, it will take some time to filter through with projects worth $384 billion already underway (up 70% from last year). The risk is that the additional $260 billion in the planning phase is shelved.
Much of that planning is in natural gas projects. Canada and the US and stepping up in that space and Japan is looking to squeeze Australian prices.
Woodside Petroleum, Australia’s biggest LNG seller, expects the US export ban to be overturned and that US exports could pressure some local projects, especially coal-seam gas projects on the east coast.
The good news is that natural gas prices have been surging, up 42% since bottoming in April. The market loves to talk about oil but at the moment, nat gas is probably much more important because hundreds of billions of gas projects will be allocated in the next two years.