On today's blog:
- Will copper pay off for BHP?
- Tony Abbott’s mixed year on Twitter
- Oil is not the only factor in falling airfares
- Interesting reads from around the web
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1.40pm - Will copper pay off for BHP?
By Ric Spooner, chief market analyst, CMC Markets
With oil and iron ore under increasing pressure, BHP Billiton is turning to copper. Chief executive Andrew Mackenzie said yesterday that BHP expects copper demand to grow faster than iron ore demand as China makes the transition to greater reliance on domestic consumption. The transition will see China use a lot more electricity -- around a third of world copper production is used for electricity, mainly in wiring and transformers.
While copper hasn’t grabbed the headlines like iron ore and oil, it’s been no slouch in the volatility stakes. It had a bone-jarring descent to $US1.25 per pound following the global financial crisis. After that, China’s massive stimulus policy collided with a tightly supplied market, launching copper into the stratosphere at $US4.64 per pound in 2011. Since that peak copper prices have declined 36 per cent and currently sit just below $US3.
Many analysts are forecasting that copper will follow iron ore, moving to a supply surplus next year as mine production grows. As the chart below shows, copper has been drifting lower this year, though not at the same alarming rate as oil and iron ore. While a copper surplus is forecast for next year, it should be relatively minor and short-lived due to the dearth of major mining projects in the pipeline.
Chart followers are likely to have a couple of potential support levels on their copper watch list: one possibility is the completion of a ‘three drives to a low’ pattern. Copper is potentially now in the third and final drive lower. This has a habit of being the same size as the second drive lower. That implies a final move down to around $2.73. Another level to watch is the 61.8 per cent retracement of the post-GFC rally, which cuts in at $2.55.
11.40am - Tony Abbott’s mixed year on Twitter
Remember that time when the Prime Minister of Australia modelled a pair of RM Williams boots along with Japanese Prime Minister Shinzo Abe? Or when he gleefully tweeted about the repeal of the Carbon Tax only to have it torn to shreds on the Twittersphere?
Thanks to some handy analytics work from Twitter, we now know that these two instances, and a few others, were our Prime Minister’s most memorable and retweeted moments on Twitter. We also know that the number of accounts following Tony Abbott on Twitter grew by about 60 per cent in the past year -- which is not too surprising given it was his first year as Prime Minister. |
Here are the Prime Minister’s top five tweets of the year:
1. A leader photo. Given the international context to this, it’s no surprise this is Abbott’s most retweeted tweet.
2. A tribute to Phil Hughes. Goes to show, despite all the abuse Abbott endured on Twitter over the year, positive messages still have a greater resonance on social media than negative ones.
3. RM Williams advertising from our highest office.
4. The comments attached to this tweet aren’t pretty.
5. Little did Abbott know that this ‘watershed moment’ would continue to haunt the Coalition.
This Budget is a watershed moment when a bold, new Govt does what has to be done to set the nation on a better course. #Budget2014— Tony Abbott (@TonyAbbottMHR) May 13, 2014
10.30am - Oil is not the only factor in falling airfares
It’s inevitable, when a commodity like crude oil falls, our initial instinct is to look for what impact it will have on wider society.
Today, the International Air Travel Association has noted that lower oil prices will also pull down airfares in 2015. But it would be a mistake to assume that the price of oil is the only factor that determines the price of flights. Regardless of the oil price, airfares have fallen steadily over the past couple of decades.
And here’s another chart showing the average price of a return flight over the past couple of decades.
This doesn’t mean that the oil price has no impact on fares. Intense competition and the rise of budget airlines mean that any savings made are inevitably passed on to consumers.
9am - Interesting reads from around the web
After some not-so-light reading? Here’s the full transcript of The Australian Financial Review’s talk with RBA governor Glenn Stevens.
What could possibly go wrong? This start-up wants you to fly with strangers’ stuff in your luggage.
Bitcoin for rockstars: Why crypto-currency should be used to reinvent the way artists get paid.
Your boss is human too: What bosses gain by showing their vulnerabilities to their employees.
I sense a petition in the wings: Forget Target, Apple is still the biggest company censoring games.