Global Link Dump: 6.18.09

If steel prices are to rise globally, metallurgical and coking coal demand must show signs of a rebound. While coal prices have slumped across the board, steam coal prices have been more resilient in the face of the broad commodity sell-off. The good news for those looking for signs of life from the steel-making portion of the coal sector is that at least two major producers of the resource are seeing an uptick in demand:

http://www.metalbulletin.com/Article/2234312/Iron/AMM-Patriot-sees-met-coal-demand-picking-up.html

http://www.bloomberg.com/apps/news?pid=20601081&sid=a8iVJNOOTOK8

If you combine these two outlooks with the one below for iron ore, you get a decent fundamental case for a stabilization of steel demand.

http://www.theaustralian.news.com.au/story/0,25197,25641881-643,00.html

In the case of Patriot Coal's market optimism, it may just be a case of wishful thinking. After all, they have seen the company's shares drop by 35% since May 20^th in the face of an analyst downgrade, contract disputes, and the recent stock offering. If you are looking for a low debt company which has as much bad news baked into it as a fruit cake has bad fruit, take a look:

http://wallstnation.com/node/1584

http://finance.yahoo.com/news/Patriot-Coal-Announces-Public-prnews-4215097154.html?x=0&.v=1

For those still watching the Canadian Royalty Space, this blurb below about Harvest Energy Trust's takeover of Pegasus shows this sector still has a pulse. While Harvest has been roundly criticized for their acquisition of their Newfoundland refinery, the company has separated itself from the pack. Not only is the company the only integrated CRT in existence, but it has stabilized its business with the refining segment which has realized record margins in 2009.

http://www.iii.co.uk/news/?type=afxnews&articleid=7371933&subject=companies&action=article

http://stocks.investopedia.com/stock-analysis/2009/put-your-faith-in-energy-trusts-hte-zarff-pds-tlm0616.aspx

Staying in Canada, here is a quick hit on the CAPP conference and the 300 pound gorilla in the room. With the Suncor -Petro Canada merger in the books, Suncor is set to join Syncrude, formerly their biggest rival. It will be interesting to see how this meeting of the minds can improve the efficiency and competitiveness of the oil sands.

http://network.nationalpost.com/np/blogs/fpposted/archive/2009/06/15/caap-in-calgary-strange-bedfellows-at-syncrude.aspx

The two stories below highlight the ineffectiveness of businesses which have been aided by or taken over by the government. The case of Lloyd's should be a cautionary tale for those arguing that U.S. banks should not be allowed to return TARP money. The estimation that 230,000 (!) people have been added to the UK government's payroll due to bank nationalizations should be a wakeup call to tax payers here.

http://www.thisisscunthorpe.co.uk/news/Workers-dark-Lloyds/article-1088593-detail/article.html

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=a14f2c0b-8f37-404f-82cc-78b377ed8691

Interesting look at the weak dollar's impact on UK retail sales:

http://www.dofonline.co.uk/economy/barclays-sterling-recovery-helping-retail-060918.html

Even if you think the water demand story has been beaten to death, this article is a powerhouse. Clean water demand to TRIPLE in the next 20 years.  If that does not jump off the page at you, I do not know what will.

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/436856/1/.html

According to this article, India's official rate of inflation has dipped into the negative. To go from a 13-year high to a negative rate of inflation in a year's time is a fantastic turnaround. While we may be reaching an inflexion point for inflation globally, it is clear that global deleveraging is affecting pricing power everywhere.

http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/436803/1/.html

While the stimulus plans of China and the U.S. have grabbed all the headlines, those stimulus plans occurring in the emerging world are nothing to scoff at.  Thailand's stimulus package comes in at just over 3% of GDP.

http://www.businesstimes.com.sg/sub/news/story/0,4574,338102,00.html?

For those investors interested in the gold mining sector, the article below reiterates the importance of being extremely familiar with the countries in which these companies operate mines. Tax changes in Tanzania, a significant gold producer, will dampen margins and deter investment.

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=85099&sn=Detail

Lastly, an interesting look at the unintended consequences of the Rio-BHP deal and how they may flip the companies' forecasts on their head. I doubt Rio or BHP envisioned running into anti-monopoly roadblocks in China when they linked-up. After all, China is a very significant contributor to their growth projections.

http://www.mineweb.com/mineweb/view/mineweb/en/page39?oid=85052&sn=Detail

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