BC Liberals have said that they will allow mining on Crown Land but not Parks.
This article is bullish for non ferrous metals. Enjoy, be 6 months in front of the crowd like me.
U.S. Manufacturing Slump May Ease Soon, Says Zurich's Raffan
2001-05-01 22:00 (New York)
Sydney, May 2 (Bloomberg) -- The first signs are emerging of
an end to the six-month-old recession in U.S. manufacturing
industry and metal prices should soon start rising, said Nick
Raffan, a fund manager at Zurich Scudder Investments in Sydney.
The rate at which U.S. demand for aluminum, copper and other
metals is declining is slowing, said Raffan, who works with
colleagues who manage more than $370 billion worldwide. This
slowing in the rate of decay is a leading indicator of a turn for
the better, he said.
``We feel that the worst is over,'' said Raffan, who helps
manage the resources stocks in Zurich's A$1.9 billion portfolio of
Australian equities. ``The companies that will really feel the
pickup first will be metal intensive or metal leveraged
companies,'' he said in an interview. He declined to name
companies, but metal producers include Phelps Dodge Corp. in the
U.S., Teck Corp. in Canada and M.I.M. Holdings Ltd. in Australia.
Statistics show that U.S. manufacturing industry has been
slumping since the middle of last year, ending an almost decade-
long expansion. Still, the rate of decline in new orders for
primary metals in the U.S., including new orders for steel, has
stopped accelerating, and the rate of decay has already reached
the worst levels seen in past slowdowns, Raffan said.
An index of manufacturing in the Chicago area, which includes
automakers, rebounded this month from a 19-year low in March. The
National Association of Purchasing Management-Chicago's monthly
index of regional manufacturing rose to 38.9 from 35 in March. A
number below 50 indicates contraction.
Second-Half Turnaround
``The market is forecasting a turnaround in the second half
of this year,'' he added. ``That's possible, though I think that
it would be more likely to be early next year. It takes perhaps
six months to go from the worst rates of decay back to positive
year-on-year figures.''
U.S. production of durable goods -- construction materials,
cars and other equipment -- fell in third and fourth quarters of
2000, the first consecutive declines since the period October 1990
to March 1991. Durable goods output fell in each of the five
months to the end of February.
``I would expect that to turn around in the next few
months,'' said Raffan. ``It will show up first in things like
orders for non-ferrous metals in America.
The NAPM factory index for all of the U.S. increased to 43.2
last month from 43.1 in March. Analysts had expected April's index
to rise to 44.
Reasons for Optimism
The April factory survey gave reasons for optimism.
Manufacturers reduced inventories at the fastest pace since
October 1996. At the same time, the indexes measuring production
and new orders rose for the third consecutive month.
The main danger to forecasts for a recovery is the U.S. power
crisis, Raffan said. Wholesale electricity prices rose as much as
10-fold last year in California, amid blackouts as generators
didn't keep up with demand.
``It's difficult to see how you can grow an economy quickly
when you have a shortage of power and very high-cost power,'' he
said. ``One has to imagine what happens if you cut interest rates,
increase money supply, and really push an economy where you
already have high power prices.''
The power shortage has helped sustain prices of some metals.
Aluminum has gained 3.4 percent on the London Metal Exchange over
the past 12 months, even as U.S. demand for the metal has slumped
about 25 percent. This is because high electricity prices have
caused many U.S. producers to close their plants.
Fallen Copper
The LME copper price has fallen 6.9 percent over the past six
months, reaching a one-year low in April, while zinc has declined
11 percent to the lowest prices in almost two years.
When speculators reverse their bets against metal prices,
``we should see a spike in some commodity prices,'' Raffan said.
``Commodity hedge funds, which really have to be ahead of the
curve ... would fairly soon have to think about their short
positions,'' he said.
Short-sellers borrow commodities or securities, and sell
them, hoping to profit by repurchasing the commodities or
securities later at a lower price and returning them to the
lender.
Speculators have been increasing the amount of copper they
have been selling short on the Comex division of the New York
Mercantile Exchange over the past eight months.
On June 27 the exchange reported the speculators were short
2,997 contracts, each to sell 25,000 pounds of copper. By April
17, the total short position had increased to 38,111 contracts,
the highest level in at least eight years, though it declined to
34,652 last week.
--Stephen Wisenthal in Brisbane (617) 3857-3026, or at
swisenthal@bloomberg.net, through the Sydney newsroom/kg
This article will also be good for copper eventually. All those electric motors in new vehicles will consume a lot of copper.
Ford Says Vehicles May Contribute to Global Warming (Update2)
(Adds Ford comment in ninth paragraph. Updates shares.)
Dearborn, Michigan, May 3 (Bloomberg) -- Ford Motor Co., the
second-largest automaker, said that cars and trucks may contribute
to global warming and created a team to begin looking for ways to
reduce emissions.
``The global temperature is rising and the evidence suggests
that the shift is being affected by human activity, including
emissions related to fossil fuels used for transportation,''
Chairman Bill Ford said today in the company's second annual
corporate citizenship report. ``We believe it is time to take
appropriate action.''
Legislators are pressing automakers to make vehicles more
fuel-efficient and pollute less. Automobile exhaust is a source of
carbon dioxide that environmentalists blame for trapping heat and
causing global warming. The building and use of Ford vehicles
produce an estimated 400 million metric tons of carbon dioxide
each year, the automaker said.
``It's a statement that challenges the politically convenient
30-year-old mentality that dominates much of Washington these
days,'' said Robert Massie, executive director of the Boston-based
Coalition for Environmentally Responsible Economies. ``All eyes
are now on how they're going to implement this extraordinary set
of goals.''
Ford's report last year said light trucks aren't as clean or
fuel-efficient as cars, and that it had no plan to retreat from
selling the highly profitable vehicles. The Dearborn, Michigan-
based automaker also said in the first report that it was working
to make sport utilities cleaner and safer.
In the latest report, Ford said it recognizes human rights as
critical to business, and will assess these issues at several
facilities.
The company's shares fell 42 cents to $28.83 in late morning
trading. They have risen 23 percent this year.
Fuel Savings Sought
Two U.S. senators introduced a bill this week that would
require automakers to boost fuel efficiency of light trucks by a
third, possibly saving 1 million gallons of oil a day and reducing
fuel imports by 10 percent. Pickups, minivans and sport utilities
would be required to average 27.5 miles a gallon by 2007 instead
of the current 20.7 miles a gallon.
``These issues are serious issues that we're going to have to
deal with,'' Martin Zimmerman, vice president of government
affairs for Ford, said on a conference call with reporters today.
He said Ford is working this year on developing a strategy to
address climate change, though ``we're not preaching what the
answer is because we don't know what the answer is yet.''
Ford said last year it planned to increase the fuel economy
of its sport-utility vehicles 25 percent over the next five years
in an effort to pre-empt tougher federal regulations.
General Motors Corp. plans to make full-size pickups powered
by a gasoline engine and electric motor in 2004, helping to boost
fuel efficiency 15 percent.
DaimlerChrysler AG has said it will sell a version of its
Dodge Durango sport-utility in 2003 powered by a gas engine and
electric motors, helping increase fuel economy by 20 percent.
DaimlerChrysler has said its fleet of cars and light trucks will
match or exceed the fuel economy of that of its full-scale
competitors.
--Rajiv Narayana in Detroit (248) 208-9965 or at
rnarayana@bloomberg.net, through the Chicago newsroom (312) 692-
3720/sgw |
