Good afternoon
not much action today in bonds or equities - US$ is strengthening again, as the world is watching events in Kore, Qatar and the G-20....Base metals and gold continue to see profit-taking, as copper stocks rise strongly again today. The market should get used to this...it´s happening every few month, and then stocks trickle down again!
Steel Rebar is trading near recent record highs - there seems to be pretty big, Chinese speculation in it again. Iron ore is trading at a very healthy 63 US$, and coking coal at a recent high of 153 US$/t . Even thermal managed to trickle above 80 US$/t again....All of this is pointing to a Chinese economy, which at least continues to bubble along.
Peak Resources - prices for Rare Earth continue to increase - not by leaps, but consistently. NdPr are now trading in the high 40ties, up by about 30% over the last 9 month. Once prices hit 60 US$ - and I have little doubt, that thy will this year or early next - their project becomes very interesting. I think we will need this price-level for the project to be financable. In teh emantime, the company is trying to add value by reducing costs, as well as by advancing their flurspat asset, which is part of the Rare Earth project, which could add meaningful revenue. Fluorspat is being used by cement producers, and is currently imported from Asia into Africa. A resource here would save meaningful transport costs for African cement producers in the order of 20$/t or more. Unsurpisingly, Lynas is moving in the right direction, by the way, driven by the positive outlook for Rare Earth.
The new, Tansanian legislation, which made headlines over the last few days, will probably only affect PEK in a limited way. Royalties will increase by 1% - hat´s for sure, but not too bad. Comapnies, which ahve had tax-concessions in the past, look like having to hand over 16.66% of their proejcts to the government - bad news for some, but Peak is not affected here. BUT there is one remaining uncertainty: The government wants to limit the export of concentrates. It remains to be seen, wheather PEK will be affected by this measure. The company will do some value add to their ore, but will NOT produce a finished product...we will have to wait for more detail...The stock has been weak lately - I believe and think, that all is in the price. Buy straw-hats in winter - I know, that I have said this before!!
Have a nice evening!
WS