Oil, LNG and gas prices are weaker but precious metals are slightly up. Business Advantage PNG’s monthly review of Papua New Guinea commodities and financial markets.

Twinza Oil jack-up rig Credit: Twinza Oil

According to Kina Securities, West Texas Intermediate (WTI) fell by 5.7 per cent over the month, although it is up by almost a quarter over the year to date. It is currently trading at US$56.6 (K192.34) a barrel, sharply down from last October, when it peaked at over US$75 (K254.87) a barrel.

LNG prices were also weak, according to Kina. LNG Japan/Korea fell by 5.5 per cent over the month and is down by 50.6 per cent over the year. However, demand from China remains strong. According to Oilprice.com, China imported 4.53 million tonnes (mt) of liquefied natural gas in June 2019, up 14.9 per year on year, according to data from the General Administration of Customs (GAC).

Precious metals prices have continued to show strength.

Gold was up 1.1 per cent for the month of July and has risen 11 per cent over the year to date, according to Kina. It is currently US$1,421.05 (K4829.15) an ounce. Gold buying by central banks in 2019 has persisted and remains the highest in years. The biggest buyer is Russia, which, after dumping most of its US Treasury holdings in 2018, has continued to aggressively convert its foreign reserves into the precious metal.

The silver price was the strongest mover. It was up 7.3 per cent over the month and is up 5.6 per cent for the year. It is trading at US$0.53 (K1.80) a gram.

Liquified Natural Gas netback prices. Credit: Australian Competition & Consumer Commission

Copper came off slightly. It was down 0.3 per cent over the month, according to Kina, but has risen 2.8 per cent over the year. It is currently US$2.70 (K9.18) a pound.

Agriculture

Agriculture prices were mixed. The palm oil price rose 5.6 per cent but is down 0.9 per cent for the year to date.

The cocoa price fell slightly. It was down 1.8 per cent for the month but is up 0.7 per cent for the year to date. It is currently US$2,424 (K8237.48) a metric tonne.

Coffee prices fell 4.6 per cent over the month to US$101 (K343.23) per pound. That’s down 1.2 per cent this year.

Equities

Domestic stocks did better than dual-listed stocks on the PNGX, formerly the Port Moresby Stock Exchange. The KSI Home Index (PNG-listed stocks only) rose 1.4 per cent over the month to 12,488.75. It is up 9.5 per cent for the year to date. By contrast, the KSI Index (which includes dual-listed stocks) fell 1.9 per cent over the month to 12,488.75. It is down 1.3 per cent for the year to date.

The Australian All Ordinaries Index rose 2.5 per cent over the month and is up 20.9 per cent this year. America’s S&P 500 had a monthly rise of 2.7 per cent and is up 19.8 per cent this year.

‘Interest rates are at a record low, which is why the equity market is at a record high,’ Plato Investment Management managing director Don Hamson told the Australian Financial Review this week.

The Kina was down 0.3 per cent over the month against the US dollar and is down 0.8 per cent in the year to date. The currency was steady against the Australian dollar and the yen, reports Kina.

Half-year Treasury Bills are 4.7 per cent, while full-year Bills are 6.85 per cent. Four-year government inscribed stock (2018-21) is yielding 8 per cent.

David Lawrence, Chairman of PNGX (formerly the Port Moresby Stock Exchange), will be speaking at the 2019 PNG Investment Conference in Sydney on 19 and 20 August. For more information, visit www.pnginvestmentconference.com.