Commodities markets appear to have entered a holding pattern, with stability evident in the oil market and metals. Business Advantage PNG’s monthly overview of Papua New Guinea’s commodity and financial markets.

Oil prices are showing signs of  trading within a range. West Texas Intermediate is at US$52.42 a barrel, according to Kina Securities, which is down 1.1 per cent over the month and 2.4 per cent for the year. There is growing optimism that OPEC’s production cuts may stabilise the market.

Gas prices have eased slightly, having risen 34.6 per cent in the fourth quarter of 2016, according to Kina Securities. Japan/Korea LNG is trading at US$7.7 per million British Thermal Units (BTU).

‘Gold continues to find a floor after a period of profit taking.’

There is speculation that, should new US President Donald Trump implement policies that reduce American taxes and regulation, then US LNG cash costs will come down, having a flow-on downward effect on Asian spot LNG prices.

Spot LNG prices. Source: Platts

Minerals

Gold continues to find a floor after a period of profit taking. According to Kina Securities, it is trading at US$1204.90 an ounce, which is up 2 per cent for the month and 4.6 per cent for the year.

Silver prices are also stronger. They are up 8.1 per cent over the month, although only 6.5 per cent over the year, according to Kina. This represents a stabilisation this year, however. According to Kina, silver fell 16.8 per cent in the fourth quarter of 2016.

‘Cocoa prices, at US$2140 per million tonnes, are continuing to weaken in the short term.’

Copper is steady. The price is up 5.9 per cent for the month, according to Kina, and 4.8 per cent for the year. With the Ok Tedi mine coming back on stream, the signs for sound revenue generation from copper are positive.

Agricultural commodities

Cocoa prices, at US$2140 per metric tonne, are continuing to weaken in the short term. They are down 5.5 per cent over the month, although they are steady over the year, having recorded a rise of 0.7 per cent. Cocoa prices came off 23 per cent in the fourth quarter of 2016.

Coffee prices, by contrast, are strong. They are up 12.5 per cent for the month and 11.8 per cent for the year. This represents a rebound. Coffee was down 9.6 per cent in the fourth quarter of 2016, according to Kina.

‘Australia’s All Ordinaries Index was up 0.6 per cent over the month.’

Malaysian palm oil is steady. It is up 2.7 per cent for the month and 0.5 per cent for the year, according to Kina. The price rose 16 per cent in the last quarter of 2016.

Equities

The KSi Home Index (stocks listed only in PNG) was down 0.1 per cent over the month, and is steady over the year. The KSi index (which includes dual listed stocks) performed slightly worse over the month, falling by 0.3 per cent. It is down 1.1 per cent over the year, according to Kina.

Australia’s All Ordinaries Index was up 0.6 per cent over the month. The US Standard & Poors 500 was up 0.3 per cent over the month.

In terms of individual stocks, Kina Securities was up 3.8 per cent for the month and 2.9 per cent for the year. Steamships is down 4.5 per cent for both the last month and over the year.

Half-year Treasury Bills are trading at 4.72 per cent, while full-year Bills are trading at 7.79 per cent.