Despite short-term weaknesses, oil and gold prices are up over the year so far. Gas prices, although only half their 2014 peak, may be finding a floor while coffee prices are strong. Meanwhile, domestic equities have moved sideways, while some Australian miners have surged. Business Advantage PNG’s monthly overview of commodity and financial markets.

Oil prices are showing signs of recovery, reducing the financial pressures on the global majors.

West Texas Intermediate is trading at US$45.24, reports PNG-based Kina Funds Management. This is down 8.4 per cent over the month, but up 23.4 per cent for the year.

Gas prices are weak in the short term, but are showing tentative signs of stability. Japan/Korea LNG prices are US$5.39 per million British Thermal Units (BTU), down 22.4 per cent on a year ago. According to infomine gas prices are 38 per cent below their level of five years ago.

Five year natural gas prices. Source: Infomine.com

Minerals

Gold is stronger, possibly because of growing concerns about the stability of the global financial system, particularly in the wake of Britain’s vote to exit the European Union.

According to Kina Funds Management, gold is trading at US$1329.30 an ounce, which is up 2.9 per cent for the month and 25.2 per cent for the year. According to the Bank of Papua New Guinea’s December Quarterly Economic Bulletin, PNG exported 52.3 tonnes of gold in 2015, at an average price of US$1161 per ounce.

The copper price is up 6.9 per cent over the month.

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Silver prices are strong at US$20.08 per ounce, which, although down 14.6 per cent over the month, is up 44.2 per cent over the year. One theory is that silver’s strength is because silver recycling is only 8 per cent of global jewellery demand, whereas gold recycling is 41 per cent of global jewellery demand.

In better news for PNG’s farmers, coffee prices, at US$148 a pound, are strong.

Other commodity prices are moving within a range. The copper price is up 6.9 per cent over the month, according to Kina, which equates with a 4.2 per cent rise for the year.

Agricultural commodities

Sustainable, traceable palm oil has become PNG’s largest agricultural export. Credit: NBPOL

Palm oil prices are in a holding pattern, according to Kina figures. They are down 5.1 per cent over the month, but up 0.4 per cent for the year.

Cocoa prices, at US$3085/mt (metric tonnes), are down 2.7 per cent over the month and 4.5 per cent for the year.

In better news for PNG’s farmers, coffee prices, at US$148 a pound, are strong. This is up 5.9 per cent for the month and 19.5 per cent for the year.

Equities

Domestic equities only listed on the Port Moresby Stock Exchange (POMSoX) have been weak when compared with PNG stocks listed in more than one domicile. The KSi Home Index (stocks listed only in PNG) is up 2.4 per cent over the month, but only 2.2 per cent for the year.

A particular standout is the dual-listed Newcrest Mining.

Meanwhile, the KSi index (which also includes dual-listed stocks) is up 1.3 per cent for the month and 35.5 per cent for the year.

A particular standout is the dual-listed Newcrest Mining. Despite its shares having fallen by 2.2 per cent over the month they are up 69.2 per cent for the year.

Bank South Pacific shares are up 3.1 per cent for the month and 10 per cent for the year.

Shares in dual-listed Oil Search, currently bidding to acquire InterOil, are up 6.3 per cent for the month and 20.9 per cent for the year.

Bank South Pacific shares are up 3.1 per cent for the month and 10 per cent for the year. Shares in Credit Corporation, which is about to appoint a new Chief Executive, are down 0.6 per cent for the month and 25.3 per cent for the year.

Meanwhile, Steamships Trading Company is up 2.1 per cent for the month on the Australian market but down 13.1 per cent for the year.

Six month Treasury Bills are trading at 4.72 per cent, while full year Bills are trading at 7.66 per cent.