PERTH (miningweekly.com) – The market capitalisation of Western Australia-listed companies decreased by 2.3% in May, closing the month at A$155.4-billion, advisory firm Deloitte said on Monday.
Pointing to its Western Australian Index, Deloitte noted that this decline followed a 4.2% decline in April, bringing the latest three months to a total decline of 4.6%.
“The Western Australian Index has suffered another loss as a result of the general downward trend in commodity prices. Notably, iron-ore fell 15.3% as China’s ports reached a record high since 2004 in terms of stockpile levels, and coking coal dropped by 18.9% as the supply impacts of Cyclone Debbie were found to be overestimated,” said Deloitte clients and markets partner for Western Australia, Tim Richards.
The price of iron-ore dropped 15.3% in May to $58/t, as a result of lacking sentiment surrounding growth outlook, and large stockpile levels existing in China, while the price of nickel fell by 3.5% from A$9 404/t to A$9 072/t on the back of reduced global demand and supply concerns.
Richards noted that demand from stainless steel mills in China had weakened, while there were concerns of oversupply generated from Indonesia and the Philippines.
Meanwhile, uranium prices saw gains in early 2017 owing to announced supply cuts in Kazakhstan, however, Richards said that the commodity was now experiencing some reversal of these gains with the uranium price falling 5.5% to $21.50/lb.
A new joint venture between Kazakhstan and China has been executed which will allow Kazakhstan to produce nuclear fuel for Chinese power plants in 2019.
Meanwhile, the price for natural gas is down 3.8% in May to $3.05 a million British Thermal Units of oil equivalent, owing to fears of oversupply with near-record production levels and further supplies emerging. The Permian basin on the Texas-New Mexico border is becoming a significant source of new natural gas with swelling output making it more difficult to control supply.
Coking coal also saw a decrease of 18.9% in prices to $155/t as the impact of Cyclone Debbie has begun to unwind and supply impacts have proven to be less dramatic than first expected.