11 December - Markets Wrap - Johan Maree - ABSA Capital
CNBC Africa
Transcript
Johan Marie, commodities structuring Absa Capital. Johan, thank you very much for your time today. It's quite interesting. We had very good data that came through from China perhaps showing that the Chinese economy is very much on track to a sustainable recovery. Are you convinced and is this going to keep commodity prices higher? Yes, absolutely. Um most certainly on the on the macroeconomic because you know one of the things has been there's been all this buying in the first half of this year on specifically copper and the concern was is there real demand behind it or is it pure stimulus? Um the data clearly seem to indicate that there is actual activity going on. You know we had increased copper surprise copper imports for November on the back of also increased uh domestic production. So that see you know that seems to indicate there's real demand there. What about reports saying that we're seeing a lot of industrial overcapacity in China? Does that not create some concern? Well this doesn't seem to be the case. you know, you would expect that you would either have lots of domestic production um or imports, but both, you know, there has to be demand somewhere to use all that metal and that seems to be the case. And then also the news on the, you know, they're going to commit further to the stimulus and that's going to be supportive to we think cars and household goods. And on the car side, obviously that filters through the commodities, zinc, aluminium, lead. So from that point of view, most certainly supportive bullish. What about all the worries that have emerged from Dubai? because obviously we know that property sector very key in that region and obviously the construction sector using some of those key base metals as well. Well, it it has been a concern on the market and you know we have seen you know markets reacting negatively to that. Um although I think Dubai is more of a general economic concern um and time will tell how much of that is going to filter through to the the rest of the world but it had an impact on prices. You could see that you know going down uh some move away from risky assets. Um but I think on the global scale I don't think the concern is there that's going going to affect the global market and the commodities. Oil price has also been on the decline over the last couple of weeks. It's interesting because we saw it very close to 80. Now it's very close to $70 a barrel and we know there was a lot of speculation involved in that and pushing the oil price higher towards $80 a barrel. Do you think fundamental factors are playing bigger role now? Uh no, we think it's it's it's just again a move away from from from risky assets to some to some extent and short-term we had stock figures from the US this week come out that you know you had an increase in product stocks. Um so that's you know that is bearish for prices but we think it's shortterm. Um we still see $70 as being the sort of flaw in the market um for two reasons. Uh the one being that that is where on the long term we think the market needs prices to be to stimulate new investment. Um and also just from a current supply demand uh picture we you know we think we don't think it's um uh you know the picture have changed. You could see the market trading shortterm through 70 down. Of course you could do that but we think the 70 is going to be the floor. Coal obviously under the spotlight considering the fact that Eskim is very much reliance on coal for electricity and electricity tariffs also set to rise. Coal prices have also been doing relatively well. What is your forecast for coal? Uh well coal is very interesting because you know whereas the rest of commod all commodities have over this year traded up quite significantly. Coal has not done that as much. The price has recovered over the past few weeks and now has traded down a little bit. Again what is interesting in the coal market is the forward prices are much much higher than the current spot prices. Um so we currently have lots of coal around. You know there's there's lots of stocks around. Um, but as you see economic demand filtering through and those stocks start to be worked through, you you're going to see upward push on prices as well. Platinum hit $1,500 an ounce last week and obviously uh much softer this week. Really going in tandem with the likes of the gold price also coming under slight pressure. Uh looking at platinum, we know it's all about industrial demand, but also on the other end uh we've got jewelry demand really coming through from India and from China as well. Yes. Yeah. know we've seen that we've seen platinum prices recently being supported both by ETF and the promise of another ETF coming through in the in the US um and also from investors um and then anticipation of demand that needs to come through and in the background you know there's always the concern about South African industrial action with us being such a you know prominent supplier producer of platinum quickly gold where do you see it going from here we as Wayne Mccary said earlier today is probably the last real trading day uh for 2009 N. Do you think we'll see gold at these levels above $1,100 an ounce uh until we hit 2010? Uh I think it's possible. I I I would expect the probably it being rangebound for now. We've had this big rise in gold. We had what I think is a very very healthy profit taking. Um we going to have reduced liquidity and that of course could could cause movement the gold price. But um I think going towards the end of the year we're going to sit somewhere between one one one and one