Singapore Stock Market News

Commodites Strategy - Producers remain upbeat

StockFanatic
Publish date: Wed, 04 Sep 2013, 12:41 PM
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The general mood of producers during the recent reporting season was one of increasing confidence in an economic recovery in the 2H13, although caution remains. End-use demand seems to be holding up in most sectors, with plenty of talk about improving developed markets.

However, increasing supply was a caveat used by many as to the reason why prices might remain subdued in 2H13. We tend to agree. Cost cutting to date has been achieved by actually increasing supply to reduce unit costs (due to high fixed cost bases) rather than cutting capacity. Consensus among producers on China growth was 7-8%, with a mild recovery taking place in 2H13.
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