The scandal engulfing Volkswagen has spilled into the precious metals market, reflecting growing fears of a consumer shift away from the diesel engines that account for almost a half of the world's platinum demand.
Platinum prices dropped 3.6 percent on Tuesday, their biggest one-day fall in more than two years, "whacked" by concerns that the German carmaker's years-long effort to dupe U.S. regulators on diesel emissions will hurt sales of diesel engines, said Ed Meir, metals analyst at INTL FCStone.
The price of palladium, which is preferred for gasoline-powered engines but less so for diesel, barely dipped 0.6 percent.
The collapse highlights not only the enormity of the diesel industry's woes, but also the growing threat to platinum markets if, as some analysts now wonder, Volkswagen's scandals coupled with tougher regulations end a decades-long preference for diesel cars in Europe.http://www.reuters.com/article/2015/09/23/usa-volkswagen-platinum-idUSL1N11S2WZ20150923
We expect this CDS blowout to continue.
The report compares the current downturn to the previous bear market in mining which ran from 1997 to 2002 and argues that capex cutbacks are far from over.
Instead the industry should brace itself for at least another two years of shrinking budgets and outlays with the first signs of a "subdued" recovery only appearing early in 2018.
But even this prediction could be too bullish.
"Worryingly, metal prices have already fallen 12% further than they did during the bear market in the 1990s. In the last bear market, capex only recovered to its pre-crash (1997) level after seven years (2004)," according to Fellows.
TECO Energy Inc. has closed the sale of its coal mining subsidiary, TECO Coal LLC, to Cambrian Coal Corp. There were no up-front purchase payments for the sales agreement, however the agreement does include future contingent consideration of US$60 million if certain coal benchmark prices meet particular levels over the next five years.