Global Investing

Water, water everywhere

British water companies announced a plan earlier this week to
increase household water bills by up to 4.5 percent above
inflation between 2010 and 2015.

A pain for households, yes. But such increases underline a trend
that may prove tempting to investors searching for new commodity
assets as oil, gold etc tumble from their peaks.

The water index on the International Securities Exchange, which
includes companies engaged in water distribution, water
filtration, flow technology and other water solutions, has risen
more than 5 percent since January.

World water consumption could also double over the next 20 years
– according to a report from rating agency Moody’s economic
research arm — and at current growth rates, water demand by
2025 would exceed the available supply by 56 percent.

Water demand could rise because of climate change which trigger
more frequent droughts, increased migration to cities and
industrialisation of emerging economies.

European industry feels the heat of high oil prices

Castle Cement furnace

European industry is suffering under soaring energy costs. Profit warnings are becoming more common and industry leaders predict plant closures and job losses may follow.

Companies say they are doing all they can to improve their game but want government help.

Britain’s Castle Cement, part of Germany’s Heidelberg Cement, is a case in point. Its cement furnace in Stamford, England, is replacing much of its coal with  alternatives  — tyres, bone meal, paper – as $140 a barrel oil sends all fuel costs skyrocketing.   

Nerves of steel as regulators probe iron ore

iron-ore-graphic.gifAre steel companies really hurting from huge rises in the price of raw materials like iron ore? The biggest miner BHP Billiton reckons they aren’t and hopes to sway anti-trust regulators who are reviewing its takeover bid for rival Rio Tinto.

Steel firms from China to Japan to Europe have cited rising raw material costs as they ramp up prices, with Germany’s Salzgitter the latest to push the blame upstream.

Rio Tinto agreed record prices rises with China’s Baosteel on Monday that nearly doubled the price of iron ore this year under long-term contracts and BHP may try to get even more .

Growth in oil futures outpaces oil consumption

oil_graph1.gif

Here’s a look at the average daily volume of oil futures on the NYMEX expressed in terms of global consumption of oil. As the chart makes clear, the number of paper barrels traded every day on the NYMEX is now over three times the number of actual barrels consumed every day worldwide. On Friday, as oil surged to a record $139 a barrel, the volume on the NYMEX was over 5.2 times average daily consumption. The chart gives some indication of the boom in oil and commodity futures in general.