WA index feels commodity pressure

THE combined worth of Western Australia’s ASX-listed companies fell almost 10% under the weight of plummeting commodity prices in November, according to figures released today by Deloitte.

Jack McGinn

The Deloitte WA Index found the market capitalisation of WA companies to be $A128.5 billion at the end of November – a drop of 9.3%.

The decrease reflected the impact of struggling commodity prices, with iron ore (-13.6%) and crude oil (-17.6%) continuing to fall in November, moving their year-to-date decreases 48.9% and 36.6% respectively.

Deloitte clients and market partner for Western Australia, Tim Richards, said there was little relief in sight for oil and iron suppliers.

“The iron ore and oil price decline has continued this month with no floor yet in sight,” he said.

“With the market looking oversupplied, it is likely we will continue to see depressed iron ore and oil prices for some time.”

Of the commodities, uranium performed the best with a 12.7% increase on the back of Japan’s decision to reopen two nuclear reactors. This trend is set to continue, with more Japanese reactors to be opened into the New Year and China expected to quadruple its nuclear energy output by 2020.

Precious metals experienced mixed fortunes, with gold up 1.4% and palladium 3.2%. Platinum fell to its lowest price in five years with a 1.8% decrease, and silver to its lowest price since January 2010 with a 4.8% reduction.

Weak manufacturing figures and slow business growth in the Eurozone were attributed to a 5.8% copper decrease, while zinc’s 4.1% fall was on the back of a stronger US dollar.

Iron ore fell below $US70 a barrel, and is expected to continue sliding with more supply forecast to hit the market next year. Some analysts have predicted a price below $60 a tonne — a daunting thought for WA producers.

Market capitalisation across the All Ordinaries fell 3.8%, while the US S&P 500 was up 2.5%, Germany’s FTSE 100 increased 2.7% and Japan’s Nikkei jumped 6.4%.

Uranium producer Paladin Energy was one who bucked the trend, posting a 33% increase to its market capitalisation after announcing a placement and share offer to existing shareholders on November 24.