Summary
The article (BBC 2015) reports that Glencore’s loss of profits of 676 million dollars, which is due to its costs associated with paring back oil operations and falling prices of commodity and raw materials such as oil and metal resulting from a supply glut and Glencore’s biggest earner, copper, is at its six-year lows after an economic downturn in China.
Application of concept
This article relates to economic environment due to the constraints facing the company put on by globalization, emerging markets’ insipid economic growth affecting the firm’s investment and profits and depreciating Chinese currency increasing market competition levels for copper.
U.S. Energy Information Administration (2015) reported that the reasons why oil price …show more content…
Analysis
Glencore’s outlook is not promising in the foreseeable future, according to Stephen (2015), global supply of oil still remains high despite the lower prices, and OPEC is now pumping at its highest level in three years. In today’s global economy, increasing integration through international trade hinders an individual company to cut down production to increase product price (Mussa 2003).
However, International Energy Agency (2015) reported that demand for oil has rebounded to the highest level in five years as global economy strengthens, which may potentially increase oil price.
Nevertheless, OPEC has little or no impact on its members’ production levels (Colgan 2014) and increasing supply from unconventional sources such as America and Canada as well as biofuel production raises market competition level (Baffes et al. 2015), therefore, oil price is likely to stay down.
As to the cooper market in China, it is also bleak. Current China’s stock market rout could destabilize its economy and continues to drag on copper because of the deterioration in the Chinese economy (Saefong and Sjolin
The article (BBC 2015) reports that Glencore’s loss of profits of 676 million dollars, which is due to its costs associated with paring back oil operations and falling prices of commodity and raw materials such as oil and metal resulting from a supply glut and Glencore’s biggest earner, copper, is at its six-year lows after an economic downturn in China.
Application of concept
This article relates to economic environment due to the constraints facing the company put on by globalization, emerging markets’ insipid economic growth affecting the firm’s investment and profits and depreciating Chinese currency increasing market competition levels for copper.
U.S. Energy Information Administration (2015) reported that the reasons why oil price …show more content…
Analysis
Glencore’s outlook is not promising in the foreseeable future, according to Stephen (2015), global supply of oil still remains high despite the lower prices, and OPEC is now pumping at its highest level in three years. In today’s global economy, increasing integration through international trade hinders an individual company to cut down production to increase product price (Mussa 2003).
However, International Energy Agency (2015) reported that demand for oil has rebounded to the highest level in five years as global economy strengthens, which may potentially increase oil price.
Nevertheless, OPEC has little or no impact on its members’ production levels (Colgan 2014) and increasing supply from unconventional sources such as America and Canada as well as biofuel production raises market competition level (Baffes et al. 2015), therefore, oil price is likely to stay down.
As to the cooper market in China, it is also bleak. Current China’s stock market rout could destabilize its economy and continues to drag on copper because of the deterioration in the Chinese economy (Saefong and Sjolin