Industrial and energy resources have traded more or less in line with stock markets over the last year so with the "risk-off" attitude currently gripping markets, they have come under pressure. However while this generalisation is a handy way of grouping asset classes together, there has been significant divergence at the individual commodity level.

Aluminium in particular has fallen sharply this month but has now returned to an area of potential support near $2000 and is testing the short-term progression of higher reaction lows. A relief rally appears likely while a sustained move below $2000 would be required to reassert the three-week decline.

Copper is currently testing the upper side of the 8-month range below $3.50 and needs to sustain a move above that level to reassert the medium-term uptrend.

Lead rallied impressively from the June lows to test the 8-month progression of lower rally highs. It paused above $2000 this month but needs to sustain a move above $2200 to indicate demand has regained dominance. Zinc has a very similar pattern

Nickel rallied back above the psychological $20,000 in July and has so far held the move. A sustained move back below that level would be required to question medium-term potential for continued higher to lateral ranging.

Tin continues to lead and had become somewhat overbought when it encountered at least short-term resistance two weeks ago. However a sustained move back below $!7,500 would be required to begin to question medium-term upside potential.

Lumber has had one of the more violent reactions among the industrial resources but found support near $200 from late June and is currently testing the upper side of the 6-week range. A sustained move to new reaction lows would be required to question scope for a successful upward break.


PotashCorp bid revives TSX hollowing-out fears by Jeffrey Hodgson also for Reuters.
PotashCorp may have to go to China in its search of better offers by Michael Smith and Euan Rocha for Reuters
Potash Corp. Said to Get Sinochem, Vale's Inquiries by Jeffrey McCracken for Bloomberg may be of interest to subscribers. Here is a section from the first:

Top Chinese fertiliser company Sinofert -- in which Potash owns a 22 percent stake -- is the most logical candidate to lead a counter offer, industry sources say.

While Sinofert itself is small -- its $3.8 billion market value is less than a 10th of Potash's -- its parent, Sinochem Group, is a huge state-owned group. Sinochem's revenues were $36 billion last year.

A spokesman for Sinofert said the company would "pay close attention" to BHP's bid and added that the group "was interested in overseas potash investment opportunities", the Financial Times reported.

Aluminium giant Chalco, and state-backed chemicals company ChemChina, could also emerge as potential bidders, said the sources who spoke to Reuters.

A Sinofert spokeswoman contacted by Reuters declined to comment, while Chalco and ChemChina could not be reached.

"I assure you there are numerous organisations in China who would chase potash (assets)," said an Asia-based investment banker who has advised Chinese resources companies on overseas deals but was unauthorised to speak publicly about the matter.

"China has very few potash reserves for itself, it's a commodity which they're going to be in short supply of. And, does China want to be over the barrel on yet another commodity?"

My view - The emergence of Chinese interest in also acquiring Potash Corp of Saskatchewan raises the profile of this takeover battle but also makes BHP Billiton's bid less likely to succeed because the former simply have deeper pockets with a government proactive in seeking overseas acquisitions.

Rumours of a bid for Potash Corp have been rife for most of the year and it would be surprising if some competition does not develop for such a prize set of assets. BHP Billiton's attitude to a competing bid will be interesting to observe because it has so far demurred from paying up for commodity resources. The relatively low offer for Potash Corp was never likely to succeed and I wonder just how high BHP Billiton would be willing to go in order to dominate the fertiliser market.

In the meantime prices for Potash Corp shares continue to advance and would need to sustain a move back below C$140 to question medium-term upside potential.

Eoin Treacy's view The emergence of Chinese interest in also acquiring Potash Corp of Saskatchewan raises the profile of this takeover battle but also makes BHP Billiton's bid less likely to succeed because the former simply have deeper pockets with a government proactive in seeking overseas acquisitions.

Rumours of a bid for Potash Corp have been rife for most of the year and it would be surprising if some competition does not develop for such a prize set of assets. BHP Billiton's attitude to a competing bid will be interesting to observe because it has so far demurred from paying up for commodity resources. The relatively low offer for Potash Corp was never likely to succeed and I wonder just how high BHP Billiton would be willing to go in order to dominate the fertiliser market.

In the meantime prices for Potash Corp shares continue to advance and would need to sustain a move back below C$140 to question medium-term upside potential