BLACKROCK COMMODITIES INCOME INVESTMENT TRUST plc
All information is at 31 October
2012 and unaudited.
Performance at month end with net income reinvested
One Three Six One Three Five
Month Months Months Year Years Years
Net asset value 0.3% 5.7% 0.5% -3.6% 20.9% -8.0%
Share price 3.1% 9.5% 2.1% 4.6% 21.7% -0.7%
Sources: Datastream, BlackRock
At month end
Net asset value - capital only: 119.23p
Net asset value - cum income**: 119.99p
Share price: 124.13p
Premium to NAV (cum income): 3.5%
Net yield: 4.7%
Gearing - cum income: nil
Total assets^^: £113.1m
Ordinary shares in issue: 94,258,000
**Includes net revenue of 0.76p.
^^includes current year revenue.
Sector % Total Country % Total
Analysis Cap Assets Analysis Cap Assets
Integrated Oil 28.4 Global 29.7
Exploration & Production 18.4 Canada 22.0
Diversified 18.3 USA 18.7
Copper 8.2 Latin America 8.6
Gold 7.1 Europe 7.6
Oil Sands 4.5 Asia 7.4
Oil Services 3.3 South Africa 2.9
Iron Ore 2.9 China 1.7
Aluminium 2.2 Africa 1.6
Distribution 1.9 Australia 1.6
Coal 1.7 Current liabilities (1.8)
Tin 1.3 -----
Fertilizer 1.2 100.0
Nickel 0.9 =====
Platinum 0.8
Zinc 0.7
Current liabilities (1.8)
-----
100.0
=====
Ten Largest Equity Investments (in alphabetical order)
Company Region of Risk
Anadarko Petroleum USA
BHP Billiton Global
Chevron Global
ENI Europe
ExxonMobil Global
Freeport-McMoran Asia
Occidental Petroleum USA
Peyto Exploration & Development Canada
Rio Tinto Global
Total Global
Commenting on the markets, Richard
Davis, representing the Investment Manager noted:
The great and the good of the mining industry gathered in London in October for
the annual London Metal Exchange Week. A recurrent theme discussed by the
executives was the importance of capital allocation. The most successful mining
companies are likely to be those that balance the need to invest and develop
attractive production growth opportunities with the necessity of servicing
shareholder capital through dividends and disciplined use of cashflow.
Commodity focus and geographic location will also be crucial. Selection is
becoming paramount in the mining industry - both on the part of mining
companies who must choose carefully between different projects (and different
commodities) and mining investors whose success will depend on picking those
companies able to deliver production growth in supply constrained commodities.
The iron ore price continued its recovery in October. From 28 September to
2 November, the spot price for 63.5%Fe iron ore went from US$107.5/ton to
US$121.5/ton as Chinese steel mills restocked and the effects of rationing in
some high cost supply fed through. Iron ore was one of the top mining commodity
performers over the month. The base metals were weaker, with the MG Base Metals
Price Index falling by 8.6%.
In the uncertain growth environment that the global economy has spent much of
the year in, equity investors have treated mining shares with some caution. The
same has not always been true of debt investors, at least not for the major
diversified miners. BHP Billiton made history in October by completing the
largest ever issue in the Australian debt markets. What was of particular
interest, however, was the yield investors required for being a creditor to the
mining giant. BHP Billiton paid only 90 basis points more than swap rates for
its five year bonds, which is less than has been required of higher rated
Australian banks. Mining shares closed the month up by 1.5% (Sterling terms).
In the energy sector, West Texas Intermediate oil, the benchmark oil price in
the US, declined by 6.5% during the month as levels of storage hit 30-year
highs during October. This build in inventories is primarily due to the
continued sluggishness in the US economy and to the increase in oil production
in the country (in part from unconventional oil shales). Whilst these sources
have caused a glut of supply in natural gas in the US over the past few years
and pushed down prices, the increase in shale oil is unlikely to have as
meaningful an impact on oil in the coming years. Brent oil prices, which are
more representative of global supply-demand dynamics, declined by 1.3%.
The month of October saw Hurricane Sandy batter the north east of the US and
the Caribbean, sadly causing widespread destruction of property and fatalities
amongst the population of the affected regions. The storm also had an effect on
US refining capacity, forcing the shut-down of c.8% of capacity. However, this
proved to be a short term phenomenon as much of this capacity was operational
again in the days following the storm (although disruptions to the supply
infrastructure caused a shortage of gasoline at service stations across the
region). Natural Gas prices gained by 13.6% (Henry Hub) during October as
injection rates (i.e. the amount of Natural Gas moved into inventory) were
lower than expected. Levels of natural gas storage are a key focus as we head
towards the northern hemisphere winter, a period of seasonal demand strength.
In equity news, Rosneft announced its intention to buy TNK-BP from BP and AAR
(a consortium of Russian tycoons) in a $55 billion deal. BP is set to receive
US$12 billion in cash and an 18.5% stake in Rosneft in exchange for its holding
in TNK-BP. Rosneft is understood to have signed a memorandum of understanding
to buy AAR's stake for US$28 billion in cash. This transaction seemingly ends
what has been a tumultuous relationship for BP and, as well as receiving a
meaningful cash payment, allows them to retain an interest in the exploration
of the potentially oil rich Arctic region. On the last day of October, BG
Group, a European energy company with a bias towards natural gas and Liquefied
Natural Gas, announced that it expected no output growth in 2013 due to project
delays and a scaling back of activities in US shale gas (where pricing has made
some activities uneconomic). The market took this announcement, from what was
previously perceived to be a high growth name, badly and at one point the stock
was down close to 20% on the day. The energy equity index closed down by 1.4%
(Sterling terms).
All data sourced from DataStream and quoted in US Dollars unless
otherwise stated.
19 November 2012
ENDS
Latest information is available by typing www.blackrock.co.uk/brci on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV
terminal). Neither the contents of the Manager's website nor the contents of
any website accessible from hyperlinks on the Manager's website (or any other
website) is incorporated into, or forms part of, this announcement.