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1. Increasing energy…

The IEA (International Energy Agency) warned this week that “the world has never witnessed such a major energy crisis”. And the chart below from Wood Mackenzie helps put that into context. WoodMac has a database of over 3,000 assets and companies in the resources space. And their data shows investment is falling. The blue and green bars from 2023 onwards in the chart below show the required increase in spending to meet climate targets, including the Energy Transition Outlook (ETO) and Accelerated Energy transition (AET) 1.5 degree pathway.

If we are going to transition successfully, we need investment. And to incentivise investment, raw materials pricing needs to remain elevated. Firetrail remains overweight energy on the back of this supply imbalance thematic.

Source: Wood Mackenzie Corporate Service

2. Getting gassy

Natural gas prices have been spiking again and are now above US$50/mmbtu. This is creating headaches for European ammonia producers which have seen costs of production soar to over $2,000/t, versus the ammonia price currently trading around $1,000/t.

The chart below illustrates the close relationship between ammonia prices and the cost of production for European producers. These producers are the marginal suppliers into the global market and need to remain marginally profitable for the world to continue to receive its ammonia requirements.

Fortunately for Firetrail holding, IPL, it has low cost ammonia production in the US. IPL’s equivalent cost today is less than $300/t given its access to low cost US gas. This suggests strong cash generation today, but it’s likely to accelerate as ammonia prices catch up to costs of production.

Source: Morgan Stanley

3. Workers wanted…

Australia recorded its lowest unemployment rate since 1974 this week – dropping to 3.5%. It was the eighth consecutive monthly increase in employment. With a new record high participation rate of 66.8%. According to Barrenjoey there is now 1 unemployed person per job vacancy. This is typically 3 to 1. While in the US, Germany and the UK there are more job vacancies than unemployed people.

It’s getting very tight out there!​​​​

Source: BLS

Source: The Wall Street Journal


This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

Links to the Product Disclosure Statement: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

Links to the Target Market Determination: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email

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