Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200925 by Andrew Pedler – Now Available

Australian Exploration – World Steel

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:     The world is recovering from a low disrupted space, and recovery is unlikely to be uniform, nor without volatility.  Raw materials are essential to maintain existing demand requirements, and for future growth.  Supply chains and demand levels have been disrupted differently, often according to regional epidemic outbreaks.  Timing and impacts of Covid-19 epidemics have been different in: China, vs USA, vs Europe, vs Africa, vs South America, and then South East Asia, Australia.   

  • Covid lockdowns have widely been the main drivers of very sharp declines, much sharper than prior economic or financial crashes, to deep levels, from which, in many cases recovery has yet to achieve prior levels.  For some economies it may be a matter of time required for recovery.  For some however, each past ‘crash’ has resulted in recovery to a slightly lower level. 
  • Base metals’ pinch-point graphs continue to show metal prices rising, copper in particular, in response to expectations of (stimulus driven) increased demand, and recognition of tight supply.  
    • Any material supply disruption or surge in demand may trigger marked price responses.   
    • Right now though activity appears to be slowing on several fronts. 
    • Total exchange base metal inventories reduced for each metal, though prices reduced in USD terms. 
  • China’s Golden Week commences 1st October, during which time Chinese commercial activity usually ceases with traders absent from the market. 
  • Australia’s exploration expenditure recorded modest growth in the Jun20Qtr, with positive growth only in minerals and in NSW, Vic and Qld, with WA expenditure being flat. 
  • This week the USD strengthened against a long downward trend, without particular support of notable economics. 
  • Gold price reduced again, in all currencies except ZAR in which it was flat.
    • No notable reductions in geopolitical risk, nor any escalations.

SUMMARY  

Copper  Cu demand is increasing.  Cu, supply is starting to recover. 

Cobalt  Research has discovered how to regenerate Li-Cobalt oxide within batteries!.  

Nickel  Tesla’s ‘Battery Day’  Tesla is reviewing battery manufacture.  Ni is a key metal.  .

Zinc & Lead  USA auto sales up.  USA premiums for Pb ingots up.  China’s refined Zn output up. 

Tin  Tin market to remain in deficit to 2023.  Electronics & semi-conductor demand are rising.   

Aluminium  Chinese imports of primary aluminium rose their highest in over two decades..

Gold  Price down in all currencies.  Central banks reluctant to buy at high prices.  Plus other factors?

Platinum & Palladium  WPIC sees resurgence in buying diesel vehicles will lift demand for Pt.

Oil  Iran’s oil exports noted as highest in ~18mo, in defiance of USA sanctions. 

Coal  China stocked up ahead of Golden Week.  Import restrictions may loosen afterwards. 

*Iron Ore  Japanese steel mills restarting.  China’s floods and holidays contribute to softer demand. 

Shipping  Rates for Capes & Supramax edged up while Panamax rates slid (a little). 

General 

*World Steel:  Slow positive growth with much of the world still recovering from Covid-19. 

*Australia – Exploration Spending:  iron ore, coal & gold +ve growth.  Also +ve NSW, Vic, Qld

*China – Transport – freight & passengers:  Freight rail & waterway +ve growth.

*USA – Durable Goods, Vehicles & Electronics:  Durables still down.  Vehicles & Electronics up.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200918 by Andrew Pedler – Now Available

Work in Progress – Recovery Mode

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:    The world is recovering from a low disrupted space, and recovery is unlikely to be uniform, nor without volatility.  Raw materials are essential to maintain existing demand requirements, and for future growth.  Supply chains and demand levels have been disrupted differently, often according to regional epidemic outbreaks.  Timing and impacts of Covid-19 epidemics have been different in: China, vs USA, vs Europe, vs Africa, vs South America, and then South East Asia, and little old Australia. 

  • Covid lockdowns have widely been the main drivers of very sharp declines, much sharper than prior economic or financial crashes, to deep levels, from which, in many cases recovery has yet to achieve prior levels.  For some economies it may be a matter of time required for recovery.  For some however, each past ‘crash’ has resulted in recovery to a slightly lower level. 
  • Base metals’ pinch-point graphs continue to show metal prices rising, copper in particular, in response to expectations of (stimulus driven) increased demand, and recognition of tight supply.  
    • Any material supply disruption or surge in demand may trigger marked price responses. 
  • Iron ore demand remains firm with China’s surging steel output.  
    • How long before China satiates domestic demand and resumes steel exports? 
    • When will its (developed economy) export markets have recovered enough to resume import demand? 
      • Matau suggests a further 4-6 months may be required for the lagging economies, though these need to gain control over Covid infection rates.
      • Widespread availability of vaccines may be about 12 mo away (if a successful one is generated) according to epidemiologists.
  • China’s industry and energy output is broadly recording positive growth.  China’s worst month was February (during Chinese New Year), eight months ago.
    • Demand for steel raw materials, Cu & Co is strong. Nickel is likely the next to respond, as Zn & Pb are reported in surplus. 
  • Singapore shipping data supports the Chinese data with positive growth in bulk materials, fuels, and a return to positive growth in container shipping.
    • Passenger shipping traffic however was flattened, and perhaps may not recover in its original format, and is likely to take a long time to recover to original levels, if it does.
  • Germany’s industrial production is recovering, with positive growth in several segments
  • UK’s industrial production is recovering from its low, though most segments have yet to record positive growth. 
  • As noted two weeks ago, USA’s yield curves with yields below 1% out to 3 yr terms hint that is may be some time before USA really recovers.
    • The USA Federal Reserve has now said that it expects yields to remain low for about 3 years. 
  • Oil demand for 2020 continues to be forecast to face further (covid) reduced demand.  OPEC+ is working, with variable success to corral its members to maintain discipline.

SUMMARY  

*Copper  Demand to rise from USA investment in infrastructure and global investment in green technology.

*Cobalt  China’s SRB expected to add to significant purchases of Co for stockpiles.   

Nickel  MCR restarting and progressing Kambalda area Ni project(s).

Zinc & Lead  IGB progressing Citronen Zn-Pb.   Zn & Pb markets in surplus.   

Tin  Indonesia & ITA expecting a material decline in world tin production this year.    

*Aluminium  USA withdrawing plans to impose tariffs on imports of Al from Canada.

*Gold  USA Fed expecting low yields for 3 years, though economic growth forecasts are looming.   

Platinum & Palladium  Industry giving consideration to substitution from palladium back to platinum for auto-catalysts.

*Oil  Oil supply is currently excessive.  OPEC+ trying to corral its members.. 

Coal  LVPCI settlement for Dec20Qtr.  South Korea to reduce thermal power capacity (over time). 

Iron Ore  Chinese port inventories increasing.  Brazil’s Vale production looking to increase.  

Shipping  Cape rates increased while Panamax rates reduced.  

*General 

Port of Singapore – Shipping traffic:  Freight has good growth.  Passengers still suffering.

China – Industry & Energy Output:  Broadly positive growth across the segments.

Germany – Industrial production:  IP is struggling though durables are positive.

UK – Industrial Production :  recovering though still struggling.. 

USA – Industrial Production:  struggling to recover though durables & construction are positive.

USA – New House Starts: growth positive but subdued after a burst in July. 

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200911 by Andrew Pedler – Now Available

Comments of particular interest are noted with ‘*’.

Matau’s Comments:

*        Base metals’ pinch-point graphs continue to show metal prices are tight though only copper is responding in this confused market. as industry restarts post-Covid-19 in several
areas. 
*        Copper recycling and scrap availability has suffered through the Covid epidemic. 
*        Iron ore demand remains firm with China’s surging steel output.

SUMMARY
*Copper:  Recycling of copper scrap has suffered during Covid. Chinese scrap imports reduced.
*Cobalt: China stockpiling cobalt.
*Nickel:  Mincor’s Cassini North is can add materially to MCR’s Resources.
Zinc & Lead:  Zn outlook improving through 2021, then moderating through 2024.
Tin:  n/a
Aluminium:  Al’s aims of reducing carbon footprint will likely shift the industry’s structure..
Gold:  Unusually, both equities and gold prices are rising and falling together.
Platinum & Palladium:  A hydrogen energy and fuel cell evolution may support Pt markets. .
*Oil: Price slips on higher US stocks, and weak demand.
Coal: Sep20Qtr coking coal settlements.
Iron Ore: Reports that China’s iron ore imports increased by 11% from Jan-Aug20.
Shipping:  Cape rates reduced while Panamax rates increased.
General
Port Hedland – Iron ore shipments:  still strong levels of exports.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200904 by Andrew Pedler – Now Available

World in Recovery Mode

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:    The world is recovering from a low disrupted space, and recovery is unlikely to be uniform, nor without volatility.  Raw materials are essential to maintain existing demand requirements, and for future growth.  Supply chains and demand levels have been disrupted differently, often according to regional epidemic outbreaks.  Timing and impacts of Covid-19 epidemics have been different in: China, vs USA, vs Europe, vs Africa, vs South America, and then South East Asia, and little old Australia. 

  • Base metals’ pinch-point graphs continue to show metal prices rising, in response to expectations of (stimulus driven) increased demand, and recognition of tight supply.   Inventories at exchanges continue to reduce.  Copper price in particular breaking upward, on the pinchpoint graphs, as industry restarts post-Covid-19 in several areas.   Base metal inventory levels can now only be described as tight.  Any material supply disruption or surge in demand may trigger marked price responses. 
  • Iron ore demand remains firm with China’s surging steel output.  How long before China satiates domestic demand and resumes steel exports?  When will its (developed economy) export markets have recovered enough to resume import demand?
  • China’s freight & passenger transport showing good recovery post-covid.  China’s worst month was February (during Chinese New Year)
    • Demand for steel raw materials, Cu & Co is strong.
  • Japan’s industrial production is recovering.  Japan’s worst month was May 2020.  Its recovery is lagging China’s.
  • USA’s yield curves with yields below 1% out to 3 yr terms hint that is may be some time before USA really recovers.
    • Construction spending (July) was flat. 
    • Its PMIs (August) are very optimistic. 
      • Worth noting that PMIs are ‘soft’ data, reflecting managers’ ,expectations’ for the near future.  It remains to be seen how expectations are borne out.  In the past, correlations have been reasonable, though this time, there are marked inconsistencies.  July’s durable goods orders were not good, though vehicles orders soared.  July Housing Starts look to be recovering well, but Construction Spending is flat and faltering.
  • Oil demand for 2020 is forecast to face further (covid) reduced demand.  Rig counts do appear to have bottomed globally, though USA & mid east numbers reduced recently.  OK so energy ought to be cheap at least in the near future and not an impediment to (other) recovery.

SUMMARY  

*Copper  Global Cu market may be on the cusp of a supply squeeze.  

*Cobalt  Cobalt salt (OH & SO4) prices surged.  Supply disruption & strong demand from electronics. 

Nickel  SLN & Eramet seeking to revive New Caledonian Ni operations. 

*Zinc & Lead  Miners becoming more optimistic about outlook.  Though Zn is currently in surplus, for now.  

Tin  MLX plans to increase output at Renison, with new longer life plan.  Aust is a significant producer.     

Aluminium  Japan’s LME Al premium reduced in recent contract settlements. Will other regions follow?

*Gold  USA labor data softened Au price, though ahead are ample geopolitical risks and a USA election. 

*Platinum & Palladium  CLQ to drill a new Pt zone at its Sunrise project, including dunite targets.

*Oil  Global oil demand forecast to decline in 2020.  Russia supporting an OPEC+ response proposal. 

Coal  Metcoal prices up on demand.  China finessing its import sources.  Japan’s thermal imports up.

Iron Ore  FMG has approvals to expand output.  BHP launches LNG-fuelled bulk carriers.  Brazil blockchain.

Shipping  Freight rates reduced this week, across the board.  

General 

USA – Treasury Yields:  Low yields for up to 3yr terms.  Is USA’s recovery after 3 yrs?. 

*USA – Construction Spending:  currently very low growth – flat!

*USA – Purchasing Managers’ Index:  Strong outlook.  nb: this is a ‘soft’ index – opinions..

*Baker Hughes Rig Counts – World & North America:  Rig count appears to have bottomed.

*China – Transport – freight & passenger:  Traffic is recovering.  Passengers taking longer.

*Japan – Industrial Production:  Recovery has started.  May was Japan’s worst month.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200828 by Andrew Pedler – Now Available

World Steel & China

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Base metals’ pinch-point graphs continue to show metal prices rising, in response to expectations of (stimulus driven) increased demand, and recognition of tight supply.   Copper price in particular breaking upward, on the pinchpoint graphs, as industry restarts post-Covid-19 in several areas. 
  • Iron ore demand remains firm with China’s surging steel output.
  • China’s industrial & energy output showing good recovery post-covid.
    • Demand for Cu & Co is showing strong growth in China.
  • USA’s vehicles & electronics orders showing decent recoveries, though durable goods are slower to recover.
    • Some insights into statistical manipulation regarding USA’s CPI numbers.

SUMMARY  

*Copper  China’s demand for Cu is rising.  Inventories are falling.  

Cobalt  China’s Co imports are jumping.    

*Nickel  EV batteries should be known as Ni-graphite batteries, not Li-ion. 

Zinc & Lead  Zn & Pb posted surpluses for Jun20HY, though inventories are falling, again.  

Tin  DRC providing miners waivers on export bans (across several segments).     

Aluminium  Al sector struggling to agree on consistent environmental emissions standards.

*Gold  USA Fed has now officially moved its price inflation goalpost.  Beware statistical methods in USA.

Platinum & Palladium  PGI is looking to a recovery in jewellery fabrication post-covid.

*Oil  Saudi Arabia has lost market share in China to Russia & USA.   

Coal  Brazilian steel mills seeking 2021 supply of met coal, coming back on line. 

Iron Ore  Iron ore market well supported by ongoing supply issues.   

Shipping  Typhoons and heavy rain in China tightened the availability of shipping. 

General 

World Steel: World Steel output slower in July, with few positive growth rates. 

China – Industry & Energy Output:  Broadly positive growth across segments.

USA – Durables, Vehicles & Electronic products:  Vehicles bounced, but Durables lagging

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200821 by Andrew Pedler – Now Available

Singapore Shipping – USA (House Starts)

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Base metals’ pinch-point graphs continue to show metal prices rising, in response to expectations of (stimulus driven) increased demand, and recognition of tight supply.   Copper price about to break upward, on the pinchpoint graphs, as industry restarts post-Covid-19 in several areas. 
  • Iron ore demand remains firm with China’s surging steel output.
  • Singapore shipping shows bulk commodity demand and tanker traffic is strong, reflecting Asian industrial & economic activity.

SUMMARY  

*Copper  Supply side issues less than expected.  Price expected to hold above USD 6,000/t through 2020.

*Cobalt   Supply chain is facing challenges. Prices and inventories beginning to move.

Nickel  Philippines’ miners do not expect further major mine disruptions this year.  Ore supply is tightening.

Zinc & Lead  Zn’s performance appears due to supply-side issues.  Price anticipated to be static.  

Tin  Tin supply has taken some heavy knocks from COVID-19-related lockdowns.     

Aluminium  Trump’s aluminium pillar of the “America First” policy is wobbling.

*Gold  Gold’s market fall described as an “over-priced market”, “cleaning itself out”.  “No fear present now”.

Platinum & Palladium  Auto markets including diesel heavy Duty Vehicles (HDV), starting to support Pt outlook

Oil  There are five major factors that usually go into a report on a major oil spill.   

Coal  Major Chinese domestic HCC miner slashing prices to compete with imports. 

*Iron Ore  Chinese demand strong and well managed supply from Australia & Brazil maintained prices. 

Shipping  Cape rates down, Panamax rates rose, Supramax rates up. 

General 

*Port Hedland – Iron ore exports:  Demand from China reduced, but remains strong. 

Germany – Industrial Production:  Negative growth, but improving on the prior 2-3 months.

United Kingdom – Industrial Production:  Negative growth, but improving on the prior 2-3 months. 

USA – Industrial Production – Capacity Utilisation:  -ve growth but improving.  Low utilisation.

*USA – Yields:  Bond market does not appear to expect recovery for three years.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200807 by Andrew Pedler – Now Available

Japan, USA, Rigs

Matau’s Comments: A number of  viewpoints or signals the market is said to be emitting are quite positive, however in several cases, the direction indicated does not appear to match or offset opposing factors, particularly in this Covid-riddled world:
… USA’s PMI indicator put forward a quite positive outlook (by themselves) however other economic data that usually would support such an attitude does not seem to have much substance.   The USA economy looks more like it needs medical assistance …
… or … the Cu market is seeing falling inventories and rising prices, yet respected analysts expect a pandemic downturn … if a downturn of pandemic proportions is looming what is the (market-forces-informed) copper market think it is doing?  Is the market seeing something we do not?

This week’s Commodity Review has been produced from an old laptop with a reformatted – re-llnked report. … as my good laptop has a failed power board.  Some of the commmentary this week is abridged.
If the link to the report does not work, pls call (+61 412 122 778) or email me andrew@matauadvisory.com.au and I will get a copy to you.

We live in interesting and challenging times!

SUMMARY Copper  Analysts forecast a pandemic slowdown, but Cu price is rising.

Cobalt  EV charge points’ global distribution is somewhat skewed, to China & Netherlands.   

Nickel  Tesla is building a new GigaFactory in Texas .and is calling on Ni producers.

Zinc & Lead  ORN is arranging funding for Prieska, which is development ready.   

Tin  Afritin mining at its Uis mine is operating free of Covid.      

Aluminium  USA announced renewed tariffs against Canada.  Canada has protested and reciprocated.Gold Global ETF holdings are at an all time high (again).  Platinum & Palladium  South Africa’s platinum miners are facing tough economic conditions.  Oil  Prices struggling to hold current levels. Agencies forecast demand declines.  CoalDemand for seaborne SSCC & PCI down, aggravated by Covid.  Iron Ore  China’s steel output is expected to achieve new highs Shipping  Cape rates and Panamax rates both up with shipping in demand.   General  
Baker Hughes – WorldWide Rig Counts:  USA has its lowest rig count for any time since 1975. Japan Industrial Production:  starting to claw its way up off a bottom.  

Japan – LNG Prices:  Prices have started to recover, lagging the oil price recovery.

USA Purchasing Managers’ Index:  Strong outlook for industry expressed.  Is it Covid-proof?USA – Construction Spending: basically stalled except for Government non-residential spending

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200731 by Andrew Pedler – Now Available

Gold, USA, UK, Germany

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Base metals’ pinch-point graphs continue to show metal prices rising, in response to expectations of (stimulus driven) increased demand, and recognition of tight supply.   The markets are now looking toward base metals’ supply required for potential resumption of industries, supported by various stimulus packages (initially within China, the largest consumer of raw materials), and are beginning to recognise (a) the tightness of the supply, and (b) the risks that Covid in South America and Africa which could seriously limit supply responses, and frustrate other countries’ industrial resumption aspirations.
    • Current conditions exemplify the saw that “whenever you forecast something you will be precisely wrong!”  … what matters is:  why,  by how much; and in which direction. 
    • Copper appears to be responding with most clarity:  price, stockpiles. 
    • Zinc, Lead & Nickel are responding though fears of off-exchange stocks lurk, (real or not)
      • Ni has also to contend with Indonesian political ambitions regarding domestic added value.
    • Cobalt may be just starting to respond to expectations of EV demand … only on this week’s data though. 
  • Iron ore and coking coal demand remain firm with China’s surging steel output (and domestic demand, which is ahead of global ex-China demand at this stage).
  • Gold prices jumped again this week, in all (except EUR) the currencies that Matau tracks.  The USD had slumped somewhat but the gold price increase in USD terms (and other currencies was not due to FX changes.  
    • Oddly the conditions posed by Covid now have positive factors for both gold and equity markets:  both geopolitical risk & stimulus.
  • USA economic data still points to a soggy economy, at best.  The latest month of Covid-19 ‘advances’ are not in the June data. 
    • Yield curve terms suggest the market expects current economic conditions to persist for about 3 yrs. 
    • Electricity demand has shown that over past cycles that industrial demand falls in a crisis and usually does not fully recover, and the increase of residential and commercial seasonal demand tends to keep growing.
  • UK economic data (May) shows potential for bottoming in some segments though real recovery is yet to be realised.  All metrics remain negative yr-on-yr at this stage.
  • German durable goods orders have positive growth yr-on-yr though other segments remain negative growth … perhaps a step ahead of the English.

We live in interesting and challenging times!

SUMMARY  

*Copper  RIO gives detail on its large Winu Cu-Au deposit in the Eastern Pilbara.   

*Cobalt  Forecasts for spot prices to recover as sector demand recovers.

*Nickel  Indonesia’s ore export ban promised to miners then became a curse..

Zinc & Lead  Zn quandary:  stocks highest since 2018, but ShFE prices backwardated through Feb21.   

Tin  Fitch forecasts refined Sn output to fall then recover in 2020, subject to Covid-19.     

Aluminium  China saw strong imports in aluminium-related raw materials:  alumina & bauxite.

*Gold  Numerous geopolitical and economic factors to support Au.  USD Reserve currency status at risk? 

Platinum & Palladium  Slump in demand for autos pressures prices.  Potential for Pt to back-substitute for Pd.

*Oil  Oil prices need global oil demand to increase in order to move higher.  May take some time.

Coal  Indonesia reduces its shipping & insurance regulations.  China’s import backlogs catch up. 

Iron Ore  Margins between lump & fines ore squeezed  by high lump inventories at China ports. 

Shipping  Capes & Panamax demand declined this week, with contributions from bad weather.  

General 

*World Gold – demand – supply:  Jewellery demand collapsed in May-June, offset by ETFs

United Kingdom – Industrial Production, Manufacturing, Electricity & Gas:  Yet to show recovery.

Germany – Industrial Production, Durable Goods, Construction:  Durables recovering, other elements , not just yet.

*USA – Yield Curves:  Terms suggests an outlook that it may be 3 years before economy improves. 

*USA – Electricity End-Use:  Industrial & Commercial usage (April) was lowest since 2000.   

*USA –  Durable Goods, Vehicles, Electronics & Computers:  Subject to ongoing Covid-19 spread rates

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200724 by Andrew Pedler – Now Available

China: Industry , Energy & Transport. -World Steel

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Base metals’ pinch-point graphs continue to show metal prices rising, in response to (stimulus driven) expectations of increased demand, and recognition of tight supply.   The markets are looking toward base metals’ supply for potential resumption of industries, supported by various stimulus packages (initially within China, the largest consumer of raw materials), and are beginning to recognise a) the tightness of the supply, and b) the risks that Covid in South America and Africa could seriously limit supply responses.  
    • Current conditions exemplify the saw that “whenever you forecast something you will be precisely wrong!”  … what matters is:  why,  by how much; and in which direction.
  • Gold prices jumped this week, in all the currencies that Matau tracks.  The USD had slumped somewhat but the gold price increase in USD terms (and other currencies was not due to FX changes.  
    • Oddly the conditions posed by Covid now have positive factors for both gold and equity markets:  geopolirical risk & stimulus.
  • World Steel output increased overall with widespread mo-on-mo growth as national output(s) begins to claw back and recover production.  Just how much depends on where each nation is in its Covid-19 epidemic phase. 
  • China’s industry & energy output illustrates a widespread recovery, including of transport parameters.  Freight was moderately hit, and passenger traffic was stopped by lockdowns, though that is now recovering. 
    • China’s trade with Australia means that iron or, at >USD 100/t cfr) has made a significant contribution to Australian accounts.  Australian Government forecasts are using a forecast price well below USD 80/t cfr.   

SUMMARY  

*Copper  Disruption to copper scrap supply is roiling the Cu market. 

*Cobalt  Increased uncertainty of sourcing of Co metal  & Co salts is leading to price rises in China.  

*Nickel  Stainless steel sector outlook is driving Ni demand, not EV markets.  Musk is short of supply..

Zinc & Lead  Sluggish markets (covid affected) leads to increased exchange stocks.  

*Tin  Indonesian supply remains the segment to focus on.  Demand is covid-affected.    

Aluminium  USA is suffering a ‘shortage’ of beer cans.

*Gold  The younger aged Au-Ag deposits could prove to be the ‘worst house in the street’. 

*Platinum & Palladium  WA developed new process for treating Pt ores may assist in Kimberley (WA) deposits. (PAN)

Oil  Oil prices rising on improving economic data but dampened by fears of covid impacts. 

Coal  China has yet to show any signs of easing import controls. 

Iron Ore  Chinese steel mills are facing squeezed margins due to rising cost of raw materials. 

Shipping  Cape rates are diverting demand to other vessel types.   

General 

*World Steel:  Global output for June recorded positive growth rates, as it starts to recover.  

*China – Industry & Energy output:  Generally a solid recovery post-Covid-19 is under way.

*China – Transport:  Freight is getting back to pre-covid levels.  Passenger traffic is still recovering.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200717 by Andrew Pedler – Now Available

Singapore, Baker Hughes, USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Singapore shipping is a reflection of trade in the SE Asian Region (and passage of ships to northern Asia (China, Japan, South Korea, Taiwan).  
    • Bulk Carriers and tankers registered good positive yr-on-yr growth reflecting, in Matau’s view, raw materials imports into Asia, while
    • Containers reported modest negative growth, reflecting finished goods going to largely developed economy markets.
    • Passenger ship traffic is still down ~90% yr-on-yr. 
  • Global and North American rig counts remain low, with oil prices rising only to about USD 40/bbl.  … not enough to encourage much nre production, particularly as demand in USA is described as about 20% below typical levels.   
  • Base metals’ pinch-point graphs continue to show metal prices beginning to rise, in response to (stimulus driven) expectations of increased demand, and recognition of tight supply.  The markets are looking toward base metals’ supply for potential resumption of industries, supported by various stimulus packages (initially within China, the largest consumer of raw materials), and are beginning to recognise a) the tightness of the supply, and b) the risks that Covid in Sokuth America and Africa could seriously limit supply responses.  
  • Gold prices continued to lift this week, as did share markets. 
    • Oddly the conditions posed by Covid now have positive factors for both markets:  risk & stimulus.
  • USA IP and Housing Starts both recorded modest lifts off large falls in prior months, though the shapes of the recoveries of these critical aspects of USA economy have yet to be credibly forecast. 
  • On a recent ABC program Stan Grant indicated his expectation that globalisation as we knew it will change, to one where most economies (national, state, large city) will be looing to have ‘local’ backup of industry capacity and supply, in case imports become restricted.  Evidence that the national flu infection rate fell from a normal 2.0% to 0.2% during the early Australian COvid-19 restrictions, indicates that some of the practices, (hygiene, distancing, isolation of or stay-at-home for the ill or quarantines) may need to be retained in some format to guard against future outbreaks.  Such capacity will come at a cost. 
  • Matau believes Australia needs to bring the national fuel (oil) supply inventories (some of which are stored in USA) back to home soil as a matter of urgency, to better safeguard against further transport disruptions.  Australia has agreed to maintain a 90 day supply, though even with the USA inventory, my understanding is that Australia’s inventory remains well below 90 days. 

SUMMARY  

*Copper  Chile has largely maintained Cu output, despite Covid, so far. 

*Cobalt  COB has achieved Co benchmarks for sulphate & hydroxide products.  

*Nickel  Woodmac says key to watch China’s NPI industry, and Indonesia’s HPAL plants.

*Zinc & Lead  Peruvian output tumbled.  Japanese producers reopen two Peruvian mines.  

Tin  Fundamentals may weaken in (northern) summer months, though some recovery is seen in June.     

Aluminium  Automotive sector recovery is supporting aluminium demand (from a low base).

Gold  Goldman Sachs raises gold price forecasts. 

Platinum & Palladium  PGMs to improve performance of Li-ion batteries.

*Oil  Global oil demand ‘on the mend’, though is a two-speed recovery, affected by Covid. 

*Coal  China’s import quotas have driven domestic HCC contracts higher, in absence of cheaper imports. 

Iron Ore  Price has increased over USD 100/t cfr, though driving factors might not support further increases. 

Shipping  Cape rates reduced again while Panamax rates jumped again this week. 

General 

*Singapore Shipping:  Bulks & tankers +ve yoy.  Containers slightly -ve yoy.  Passengers crashed.

*Baker Hughes – North American and World Rig Counts:  Rig Nos remain limited by oil prices.

*USA – Industrial Production:  IP decline growth is the deepest for 60 years.  Cap.Util remains low.

*USA – New House Starts: Starts bounced back … just a little 

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Reveiw 20200710 by Andrew Pedler – Now Available

Exploration Spending , Iron Ore, Japan Orders

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Japan’s Orders to Machinery (May data) also hitting lows not seen for a long time (last week reported on IP segments).
  • Port Hedland iron ore exports at record highs, reflecting China’s surging steel output, also demanding coking coal to match.  However while Cape vessels demand is now flat demand for Panamaxes has jumped.
  • Australian exploration expenditure (Mar20Qtr) showed strong growth for Au & Cu exploration spend.
  • Base metals’ pinch-point graphs show metal prices beginning to rise, in response to (stimulus driven) expectations of increased demand, and recognition of tight supply.
  • Gold prices lifted this week, as did share markets.  Oddly the conditions posed by Covid now have positive factors for both markets:  risk & stimulus.

SUMMARY  

*Copper  RIO slashed forecast Cu output from Oyu Tolgoi.  Further tightens markets.

*Cobalt  KoBold Metals, a start-up by a coalition of billionaires, plans exploring Canada for cobalt.  

*Nickel  Ni prices in recovery mode.  Near term supply issues.  Long term demand growth to squeeze.

*Zinc & Lead  Zn & Pb mine supply and demand both disrupted.  Downstream activity is picking up

Tin  Alphamin-Bisie performing well.  Long term Sn demand to outstrip production.  Way to go yet.  

Aluminium  China is unlikely to dominate growth in the Al market in the next two decades.

*Gold  Both equities and gold prices are increasing.  Current conditions may suit both.

Platinum & Palladium  Russian Pd output un-phased by Covid.  Provides Russia with stronger market position.

*Oil  IEA’s 2020 demand forecast lifted, though USA covid-19 cases may dampen demand growth. 

Coal  Steel production growth needs to be matched with coking coal supply.  Met-coal cost curves.

Iron Ore  China’s iron ore stocks are stable.  This year’s wet season has had minimal impact on miners.

Shipping  Panamax rates jumped this week, with Cape rates unchanged. 

General 

*Pt Hedland – iron ore exports:  China’s steel industry is surging.  Iron ore export levels are high.  

*Pinch-point graphs – Base metals:  Prices are rising while inventories return to low levels.

*Australia – Mineral and Petroleum Exploration Spending:  Growth in spend on Au & Cu.

*Japan – Orders to Machinery:  negative growth for total orders.  Limited positive segments.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200703 by Andrew Pedler – Now Available

Japan & USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Japan’s Industrial production is hitting lows not seen for a long time.  LNG pricing is also wallowing though appears to be bottoming.
  • USA’s PMIs for June data staged a remarkable jump.  Matau is sceptical that the PMI outlook presented can be sustained in the face of the current USA Covid-19 status.  Construction spending has reduced to minimal growth.  The USA industrial data does not look very healthy, and has not for some time.  Several facets have been reporting negative yr-on-yr growth since September 2019.  (e.g. see last week’s Commodity Review)
  • China’s steel production growth has boosted iron ore prices and demand for bulk carriers.
  • Base metals:  South America remains a focus, with Covid-19 risks to base metals supply.  Exchange inventories in Shanghai are mostly reducing.  Other exchanges mostly show gains.  Weekly data is creeping back toward the tight end of the pinchpoint graphs and prices are beginning to rise.  The northern hemisphere industry (including southern Chinese steel) usually slows down in July-August, which we expect to happen, likely exacerbated by Covid (though not as much in China as elsewhere).
  • Gold prices did not really go anywhere this week, except in other currencies.  Numerous risks remain available to trigger price responses including geopolitical unrest, and market fears of second+ waves of Covid-19 virus.  

SUMMARY  

Copper  Cu price has recovered well, though China’s seasonal summer slowdown may test current levels.

Cobalt  Tesla is being pressured to disclose its evaluating potential human rights issues in sourcing its Co.  

Nickel  BSX progressing evaluation of its Ta Khoa Ni-Cu-PGE project in Vietnam, with good intercepts.

Zinc & Lead  Forecasts are for Zn price to edge higher near term, though soften slightly mid-term.  

Tin  Covid-19 has driven demand shocks and supply shocks to most commodities.     

Aluminium  China’s domestic alumina output is softening while demand is increasing. .

Gold  Transport disruptions that have affected gold settlements are also impacting Pt & Ag settlements. 

Platinum & Palladium  Mar20Qtr sales of Pt bullion soared.  Industry lower prices will stimulate increased volume sales.

Oil  Oil prices up on the week but have renewed caution re-Covid-19 infections in USA.  

Coal  Coking coal demand firm on rising (global) steel output.  Chinese import restrictions still an issue. 

Iron Ore  2020 has been subject to major supply disruptions for iron ore. 

Shipping  Panamax rates becoming more efficient than Capes in the current strong demand environment. 

General 

Japan – LNG prices:  appear to be bottoming, following Brent crude price moves.  

Japan – Industrial Production:  broadly heavy falls in May.

USA – PMI:  surprising jump in expectations in June data.  Can it withstand Covid?

USA – Construction Spending:  minimal growth in May data.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200626 by Andrew Pedler – Now Available

World Steel, China Industry & energy and transport.

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • World Steel production increased in May with only Japan and USA recording negative mo-on-mo growth.  Output is recovering from lows in April.  ON a yr-on-yr basis many countries will take time to recover output to pre-Covid-19 levels, if they do.
  • China’s steel production growth has boosted iron ore prices and demand for bulk carriers.
  • China’s industry & Energy output for May recorded broadly positive yr-on-yr growth for key elements.
    • Globally, supply & demand have been impacted differently, often by geographic spread and timing of Covid-19 epidemics.  Chinese supply is surging again, firstly to meet domestic demand.  However raw materials supply is bring affected by Covid-19 epidemics, currently arriving in South America and other countries.  Demand from advanced economies is similarly at different stages. 
  • Base metals:   South America is now a focus, with risks to base metals supply. 
  • Gold prices have improved.   Numerous risks are available to trigger price responses including market fears of second+ waves of Covid-19 virus. 

SUMMARY  

Copper  Price increasing upon fears of disruption to South American supply by Covid-19 related factors.

Cobalt  DRC is halting artisanal mining to ‘improve controls’ while it installs a (Govt) monopoly on artisans.  

*Nickel  WSA intersects very encouraging Ni results in the Gawler Craton in South Aust.  Assay awaited.

Zinc & Lead  Covid-19 had first affected demand, now it is similarly approaching supply.  

Tin  Covid-19 wreaking havoc in Sn supply chains.     

Aluminium  China’s Al sector appears relatively unscathed by Covid-19.

Gold  Gold price continues to respond to geopolitical risks, exacerbated by Covid-19. 

Platinum & Palladium  Platinum purchases more than doubled in Mar20Qtr.  Zimbabwe’s currency collapsed.

Oil  China holds strong position in oil price ‘war’.  China & Russia lost control.  USA is absent.

Coal  China’s import controls not clearly set out, just half way through 2020, and approaching limits.  Australian supply has issues.

Iron Ore  Vale received permission to reopen iron ore mines.  Chinese ore stocks are low.

Shipping  Demand for Cape vessels flowing onto Panamax usage. 

General 

*World Steel: Only USA & Japan recorded negative mo-on-mo steel growth for May.  

*China – Industry & Energy Output:  China’s recovery from Covid-19 is broadly strengthening..

*China – Transport – Freight & Passenger:  Impact of Covid-19 was deeper than for SARS.

*USA – Durable Goods, Vehicles, Electronics & Computers:  -ve growth, particularly for durables & vehicles.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200619 by Andrew Pedler – Now Available

Singapore Shipping

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • China’s Steel production growth has boosted iron ore prices and demand for bulk carriers.
  • Base metals:   South America is now a focus, with risks to base metals supply.
  • Gold prices have improved.  Plenty of risks available to trigger price responses including market fears of second+ waves of Covid-19 virus. 

SUMMARY  

*Copper  China’s Cu inventories at 17mo low levels.  Chile has large Covid-19 infection growth rates.

*Cobalt  Tesla plans to use of zero Co batteries but has contracted to buy major amounts of Cobalt.  

*Nickel  BHP acquired Honeymoon Well (Ni), from Norilsk, and is re-focusing on Ni. 

*Zinc & Lead  Peru’s forecast Zn output now cut back by Covid-19.  China’s Pb output is stable. 

Tin  MLX’ Renison (Sn) mine life extended for ten years.     

Aluminium  Al market pricing likelihood USA will replace Canada’s tariff exemptions with quotas.

*Gold  Despite some economic improvements, there remain plenty of risks and catalysts for Au prices. 

Platinum & Palladium  Amplats ramping up its mine production (very Covid-safe aware).

*Oil  Iraq & Kasakhstan will comply better with OPEC+ goals.  USA’s erratic focus remains concern.

*Coal  Some NipponSteel Sep20Qtr LVPCI & SSCC agreements.  India opening up mining to pte coys.

*Iron Ore  China’s iron ore inventories at 17mo lows on strong steel production growth and outlook. 

Shipping  Cape rates up markedly on strong iron ore demand. 

General 

*Port of Singapore – shipping traffic:  Strong growth for bulk carriers.  Passenger traffic stopped.

USA – New House Starts:  strong -ve growth, with recovery signs only in west.

USA – Industrial Production:  strong -ve growth.  Though not in good shape prior to Covid-19

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200612 by Andrew Pedler – Now Available

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • China’s transport data is insightful in its portrayal of impacts on different segments, and potential recovery time-frames.   (see last week’s issue if not already read).
  • Base metals:  Because of the disruption to both demand and supply, albeit in different locations and on different time-scales makes forecasting supply demand balances and conditions … difficult.  Markets now fear a second wave of Covid-19 infections in USA and Europe.  South America is now a focus, with risks to base metals supply.
  • Iron ore shipments and bulk carriers are in demand to meet China’s surge in steel production.
  • USA oil-shale rig counts have continued to reduce.   Comments suggest that an increase in oil price might see some rigs reinstated.  Though that challenges the idea that the oil price increase may be sustained, as demand has yet to demonstrate recovery. 
  • Gold prices have improved, responding to market fears of second+ waves of Covid-19 virus. 

SUMMARY  

Copper  Falls in demand still playing off against supply disruptions in Cu (and other base metals).

Cobalt  COB backed by majors.  CATL & Tesla agreed on LFP batteries (Co-free) for model-3 (only).  

Nickel  Stainless steel outlook and restaurant cutlery feature in Citi analysis.

Zinc & Lead  Jump in LME inventories dampened outlook for Zn & Pb, at least short term.  

Tin  Indonesia’s PT Timah to develop tin smelting capacity.     

Aluminium  USA continues to raise threats of tariffs against Canada, despite agreements since WWII.

Gold  Non-bank ‘Nidhi’ finance increasing plus surge in gold sales and loans in India. 

Platinum & Palladium  Platinum’s role(s) are important in the health sector.

Oil  USA rig numbers at record lows (since 1940).  Oil price recovery may see rigs added by end of mo.

Coal  SSCC Jun20Qtr contract settlements.  Australian suppliers exercising discipline by ‘stealth’. 

Iron Ore  CRU forecasts strong steel output ahead of wet season in southern China.  Brazil has issues.

Shipping  Freight rates firmed on iron ore demand, and Brazilian supply issues. 

General 

Port Hedland – Iron ore exports:  continuing to match China’s surging steel output. 

Baker Hughes – North American Rig Counts:  have continued downward. 

Germany – Industrial Production:  heavy falls in April data.

United Kingdom – Industrial Production:  heavy falls in March data.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200605 by Andrew Pedler – Now Available

China transport & Recovery

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • China’s transport data is inciteful in its portrayal of impacts on different segments, and potential recovery time-frames. 
  • Base metals are starting to show some price recovery though some of Covid-19’s affected-supply-shock will continue.  Because of the disruption to both demand and supply, albeit in different locations and on different time-scales makes forecasting supply demand balances and conditions … difficult.
  • USA PMI collapsed in May.  The outlook is poor for USA. 
  • USA oil-shale rig counts have reduced dramatically.  The rapid production decline profiles of the oil-shale holes means USA’s oil output will really shrink soon!   … Commentary doubts an ability to recover quickly. Despite OPEC+ actions.  
  • Gold prices have reduced modestly anticipating industrial recoveries, though we expect ongoing triggers from other factors leading to ongoing volatility in the near future.

SUMMARY  

*Copper  Cu price advances on Covid-19 recoveries and expectations of stimulus driven demand.

Cobalt  Chinese Svolt claims development of a Co-free battery, but industry expects Co usage to continue.  

Nickel  Indonesia to retain Ni-ore export ban, though will relax exports on some other minerals.

Zinc & Lead  Zn’s spot TCs continued down as South Americans restarted production, despite Covid-19.  

Tin  Forecast shortages of supply are now showing in inventories and prices.     

Aluminium  China is now importing aluminium.  Japan’s Al price premium at lower levels.

*Gold  Some safe-haven criteria are easing, though other triggers remain. 

Platinum & Palladium  Forecast Pt prices to have near term rally upon recovering industrial demand.

*Oil  OPEC+ to agree to extend the 9.7 mb/d cuts. USA may have cut too much production?

Coal  HCC & LVPCI Jun20Qtr contract prices.  Imports surged into China, which is tightening ports again.

*Iron Ore  Indian steel capacity utilisation is recovering post- heavy lockdown, measures.  … ditto China.

*Shipping  Shipping freight rates firmed on iron ore, coal and other bulk commodity demand. 

General 

*China – Freight and Passenger Traffic:  comparisons between impacts of SARS & Covid-19. 

*Baker Hughes – Rig Counts – World & North America:  Rig counts down, across the board.

*Japan – Industrial Production & segments:  Steep falls in output and growth for most segments.

*USA – Purchasing Managers’ Index:  ‘Recovering’ slightly from lows but outlook is poor.

USA – Construction Spending:  Growth rates down though remain positive (for April).

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200529 by Andrew Pedler – Now Available

World Steel

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Base metals are starting to show some price recovery though some of Covid-19’s effected supply-shock continues.  
    • Demand is improving.  
    • Stocks are falling again.
  • World Steel sees China performing a credible recovery, though the rest of the world’s output is still Covid-19-struck.  
  • USA Durable Goods and Vehicles orders really collapsed in April. 
  • USA oil-shale rig counts have reduced dramatically. 
    • The rapid production decline profiles of the oil-shale holes means USA’s oil output will really shrink soon! 
  • Gold prices have reduced modestly.  The potential for economies to open up again may be diverting capital from gold.  Though there may well be volatility in the near future.

SUMMARY  

*Copper  Chile’s Cu industry, so far, only has a small output reduction.  

*Cobalt  DRC Co supply issues, artisanal miners & class actions. 

Nickel  Ni demand outlook down, though Chinese demand has only a small decline.

*Zinc & *Lead  Unreported Zn stocks building up.  Mining industry to adapt post Covid-19.  

Tin  Supply deficit with a huge backwardation. 

Aluminium  Tasmania to host ABX’s aluminium fluoride process.

*Gold  Banks have issues with Central Bank of Venezuela and a terminated large gold deal. 

Platinum & Palladium  Deficit in Pt Pd likely in 2020, though may revert later.

*Oil  USA shale-oil industry’s production outlook hurt by record drop in rig numbers. 

Coal  Chinese industry calling for relaxation of import restrictions / delays for met coal. 

*Iron Ore  Prices surged on Brazilian supply issues.  Industrial operations in China resumed.

Shipping  Cape rates up (iron ore) and Panamax rates (coal & clinker) flat this week. 

General 

*World Steel:  Chinese output is recovering credibly, though rest-of-world is down heavily.

*Baker Hughes Rig Counts – North America:  Oil & Gas rig numbers down, heavily. 

*USA – Durable Goods, Vehicles, Computers & Electronic Goods:  Orders down heavily.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20201522 by Andrew Pedler – Now Available

China

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Base metals are starting to show some price recovery though some of Covid-19’s effected supply-shock continues.  Demand is improving. 
  • China’s industry & energy output has increased markedly during April kin most segments.  
  • USA housing starts collapsed in April. 

SUMMARY  

*Copper  China’s physical infrastructure expanded considerably since 2009.  More Cu is needed for plans

*Cobalt  Supply disruptions due to coronavirus lockdowns.  The issue now is sulphur (lack of). 

*Nickel  Indonesian expansion plans are faced with a deep waste problem.

Zinc & Lead  Mid-term outlook ‘constructive’ though near-term requires caution.  

*Tin  Tightness has returned, strongly.  Watch semi-conductors for demand.    

Aluminium  Europe still pushing for its aluminium smelters, to protect its industrial base.

*Gold  Central Banks have been adding to Reserves since 2018.  Prescient or wary of USD?

Platinum & Palladium  Balancing Covid-induced supply disruptions with industrial demand, similarly disrupted.

*Oil  Oil demand may struggle to bounce back soon from Covid-19. 

*Coal  Steel mills adopting hybrid models for pricing of LVPCI and semi-soft coking coal. 

*Iron Ore  China’s steel demand growth far outpaces expectations from investors and industry. 

Shipping  Cape and Panamax vessel rates up this week.  

General 

Maps of China:  Provinces & High Speed Railways

China – Industry and Energy Output:  Strong recovery in most segments in April.

USA – New Housing Starts:  Collapsed in April.

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200515 by Andrew Pedler – Now Available

Singapore

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Base metals are starting to show some price recovery as Covid-19 has effected a supply-shock. 
  • Shipping data through Singapore (for April) shows the impact of the various Asian Covid-19 restrictions, 
  • USA Industrial Production and Capacity utilisation for April return significant downturns.

SUMMARY   

*Copper  As China returns to work from deep lockdowns during Feb, a demand recovery is not surprising. 

*Cobalt  Prices appear to be bottoming, as enquiry rates increase.  Very little ‘spot’ material available.   

*Nickel  Philippine Ni miners now allowed to operate up to full capacity, under strict protocols.

*Zinc & Lead  A broad mini-recovery across base metals, accompanied by supply-shock due to Covid-19.   

Tin  Sharp stock draws.  Production dented by low prices and government mandates.      

Aluminium  China’s Al output at 10 mo high.  Price recovery in April after smelters cut supply.

Gold  Economic contractions globally & low reported GDPs, favour holdings of gold.  

*Platinum & Palladium  Deficits in Pt & Pd now highly likely this year.  South African mines closed.

*Oil  Demand recovering in China.  Brent prices ‘anchored’ around USD/bbl.  WTI recovering.  

Coal  Mixed factors incl: supply from Qld & Datong China, USA demand delays & Indonesian legislation.  

Iron Ore  China’s iron ore port inventories at three-year lows, coupled with steel production resuming.  

Shipping  Cape & Panamax rates down.  

General  

*Port of Singapore:  Bulk & Tanker traffic growth +ve.  Container & *Passenger traffic -ve growth.  

Japan – LNG prices:  Continued low spot prices.  

*USA – Industrial Production & Capacity Utilisation: IP & Cap.Util. both reported down heavily.   

Commodity Review 20200925 by Andrew Pedler – Now Available

Commodity Review 20200508 by Andrew Pedler – Now Available

Gold & Rigs & Iron Ore

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • There are abundant conflicting influences on supply / demand balances for most commodities, driven mostly by restrictions and issues related to the COVID-19 pandemic, which coupled with political decision making, makes forecasting with confidence very difficult.  Many companies have withdrawn guidance on their forecast results. 
  • Fundamentals for long term expectations do not appear to have materially, changed, if normal expectations for economics prevail post-COVID.
  • Coronavirus – the battle continues, with China, Australia & NZ emerging from lower infection rates and Europe and notably USA opening up at higher infection rates.  Russian rates have increased markedly too. 
  • Gold – Retains safe-haven status through jump in ETF uptake, though with corresponding slump in Jewellery demand.  
  • Base metals:    Watch the base metals as countries emerge from lockdowns … 
  • Oil markets continue to re-stabilise, as best they can, with significant storage issues.  However rig numbers have been slashed, notably in USA.  Saudi’s rig numbers increased yr-on-yr. (… the benefits of low cash costs).  USA’s traditional ‘driving’ season may be stunted this year.  
  • Iron ore:  Chinese and South Korean demand may be a salve for Australia’s lockdown battered economy

SUMMARY   

*Copper  Mine-supply is starting to ramp back up.  Headwinds and Tailwinds at the same time. 

*Cobalt  China Molybdenum Cu-Co product exports from DRC diverted through non-South African ports.    

Nickel  China port stocks of Ni ores is falling.  

*Zinc & Lead  Zn concentrate TC’s lower in an uncertain market.  China’s Pb-acid battery Capacity util’n is lower.   

Tin  Global tin mine supply to contract in 2020.  Difficult to forecast re-opening timings – uncertain times.  

*Aluminium  Tariffs have done nothing to reduce USA’s import dependency.  “They never could.” 

*Gold  Gold price steady though retains safe-haven.  Market expects equities rallies.  

*Platinum & Palladium  CHN (WA) & IPT (NSW) both report stunning Pt & Pd intercepts at exploration projects.

*Oil  Prices rose despite ongoing increases in USA oil stocks.  Expect volatile prices ahead. 

Coal  China’s long Labour Day holidays slow trade this week.  U/G explosion at Grosvenor mine Qld.

*Iron Ore  Brazil – China shipments reduced while Australia-China & South Africa-China shipments rose.  

Shipping  Despite a resilient iron ore market, long haul Cape-sized shipments pricing fell.  

General  

*Gold – Supply-Demand & Central Bank holdings:  ETF’s up but Jewellery down.  

*Port Hedland – Iron Ore shipments:  Shipments fared well thus far thanks to China & Sth.Korea.

*Baker Hughes – World & North American Rig Counts:  massive cuts in USA oil rig counts.  

Japan – Industrial Production:  continued negative growth over all.