by Marg | Oct 25, 2021 | Commodity Review, Now Available
China – USA
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- China’s industry & energy data continue to show effects of its trade sanctions, and production curbs. Steel products output is down. Energy production is up. Renewables related products mostly appear with positive growth. Manufactured goods have varied growth profiles.
- USA’s housing and industrial production data records growth, but we consider these data still have a covid affected (low) denominator.
- Los Angeles port is utterly clogged, mostly with empty containers. Only allowed to stack them 2x high … no floor space left … so ships waiting offshore cannot bert to unload as ther eis nowhere to put their containers. Appealing to change regulations to allow stacking to 6x high.
- Base metals’ pinchpoint graphs continue to highlight (very) tight markets. The prices are now responding strongly to low stocks.
- High prices have NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.
- In fact for most of these stock levels are continuing to decline despite high prices.
- Implies very tight markets.
- New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available. Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates of the manufacturers and entrepreneurs. Actual rates will have to reduce to the actual rates of raw materials supply growth.
SUMMARY
Copper China views Cu as a highly strategic (& critical) metal.
Cobalt Top ten Cobalt producers (outside DRC). Outlook to be driven by batteries.
Nickel Prices at 7 yr highs on supply concerns relative to forecast demand.
Zinc & Lead Rising power prices could lead to metal producers relocating operations away from Europe.
Tin Sn prices have been the best performers this year-to-date. Stocks low and demand good.
Aluminium Aluminium alloys are also in short supply.
Gold Prices reduced gains upon USA Fed comments on inflation in 2022, and on winding back stimulus.
Platinum & Palladium PBoC launched ‘Panda’ (Pt) coins..
Oil Oil prices boosted by concerns of coal and gas shortages.
Iron Ore RIO plans massive power investments for its projects.
Shipping USA scrambling to clear US port logjams.
General
USA – Bond Yields: Marked lift in yields, now implying economic improvement sooner
China – Industry & Energy Output: Mixed: steel products down but energy & renewables better.
China – Transport: Freight is growing slowly while Passenger traffic is still struggling.
USA – Housing Starts: positive growth likely still enhanced by (covid) low-denominator.
USA – Industrial Production – Capacity Utilisation: Growth rates still enhanced by covid effects.
by Marg | Oct 18, 2021 | Commodity Review, Now Available
Shipping
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- China’s power constraints and blockading of roads & highways in Peru are impacting the production output of several of the base metals. (mostly of Cu & Zn +/- Pb). We believe these events will have temporary effect, but the markets are already tight.
- The world is progressively recovering from the Covid-19 pandemic. Increasingly talk is turning to ‘living with covid’, however it appears that many people are not paying attention and are expecting the ‘old normal’ to return. Epidemiologists caution that we still need to be careful, as there is still much to be learned about the Covig-19 strain(s).
- Shipping data illustrates the slowing of activity in response to multiple drivers that are restricting supply and demand for many commodities during a period of high uncertainty, despite economies showing signs of recovery. Recovery will progress and make good, but at present it is a battle.
- Base metals’ pinchpoint graphs continue to highlight (very) tight markets. The prices are now responding strongly to low stocks.
- New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available. Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates of the manufacturers and entrepreneurs. Actual rates will have to reduce to the actual rates of raw materials supply growth.
SUMMARY
*Copper The power crises could shift forecasts of copper oversupply next year to shortfalls. + Mexico – changes its rules!
Cobalt Sales of NEVs reduce upon cuts to subsidies in China. Co is scarce and sought after.
*Nickel If Ni-free batteries do not become available, the EV revolution grind to halt in only ~2 years.
Zinc & Lead Refined output of Zn is stressed (power shortages). China’s Pb-acid battery output is growing.
Tin The tin market has yet to resolve the supply-demand imbalance evident throughout this year.
Aluminium Rusal plans to supply Al to China to meet its (uncharacteristic) shortfall in production.
Gold Gold price up fractionally (in USD). Hallmarking is now mandatory in India.
Platinum & Palladium Top 10 Platinum producers.
*Oil Power cuts in China. Coal shortages in India. A scramble for petrol in Britain. … and more!
*Iron Ore China’s northern steel mills asked to cut production from mid-Nov21 to mid-Mar22.
*Shipping Dry bulk market – two more solid Qtrs. Watch Mar22Qtr & Jun22Qtr.
General
Port of Singapore – Shipping: impacted by numerous disruptive forces. Containers are strongest.
Port Hedland – Iron Ore: impacted by numerous disruptive forces. Excl-China sources have best growth.
USA – Yields, Gold, Copper & Oil prices: As expected
USA Energy End Use: Trying to recover from disruption(s), but how much will it achieve?
by Marg | Oct 11, 2021 | Commodity Review, Now Available
BH rig Counts – Germany
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- China’s power constraints and blockading of roads & highways in Peru are impacting the production output of several of the base metals. (mostly of Cu & Zn +/- Pb). We believe these events will have temporary effect, but the markets are already tight.
- The world is progressively recovering from the Covid-19 pandemic. Increasingly talk is turning to ‘living with covid’, however it appears that many people are not paying attention and are expecting the ‘old normal’ to return. Epidemiologists caution that we still need to be careful, as there is still much to be learned about the Covig-19 strain(s).
- German economic data is showing a recovery in Durable GFoods and Construction, though these data have yet to translate into improved industrial production. So far it looks like German IP has recovered to the pre-covid downtrend, and has not digested the news of the improving durables data.
- Base metals’ pinchpoint graphs continue to highlight tight markets. Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.
- Baltic shipping indices report on the demand for shipping, which is at 13 yr highs! This is not the language the general media is speaking in terms of the global economy …?
SUMMARY
Copper Mongolian Govt warns RIO on delays to Oyu Tolgoi. Peruvian blockades continue.
*Cobalt Prices for cobalt intermediate products are expected to lift following China’s Golden Week.
*Nickel Despite widespread poorer outlooks, Ni & Sn are expected to fare well on booming EV sales.
*Zinc & Lead China power rationing and blockades in Peru are impacting supply of Zn & Pb.
*Tin “Another week, another wild ride on the tin roller coaster”. It is really tight!
*Aluminium Power shortages are impacting Al smelters in China and Europe.
Gold Gold price is trading in a band, with price volatile, but little changed this week.
Platinum & Palladium PDI reported notable increases in Pt jewellery sales in the Jun21Qtr.
*Oil Oil prices surged on tighter supply, at least until OPEC+ increases supply in November.
Iron Ore BHP forges ahead with its new South Flank mine despite reported softer outlooks for the sector.
*Shipping The Baltic Index, reflecting shipping demand, increased to a 13 year peak.
General
*Baker Hughes Rig Counts: Global rig #s recovering from Covid, which made crew logistics hard.
*Germany – Industrial Production: IP has low growth, the strong growth from Durables has yet to tsfr into IP.
by Marg | Oct 4, 2021 | Commodity Review, Now Available
China – USA – Power – Japan
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- China’s power constraints, largely self imposed, are restraining China’s production and also demand for particular products. Part of the target is to have clear skies over Beijing for the 2022 Winter Olympics. This situation is still to work through. However there has already been impact on several commodities’ production and prices, attributable to the power cuts, on top of China’s trade tactics.
- The world is progressively recovering from the Covid-19 pandemic, though Covid is still seriously impacting shipping causing meaningful delays and cost increases
- USA economic data is showing a recovery from the covid-19 pandemic under way with several data series now back to pre-covid levels.
- Base metals’ pinchpoint graphs continue to highlight tight markets. Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.
SUMMARY
Copper RIO declared Force Majeure on its Kennecott Cu operations. Temporary, but still, a disruption.
*Cobalt Demand is leaning toward Australian Co, to avoid the stigma(s) associated with DRC material.
Nickel BHP’s Kwinana plant yielded its first nickel sulphate crystals.
*Zinc & Lead China’s power rationing & impact on supply & demand for Zn. Pb: Mt Isa smelter 90 years old.
Tin China’s power crisis impacted Ni & Sn production & prices. … might need Australian coal.
Aluminium Winter is coming to the PRC, with more power cuts. Expect impact on Al output.
Gold Strong retail & ETF demand, but less than outflows.
*Platinum & Palladium Russian govt proposed changes to mineral extraction taxes (MET) for Russian firms from 2022.
Oil If prices reach higher than USD 90/bbl, could drive demand destruction.
Iron Ore FMG’s Solomon shut down upon accident. India’s monsoon reduced output in September..
Shipping Baltic indices all higher on China port congestion, demand for iron ore & coal. Grains reduced.
General
USA & Australia – Yields & Rates: inverted curves for prior financial crises but not for covid.
Japan – Industrial Production: growth positive though is the last mo ‘flattered’ by low prior mo
USA – Purchasing Managers’ Index: Strong at >60, though PMI usually peaks at ~60.
USA – Industrial Production: IP is back to pre-covid levels (which were declining).
USA – Durable Goods et al: Durables are strong, though Vehicles are weak.
USA – Construction Spending: Private & Residential spending strong, Public & Non-Res weak.
by Marg | Sep 20, 2021 | Commodity Review, Now Available
China, Singapore
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- “Sorry Gold Bugs!” A major investment house has sold its interests in gold, assessing that the returns in such a low interest rate environment from a non-earning risk protection investment, do not justify holding costs. Matau prefers to hold gold interests in equities that have production growth. Production growth (along with other key criteria being met) assures better cash flow growth in all phases of price cycles, than non-growth entities.
- While the world is progressively recovering from the Covid-19 pandemic, Covid is still seriously impacting shipping causing meaningful delays and cost increases. An example here shows the impact and delays in shipping a container of shoes (per shoe) from China to Los Angeles.
- Singapore shipping traffic shows a reduction in traffic in July & August, notably in bulk commodities, with recent reductions also in tankers. Container traffic is also affected but less do than other segments.
- In the light of the above, and China’s trade battles, China’s Industry and Energy data is worth examination, as it provides granularity to what is otherwise usually highly generalised statements.
- Base metals’ pinchpoint graphs continue to highlight tight markets. Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.
SUMMARY
*Copper Concerns over labour action in Chile is dissipating, as labour contracts are agreed. Chile’s miners have widely settled labour contract agreements (ranging fro 3-5 yrs) without notable strike action.
*Cobalt China plans to encourage mergers in the NEV segments to achieve size (market power). This is consistent with China’s other campaigns (iron ore & other) to merge intra-segment entities to generate larger companies with more global market power.
Nickel Nickel mine production is forecast by Fitch to grow strongly from 2021-2023.
*Zinc & Lead Zn mines recovering from Covid (ex China). Covid outbreaks in China are threatening mine growth.
*Tin New tin supply is not keeping pace with growing demands.
*Aluminium A disruption to bauxite supply from Guinea remains a concern, particularly for China & Russia.
*Gold “Sorry gold bugs!”. World’s largest fund manager steps away from gold.
Platinum & Palladium Of the PGE’s Pd has is in the best position for price recovery.
*Oil Iran plans to boost oil exports despite remaining USA sanctions.
Iron Ore Reduced Chinese steel output drives less iron ore imports and lower prices.
Shipping Baltic indices show that shipping is in strong demand. Possibly tightness due to covid delays.
General
*Singapore Shipping: Traffic generally slowed down for the past couple of months. Passenger shipping traffic has recovered (oddly in total gross tonnage terms, though the numbers of ships reported have dropped markedly, implying that it is only the big ships that are returning … so far).
*China – Industry & Energy Output: Steel down markedly, manuf. goods mixed, generally up.
by Marg | Sep 14, 2021 | Commodity Review, Now Available
Vietnam, South Korea, UK, Germany
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- South Korea & Vietnam are two of the Asian countries that are actually ‘growing’, as emerging industrial nations. (South Korea has been doing this for longer than Vietnam). Chinese and Japanese companies migrated some manufacturing operations to lower cost jurisdictions during the 2000’s and onward. This benefited countries like Philippines, Thailand, Malaysia, Vietnam and Indonesia.
- UK & Germany are recovering from covid, though often the recovery is to the pre-covid downtrend (so far).
- Iron ore shipments from Port Hedland reduced modestly in August, notably in China, though the ex-China destinations reported strong growth (from much smaller bases than China’s).
- Base metals’ pinchpoint graphs continue to highlight tight markets. Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.
SUMMARY
*Copper Chilean miner strikes appear (largely) to have been averted.
*Cobalt Tightening feedstock supplies expected to support prices for the rest of 2021.
*Nickel BSX continues to get strong Ni massive-sulphide intercepts. .
Zinc & Lead Zn conc TCs increased upon more availability. Pb remains tight in Europe but ample in China.
Tin China’s tin output increased despite restricted power consumption.
Aluminium The coup in Guinea could upset global aluminium if bauxite operations are affected.
*Gold USA Fed Governors widely talking about tapering off on bond purchasing. ‘Healthy’ economy.
*Platinum & Palladium Pt demand increasing on increased catalyst loadings in China, and substitution of Pd. .
Oil Iraq is rebounding from the coronavirus pandemic. Total is committing to large projects in Iraq.
*Iron Ore Brazilian red-tape may slow output growth and support prices further.
*Shipping Shipping demand has continued to growth through 2020-21..
General
*South Korea – Industrial Production: Growth since 1975, & back to pre-covid levels.
*Vietnam – Industry output: Strong growth to 2019. Covid knocked 2020 about in segments.
*Port Hedland – Iron Ore exports: Total exports reduced, China down, but ex-China up strongly.
Germany – Industrial Production: IP & durables are recovering, construction is work in progress.
United Kingdom – Industrial Production: Recovery appears to be to lower than pre-covid levels.
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