Commodity Review

Commodity Review 20210115 by Andrew Pedler – Now Available

Commodity Review 20210115 by Andrew Pedler – Now Available

Shipping – IP ( USA, UK & Germany)

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Base metal markets are tightening further. (pinch points & prices).  Notably Ni & Cu.
    • Permitting issues for major mines for RIO & BHP may further tighten the copper market if issues are prolonged.
  • Demand is increasing in key industrial nations (USA, Japan & Europe … in addition to China’s already demonstrated domestic recovery … with further potential pending its export customers’ recoveries).   
    • However industrial production in USA, Germany and UK still have negative growth, which should improve as durable goods orders & PMI’s are either positive or improving.
  • Covid-19 is far from peaking, as more is learned about emerging strains, and is disrupting transport and commercial businesses.
  • Pinchpoint graphs (based on exchange stocks) continue to highlight tightness in markets for Cu & Ni in particular.
    • ‘Shadow’ stockpiles are discussed in comparison with exchange stocks on the Pb & Sn pages. 
  • Shipping data [Singapore & Port Hedland] provide valuable signals comparable with other economic data, that are valuable for confirmation (rather than media hype).

SUMMARY  

*Copper  BHP & RIO facing issues in obtaining mining permits for major planned Cu operations. 

*Cobalt  Co prices started the year strongly.  BMI forecasts a marginal deficit by late 2012.  

Nickel  Eramet’s SLN’s large Ni mine is at risk of liquidation.

Zinc & *Lead  Zn: Caribou mine on track for March restart.  *Pb: LME Shadow stocks pt-1.  Al shadow matches Exchange stocks.

*Tin  LME Shadow stocks pt 2.  Shadow Ni, Zn, Pb stocks increased, but shadow Cu, Sn stocks down. 

Aluminium  RIO has extended Tiwai Pt AL smelter life with new power contract.

*Gold  Gold price is facing several of the usual opposing drivers.  Likely to remain in USD 1700-1900/oz. 

*Platinum & Palladium  Outlook for Pt & Ag to outperform Au during 2021.

Oil  Value of OPEC oil exports for 2020 expected to be down 45% from 2019.  Increasing in 2021. 

Coal  Supply concerns in China for metallurgical and thermal coal are forcing some concessions. 

*Iron Ore  China’s iron ore imports (1.17 billion tonnes) were at record levels in 2020.  

Shipping  Cape & Panamax rates strengthened, with ships delayed by cold weather & good demand. 

General 

Port Hedland Iron Ore shipments:  Total (incl China) reduced yoy for Dec, though up mo-on-mo.

Singapore – shipping traffic:  Containers recovering, Bulks down, & tankers recovering in Dec.

Baker Hughes – rig counts World & Nth America:  Saudi reduced rig counts in 2020.

Germany – Industrial Production:  -ve growth for IP but +ve for Durables & construction. 

United Kingdom – Industrial Production:  Still -ve growth in most segments, but improving.

USA – Industrial Production:  IP remains -ve growth .  Mfg capacity is still <80%. 

Japan – LNG prices:  LNG prices are improving on increased demand and increased oil prices.

Commodity Review 20210115 by Andrew Pedler – Now Available

Commodity Review 20210108 by Andrew Pedler – Now Available

USA-Yields – PMI- Construction

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Base metal markets are tightening further. (pinch points & prices).  Notably Ni & Cu.
  • Demand is increasing in key industrial nations (USA, Japan & Europe … in addition to China). 
  • Covid-19 is far from peaking, as more is learned about emerging strains, and is disrupting transport and commercial businesses.  
  • Pinchpoint graphs continue to highlight tightness in markets for Cu & Ni in particular.

SUMMARY  

Copper  Cu concentrate market to remain tight in 2021.  

Cobalt  Co prices at 12mo high, but are low in historic terms.  Offtake is moving to multi-year terms.   

Nickel  Analysts forecast high demand post-covid.

Zinc & Lead  Zn:  CPM Group forecasts mkts to normalise in 2021.  Pb: Toho Zinc to focus on Abra Pg-Ag.  

Tin  Sn price impact attributed to impact of Covid-19.      

Aluminium  Auto plants reopening in Europe, Japan, USA + Chinese appetite.

Gold  USD price fell on USA yield surge and USD rebound. 

Platinum & Palladium  Zimbabwe – Kuvimba Mining to raise capital, for Darwendale.

Oil  Saudi surprises with a large reduction on output planned for February. 

Coal  Hefty responses to Covid outbreaks are limiting coal transport within China. 

Iron Ore  Production for Indian and Chinese steel is surging. 

Shipping  Asian shipping rates inched higher on strong demand.

General 

USA – bond Yields: Yield for 3 yr bonds now above 0.2%.  10yr Yield now above 1.10%

USA – PMI:  New Orders and Production are particularly strong.  Can it endure Covid impacts?

USA – Construction Spending:  positive except for Non-Residential construction.

Commodity Review 20210115 by Andrew Pedler – Now Available

Commodity Reveiw 20201231 by Andrew Pedler – Now Available

20201231 End of Year data

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • 2020 end-of-year data and graphs.
  • Comparison of a range of important FX trends of countries related to Australian resources trade.
  • Pinchpoint graphs continue to highlight tightness in markets for Cu & Ni in particular.

SUMMARY  

Copper  Covid lockdown driven fear of food shortages driving copper prices. 

*Cobalt  COB tracking for production (pilot) in Mar21Qtr.  

*Nickel  Chinese interests in Ni projects to influence Ni pricing / demand.

Zinc & Lead  Global Zn mine production to recover in coming years.  (NCZ)   *Pb:  REE comments

Tin  AfriTin’s Uis project at full production.      

Aluminium  China’s Al imports are strong.  European demand recovery also seen. 

Gold  Au price’s strongest annual gain in a decade. 

*Platinum & Palladium  Car sales outlooks in China and Asia-Pacific are looking up.

*Oil  OPEC+ to meet Monday to determine production levels for February. 

Coal  Thin trading and reporting during the Christmas / New Year period.  

Iron Ore  China to open new iron ore mines and drive mergers & acquisitions. 

Shipping  Freight demand and rates up. 

General 

Gold price in other producers’ currencies:  more stable trends than expressed in USD.

Foreign Exchange Rate trends:  Review FX trends.

Commodity Review 20210115 by Andrew Pedler – Now Available

Commodity Review 20201225 ( abridged) by Andrew Pedler – Now Available

China, Worlds Steel, USA

Wishing you a Merry Festive Season leading to the New Year. 

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Pinchpoint graphs continue to highlight tightness in markets for Cu & Ni in particular.
    • 2021 will be interesting,

This week’s Commodity Review is an abridged version, being a collation of the data tables and graphs for each relevant commodity and economic release, with minimal or no accompanying commentary.

General 

World Steel:  Wider positive growth emerging.

China – Industry & Energy Output:  Widespread positive growth. 

USA Durable Goods, Vehicles, Computers & Electronics:  Improving

Commodity Review 20210115 by Andrew Pedler – Now Available

Commodity Review 20201218 by Andrew Pedler – Now Available

Singapore Ships & USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Pinchpoint graphs are highlighting tightness in markets for Cu & Ni in particular.

SUMMARY  

*Copper  Cu prices jumped.  Pinchpoint graphs show tightness.  Indications of a ‘boom’ cycle.

Cobalt  China-Moly acquires major stake in DRC’s Kisanfu Cu-Co mine not far from Tenke Fungurume.   

*Nickel  Impact Minerals (IPT) identifies large Ni-Cu-PGE inventory near Broken Hill.

*Zinc & *Lead  Tight Zn market lowers concentrate TC’s.  China’s shortages of power supply

*Tin  Covid restrictions leading to more consumption of electronics, and increased Sn demand.      

Aluminium  Australian Federal Govt to underwrite a lifeline to Alcoa’s Portland smelter .

*Gold  USA Fed adjourns FOMC meeting and plant to retain ZIRP through 2023.

Platinum & Palladium  Battery-powered truck fleets to convert to H2 fuel-cell technology in China.

Oil  Australian Kwinana oil refinery to close, replaced by a fuel import facilty. 

*Coal  LVPCI settlement for Mar21Qtr.  China’s power shortages linked to bans on Aust. thermal coal.

Iron Ore  Iron ore price is high on strong demand and restricted supply. 

Shipping  Asian freight rates remain firm on strong Chinese demand for raw materials. 

General 

*Port of Singapore – Shipping:  Bulks and Tankers in demand.  Containers down on prior months.

USA – Housing Starts:  +ve growth.  Resumed recovery trend from 2011.  

USA – Industrial Production & Capacity Utilisation:  IP growth is -ve and utilisation is suboptimal.

Commodity Review 20210115 by Andrew Pedler – Now Available

Commodity Review 20201211 by Andrew Pedler – Now Available

USA and Japan

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Battery minerals commodity supply:  – this thematic continues, and will for some time …  has been over-estimated by EV manufacturers for some time, though they appear to be recognising the limitations inherent in ramping up new mine supply.  Viz: discover, evaluation, permitting, construction and commissioning.   
  • China’s demand for steel and copper continues to surge.
    • Australian iron ore exports are not likely to be restricted by China as it needs too much of it to maintain its steel output.  
  • Base metals’ prices again lifted upon reducing exchange stocks and expectations of improving outlook via stimuli.  
    • However it is still unlikely that Covid-19 influence has finished yet, variably impacting (disrupting) both demand and supply.
    • But absolutely  … look at the pinch-point graphs with base metals’ responses to looming demand and fundamentally tight markets !!!

SUMMARY  

Copper  Chinese demand for copper will be a dominating factor in 2021 

Cobalt  Mined & refined Co reduced for the first time since 2016.  Market to tighten in 2021.  

Nickel  China is struggling to source enough Ni from traditional suppliers Indonesia and Philippines..

Zinc & Lead  China’s domestic Zn conc TCs are at 27 mo lows.   IBG progresses permits for Citronen. 

Tin  Tin has escaped relatively unscathed from this year’s pandemic.  Electronics set to pick up.

Aluminium  China’s winter pollution cuts restricting aluminium and alumina production.

Gold  Au bullion prices might meet headwinds depending on central banks’ actions toward recoveries. .  

Platinum & Palladium  Pt jewellery demand lifted as Pt takes (price) preference over Au..

Oil  Global demand for road fuels hit a two-month high last week, recovering from lockdowns. 

Coal  LVPCI & SSCC Dec20Qtr settlements achieved between Australian and Japanese.  

Iron Ore  Benchmark iron ore futures up on speculative demand (in China). 

Shipping  Asian rates up on strong Chinese demand for both coal and iron ore.

General 

Port Hedland – Iron Ore shipments: Shipments to China & Japan reduced but Sth Korea was up.

USA – Durable Goods:  Durables orders were -ve though vehicles and electronic goods were +ve.

USA – Construction Spending:  Residential +ve, Non-Residential -ve, Public +ve and Private +ve.

Japan – LNG prices:  prices lifted notably from recent lows.