by Marg | Apr 5, 2021 | Commodity Review, Now Available
OECD CLI’s, USA, Japan
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- Most commodity markets are showing signs of increased tight (labour or raw materials) conditions.
- Precious metals are under some pressure, though there are abundant geopolitical and other risks available.
- Gold price has been jittery, following USD variations.
- A number of sound base metals projects are being advanced through toward production, as their respective markets continue to tighten.
SUMMARY
*Copper Evidence of constrained Cu supply is in spot Cu TC/RCs being at decade lows
*Cobalt EGC has been set up to buy all domestically (artisanal) produced Co in DRC, to improve standards.
*Nickel Indonesia is driving up its added value Ni processing capacity.
*Zinc & *Lead Zn & Pb TC/RCs. Teck agrees to supply China’s largest Zn smelter with concentrate.
Tin South Korea is the main destination for Sn concentrates from Bangka-Belitung.
Aluminium Portland’s Al smelter (Vic) has won support from the Australian Federal Govt, till at least 2026.
*Gold Gold Fields Australia is paying extra ‘allowances’ to retain its skilled workforce. Demand is high!
Platinum & Palladium WPIC reports Pt jewellery demand is expected to increase strongly in 2021.
*Oil OPEC+ has agreed to gradually ease its oil output cuts from May. Demand is increasing.
Coal Aust. HCC is trading around China bans. Thermal coal negotiations paused till supply stabilises.
Iron Ore Near term supply disruptions hit supply. Longer term, prices are expected to stabilise lower.
Shipping Asian freight rates eased this week, on lower global demand (for ships as Suez was unblocked).
General
OECD – Composite Leading Indicators: .CLI’s all showed recovery from the depths of the Covid-19 pandemic is well under way. Turning points suggest that improvements in GDP & IP should be in evidence about now.
Japan – Industrial Production: An earthquake mid-month, & surge of Covid cases impacted IP. An earthquake and a surge in covid-19 cases disrupted IP.
USA – Construction Spending: Private & Residential was +ve. Public & Non-Residential was -ve.
USA – PMI: Most PMI segments report a strong +ve outlook.
by Marg | Mar 29, 2021 | Commodity Review, Now Available
USA, Durables & Yields
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- USA economy recovery may be slowing a bit but is still basically positive. Vehicle orders backed off a bit in February.
- USA bond yields continue to lift slowly. Real USA 10yr bond yields are almost up to 0.0%.
- USA real 10yr bond yield has just turned positive. Still lower than the real Aust 10yr yield, hence a robust AUDUSD rate.
- Gold price has been jittery, following USD variations.
- A number of sound base metals projects are being advanced through toward production, as their respective markets continue to tighten.
SUMMARY
Copper Copper prices following equities markets’ optimism over global economic recovery.
*Cobalt Cobalt consumption in 2020 up 29%. Glencore – Murrin Murrin. COB.
Nickel Chemistries of EV batteries.
Zinc & Lead China’s Cu & Zn smelters benefitting from byproduct H2SO4 sales. EV batteries.
Tin Tin supply has reduced markedly, esp in Indonesia.
Aluminium Ship stuck in the Suez exacerbated Al billet shortage in Europe.
*Gold Choppy trading this week, influenced by USD moves.
Platinum & Palladium Hydrogen fuel technologies anticipated to support platinum.
*Oil Oil prices (esp in Europe) increased on concerns of Suez disruption.
*Coal Unusual swaps being done in coking coal to get around China’s bans.
*Iron Ore Prices increased, supported by strong steel prices.
*Shipping Asian freight rates gained this week amid heavy rains and floods.
General
*USA – Treasury Yields: slowly rising, with improving outlook.
*USA – Durable Goods, Vehicles & Electronics: +ve growth for durables & electronics.
by Marg | Mar 23, 2021 | Commodity Review, Now Available
Exploration, China, Shipping, USA
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- It is frustrating when companies are required to report data to the relevant exchanges, yet government statistics agencies’ rules prevent them from including those data in relevant categories.
- Australian mineral exploration has clearly been on a surge. Good! More discoveries are needed to feed forecast demand growth.
- Overall, while still jittery and volatile, the global economy continues to recover. In this note that is evident in shipping data and in Chinese output data.
- USA economic housing and IP data again show some jitters.
- Supply (disruptions) and demand issues continue to compete (oil, metals).
- Covid containment issues are not helping. It appears some countries are again in their own firing line in this regard.
- Despite impediments, overall it appears the world industry and trade is growing back toward, though not yet up to, pre-covid levels.
SUMMARY
*Copper Study shows REEs play important roles in formation of major (IOCG) style deposits.
Cobalt Cobalt is largely a byproduct of Ni & Cu production. Few mines have Co as their key product.
*Nickel Production of Ni matte from Ni-laterites is economic, but has its own issues.
Zinc & Lead Nationwide transport strike in Peru likely to impact supply of Zn, & Cu concentrates.
*Tin Tightness on the London Metal Exchange (LME) tin contract remains acute.
*Aluminium Major Al inventory deliveries into Asian LME warehouses (appears it was planned).
Gold Gold price appears to be being held hostage by USA real 10 year note yields again.
*Platinum & Palladium Norilsk is working toward restoring capacity to its flooded mines in the next 3-4 months.
Oil Oil price is roller-coasting on supply constraints and increased demand vs fears of slowdowns.
Coal SSCC Mar21Qtr (lagged) contract pricing settled.
*Iron Ore Vale is looking to develop a major port to increase competitiveness in shipping to Asia.
Shipping Asian freight rates increase with demand for grain, iron ore & scrap metal.
General
*Australia – Exploration Spending: There is a surge in activity under way.
Port Hedland – Iron Ore shipments: Growth has slowed in the past four months.
Singapore – Port traffic: Growth is improving post-covid.
*China – Transport: Transport (& other data) shows recovery toward pre-pandemic levels.
*China – Industry & Energy Output: Feb 2020 was peak month for China’s effort to control Covid19
*Baker Hughes – Rig Counts: Rig counts are increasing, lagging oil price increases.
*USA – House Starts: negative growth for a 4th month.
*USA – Industrial Production & Capacity Utilisation: negative growth and reduced capacity use.
by Marg | Mar 8, 2021 | Commodity Review, Now Available
USA, PMI, Yields & Construction
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- The USA Federal Reserve Chairman has not indicated any more central bank support, and has not reversed the prevailing USA central bank settings.
- Bond yields have lifted upon interpretation of his speech as a signal that the USA central bank may have reached some limits of monetary policy expansion, resulting in a selloff of bonds.
- The Chairman said the banks is monitoring financial conditions, and that the USA economy is a long way from recovery.. His view is that prices will rise but any increase in inflation will be transitory, and does not expect inflation to exceed 2%.
- Increased oil prices also contributed to bond market nerves, worrying some about prospect of inflation (which is usually not good for bonds).
- USA PMI indicates a strong outlook. USA bond yields starting to lift.
- Overall, while still jittery and volatile, the global economy continues to recover.
- A number of sound base metals projects are being advanced through evaluation toward production, as their respective markets continue to tighten.
SUMMARY
*Copper May be some weakness ahead, though economies outside China are recovering.
Cobalt Co price holding ground amid others’ declines.
*Nickel Tesla to take stake in Goro mine with Trafigura. Tesla needs security of Ni supply.
Zinc & Lead China’s Zn production to increase in 2021. TC’s for Zn & Pb concs are stable..
*Tin Boom in demand for electronic products.
Aluminium China-Inner Mongolia to cap aluminium production.
Gold Fitch forecasts avg 2021 Au price higher than current spot price.
*Platinum & Palladium Palladium price forecast to hit all-time highs in 2021. (CHN, IPT)
*Oil OPEC+ extends production cuts by a month, into April. LVPCI / SHCC to be revised / to come.
Coal HCC Dec20Qtr contract price established.
Iron Ore Australia reports record iron ore shipments.
Shipping Panamax rates fell this week while Capes and Supramax rates increased.
General
*USA Treasury Yields: Yields lifting – USA Fed Chair indicates limits of monetary policy expansion.
USA PMI: Strong outlook as key first four segments have positive growth and are .50.
USA Construction Spending: Broadly positive growth.
by Marg | Mar 1, 2021 | Commodity Review, Now Available
USA Durables and Singapore Ships
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- USA economy appears to be recovering with data including durable goods. Vehicle orders with good positive growth rates.
- USA bond yields starting to lift.
- USA real 10yr bond yield has just turned positive. Still lower than the real Aust 10yr yield, hence a robust AUDUSD rate.
- Overall, while still jittery and volatile, the global economy continues to recover.
- A number of sound base metals projects are being advanced through toward production, as their respective markets continue to tighten.
SUMMARY
*Copper Cu demand is forecast to stretch supply capacities over the next few years. SFR, Glencore
Cobalt Asian Co & Ni cathode-precursor producers are concentrated and tend to integrate operations.
Nickel POS & BSX working to develop their respective Black Swan and Ta Cuong projects.
Zinc & Lead ORN is well placed to progress development of its Prieska Cu-Zn project.
*Tin Tin’s tight squeeze continues! Inventories are very low, notably in USA & Europe.
Aluminium China’s Al sector mulling closure of 47 GW of power to reduce carbon output.
Gold .Prices lower on positive USA economic news.
*Platinum & Palladium PGM supply demand should recover to pre-covid levels in 2021.
*Oil China’s oil stockpiles have increased to ~100 days of imports. .
Coal Coal trading softer this week, pre-Indian monsoon, post China holiday. Chin AusT ban to stay.
*Iron Ore Uncertain future as different tailwinds and headwinds collide.
Shipping Cape rates softened. Panamax rates strengthened.
General
*Singapore Port – ship traffic: Segments recovering from pandemic in 2020, at different rates.
*Base metal Pinch-point graphs: Prices responding to low stocks and growing demand.
*USA – bond yields: 10yr real rates lifted in the past month, and 3yr term rates lifted a little.
*USA – Durable Goods, Vehicles, Electronics orders: Durable, vehicles & electronics all +ve.
by Marg | Feb 22, 2021 | Commodity Review, Now Available
USA IP, Houses, Yields & Gold
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- Market activity continues to refocus from sentiment to fundamentals.
- Base metal markets continue to tightening further. (pinch points & prices.
- A brutal cold snap in the northern hemisphere continues, notably this week affecting oil output in Texas.
- For this week also … Aside from China, industrial demand is increasing (recovering slowly) in key nations (USA, Japan & Europe), as well as in the emerging economies.
- Industry is recovering, and its outlook is tempering gold outlook somewhat.
- However there remain abundant gold price triggers: geopolitical (China trade, Iran, Venezuela); fiscal (equity markets, bond yields); National stimulus policies (USA, Europe, other)..
- This week we review Real interest rates and yields, and touch on relationships with gold price and AUDUSD.
- Covid-19 is far from peaking, as more is learned about emerging mutating strains, and is still disrupting transport and commercial businesses.
- Markets are placing inordinate belief that vaccines will solve things (it appears many expect life to return to ‘normal’}, however epidemiologists maintain that while an important tool, vaccines are but one of the tools (hygiene, distancing / isolation, contact tracing) that are already in use, and have successfully contained epidemics, before the advent of specific vaccines.
SUMMARY
Copper Cu prices highest since 2011. Inventories are low. Mixed views on outlook.
Cobalt Increased EV adoption rate is driving the increasing demand for lithium, nickel and cobalt,.
Nickel Ni prices highest since Sept 2014. Outlook based on EV uptake. Tesla plant coming to India.
Zinc & Lead Teck’s Red Dog mine Zn output fell in 2020, on restrictions on water handling.
Tin Sn exchange inventories critically low, now. Deficit forecast for 2023. The market is not waiting.
Aluminium USA needs to revisit and revamp its aluminium tariffs. Nothing has really been achieved with them.
Gold Gold has lost some investor interest, yet there are several factors that may boost it.
Platinum & Palladium Platinum price is breaking upward in contrast to other precious metals.
Oil The deep freeze in southern USA (notably in Texas) has curtailed production.
Coal Markets were quiet during China’s New Year holidays and are re-emerging now.
Iron Ore Iron ore prices just off the highest price since Sept 2011. Activity is picking up again post Lunar NY
Shipping Rates for Capes & Panamax both increased this week, despite Lunar New Year holidays.
General
USA – Treasury Yields: Still low out to 3 yr terms. Relationship with gold prices real & nominal.
USA – Industrial Production: remains mildly negative, though a market improvement on April 2020.
USA – New Housing Starts: Growth is back into negative rates. Could be a bit bumpy ahead.
