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.
by Marg | Feb 9, 2021 | Commodity Review, Now Available
USA, Japan, Silver
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- Market activity continues to refocus from sentiment to fundamentals.
- Base metal markets are tightening further. (pinch points & prices.
- Pinchpoint graphs (based on exchange stocks) continue to highlight tightness in markets for Cu & Ni in particular.
- Reports highlight tight markets in: Cu, Co, Ni, Sn, Zn & Pb
- Aside from China, demand is increasing (slowly) in key industrial nations (USA, Japan & Europe).
- Most recently Tesla is having to slow its rollout of some models (trucks) as it is short of key battery minerals (Li, CO, Ni, graphite).
- Covid-19 is far from peaking, as more is learned about emerging mutating strains, and is still disrupting transport and commercial businesses.
SUMMARY
*Copper Cu is forecast to outperform other commodities in 2021.
*Cobalt Outlook for cobalt production is good, particularly as Co is usually a co-product.
*Nickel Tesla to join Indonesia’s plans for an EV battery supply chain in-country.
*Zinc & Lead Zn & Pb TCs down on limited concentrate supply.
*Tin Tin is currently subject to a ‘physical’ supply squeeze, driving prices up.
Aluminium Chinese plants planning holidays during CNY.
Gold Selling pressure attributed to strong USD & increasing yields.
Platinum & Palladium Northam Platinum considering acquisition of the Bokoni mine (Sth Africa).
*Oil Economic revival hopes and OPEC supply curbs are supporting oil prices.
Coal Coking prices remain strong. Thermal prices softened ahead of Chinese New Year.
Iron Ore China plans to moderate steel output, but current momentum is strong.
Shipping Shipping rates declined this week, ahead of Chinese New Year.
General
Silver: A mis-conceived ‘squeeze’. The Redit call was never about silver.
*USA – Purchasing Managers’ Index: Strong outlook (new orders, production)! Sustainable?
*USA – Construction Spending: Positive growth, though not in Non-Residential.
*Japan – Industrial Production -segments: Recovering. Some segments yet to record +ve growth.
by Marg | Feb 2, 2021 | Commodity Review, Now Available
World Steel – USA
Comments of particular interest are noted with ‘*’.
Matau’s Comments:
- Market activity is refocussing on fundamentals with clear responses in prices of select commodities that are in demand.
- Base metal markets are tightening further. (pinch points & prices). Notably Ni & Cu. Sn is starting to move too.
- Pinchpoint graphs (based on exchange stocks) continue to highlight tightness in markets for Cu & Ni in particular.
- Gold data shows the impact of Covid-19 on demand segments, notably jewellery, which is now recovering. Central banks had also stopped buying as the price increased, and in fact some lightened holdings.
- 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).
- Most recently Tesla is having to slow its rollout of some models (trucks) as it is short of key battery minerals (Li, CO, Ni, graphite).
- Covid-19 is far from peaking, as more is learned about emerging mutating strains, and is still disrupting transport and commercial businesses.
SUMMARY
*Copper Market focus in 2021 will move to world ex-China demand and supply risks.
*Cobalt Battery metals (Li, Co, Ni, graphite) supply is tight as battery demand surges at Tesla.
*Nickel Outlook for near term demand surge from stainless steel, an mid-term from EVs.
Zinc & Lead Zn price hit by huge inventory surge (from shadow stocks) onto LME. Pb’s USA price premiums surged on demand.
*Tin Price increased on a shortfall due to demand for solder. Forecast deficit for 2021.
Aluminium Japan’s Al production down for the third year. Imports of ingots also fell.
*Gold Jewellery demand hit by Covid mid-2020, but is recovering (WGC data).
Platinum & Palladium Demand for platinum is poised to outstrip supply.
*Oil Biden Administration has ‘paused’ oil & gas permitting, though permits continue to be awarded.
Coal Bans on imports from Australia identified as being political, not economic in origin.
Iron Ore Prices are high though have dipped from peaks, ahead of Chinese New Year (11-17 Feb).
Shipping Freight rates were mixed this week.
General
*World Steel: China remains a major growth source, but the rest-of-world has positive growth too. As elsewhere this week, the world ex-China deserves monitoring as it is beginning to move.
*Singapore Shipping traffic: Containers & Tankers positive growth, Bulks negative growth.
*USA – Electricity End Use & Bond Yields: Electricity has plateaued. Bond yields low to 2023.
*USA – Housing Starts: Positive growth, back to approximately pre-covid levels.
*USA – Durable Goods, Vehicles & Electronics: Durables growth was down (negative), Vehicles up. Durable goods orders are traditionally a leading indicator for industrial activity & production.
by Marg | Jan 25, 2021 | Commodity Review, Now Available
China, Industry & Energy & Transport
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’s already demonstrated domestic recovery … with further potential pending its export customers’ recoveries).
- 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.
SUMMARY
*Copper Cu market is tight, but Chinas’ imports of Cu conc from key supplier (Australia) have stopped.
*Cobalt Price rising on expectations of EV demand. Cobalt in batteries helps protect from corrosion & fire.
*Nickel Rally in Ni price considered over-hyped (not on fundamentals). Supply is expanding. High-nickel batteries can store more energy and provide greater EV driving range.
Zinc & Lead Vedanta has resumed mining at Gamsberg. Trevali plans to restart Caribou.
Tin ELT buoyed by Sn intercepts at Oropesa, and economic study.
Aluminium UAE is producing aluminium with solar power.
Gold Conflicting drivers continue for gold. Watch FOMC & Biden stimulus plans.
Platinum & Palladium Li battery designs that include PGMS are being patented, but may take time to commercialise.
*Oil EIA expects 2021 demand to exceed supply. Prices are forecast to increase only modestly.
Coal Asian market: supply of thermal coal remained tight across Asia.
Iron Ore China’s crude steel output exceeded a record billion tonnes in 2020.
Shipping Shipping rates in Asia eased on slowing demand for iron ore this week.
General
*China – Transport – Freight & Passengers: Freight growth is strong. Passengers is slower, recovering from almost total lockdown 11 months ago.
*China – Industry & Energy Output: largely positive growth in most areas (notably except wine & beer).
by Marg | Jan 18, 2021 | Commodity Review, 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.
by Marg | Jan 11, 2021 | Commodity Review, 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.
