USA Data,  Asian Trade & Oil

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • The Bond yield curves that inverted last week have now (in USA at least, seen a fractional normal 10yr-3mo differential).  Past performance indicates the inversion is usually effective and in place for months, ahead of a recession.  No immediate panic, but a watch must be maintained.
  • Base metal inventories remain tight, though prices are just starting to reflect those fundamental positions.   Uncertainties generated by geopolitical activities continue to hinder normal trading conditions.  
  • Gold price is as always not a predictable item, though gold is being sought by Central Banks, and geopolitical risks continue to feature on the watch list.
  • Particularly informative discussion on Indian oil sources and on Thailand’s steel imports, this week.

 

SUMMARY  

*Copper  Cu forecast deficit is shrinking near term, with longer term hinging on new projects vs demand.

*Cobalt  DRC to relax ban on concentrate exports for CU, CO, but may reimpose them.

Nickel  Indonesia to become the 2nd largest stainless steel producer.

*Zinc & Lead  Stocks low.  Price up on hopes for a USA-China trade agreement.  PEX – stunning drill intercepts.

Tin  Will there be enough supply?  Numerous factors to consider.

Aluminium  Rusal adding new production at Boguchansk smelter.  Rusal removed from USA sanction list.

*Gold  Gold’s list of geopolitical risks to consider.  New EU-Brexit dates.

Platinum & Palladium  Zimbabwe’s foreign exchange retention system.  Zimbabwe still has its fingers in the till.

*Oil  USA sanctions on Iran & Venezuela outweigh OPEC-led supply cuts.  *Oil-Iran fears the new order.

Coal  Thermal JFY contract prices settled.  Peabody re-entering, restarting Goonyella North.

Iron Ore  Market in forecast deficit post-Vale dams.

Shipping  Capesize rates lower, and Panamax increased.

General 

*India – Crude Oil Imports:  impacted by USA sanctions on Iran and Venezuela.

*Thailand Steel Imports:  a description of the changing status of manufacturing in Asia, which sees migration of capacity into the SE Asia Five (Vietnam, Indonesia, Thailand, Philippines & Malaysia).

*USA – Durable Goods, *Construction Spend, *Housing Starts.  Downturn in Construction & House Starts. With the bond yields near inversion, the turning points in House starts and Residential Construction were key signals ahead of the GFC, and bear watching (based on past form), though we do not believe we ae there yet.