China – industry & energy
Comments of particular interest are noted with ‘*’.
- USA yield curves remain on tight margins. The downward trends have yet to be convincingly turned upward. To be monitored.
- Base metal inventories remain tight, … as before, prices distracted by geopolitical sentiment which is also dampening and delaying commitments to expenditure and development (which will ultimately only make the market tighter). Some of the metals deficits have reduced, becoming subject to a finer balance as low prices defer and delay commitments to construction or expansions that will be needed to supply forecast demand growth (not just in battery minerals … referred to last week).
- Chinese industry and energy data is showing broadly positive growth across most segments, a strong contrast to negative growth reported in the past year.
- Note also the strong growth rates for ‘excavator’ production … data which has previously been referred to as an indication of renewed infrastructure and building construction. Cement production is emerging (on a positive growth note) from its New Year lull.
- We retain the view supported by the OECD CLI (last week’s issue) that broadly global economic growth will improve near the end of 2019, supported by emerging Asian country growth under way now.
*Copper CRU has reduced deficit forecasts, current Cu prices may delay commitment to new capacity.
*Cobalt BMW is to begin sourcing cobalt from Australia and Morocco.
Nickel Ni deficit, for 2019 has narrowed. MCR expanded Cassini’s Resources. Deficit deeper for 2023 now.
*Zinc & Lead Zn mkt is tight, but outlook is for increased mine output. Pb smelters in China up for maintenance.
Tin LME to formally consult on ‘rules for responsible sourcing’, for all LME metal brands.
Aluminium U.C. Rusal placed a large ruble (RUB) bond, avoiding USA sanctions.
Gold Forecast is neutral, though there are multiple data releases this coming week.
Platinum & Palladium Japan’s Golden Week becomes Platinum Week.
*Oil Russia’s Rosneft does not expect USA sanction waivers to result in an oil deficit.
Coal USA met coal producers upbeat about prospects of exports to China, subject to USA trade deals. Some wishful thinking?
Iron Ore iron ore prices reduced ahead of seasonal slowdowns in southern China (wet season) in May.
Shipping Demand for shipping, and the freight rates increased this week.
USA – yield curves: Still have really low margins, though the key ones remain positive.
*China Industrial & Energy Output: Many items had negative growth last year & are positive now.
*USA – Durable Goods, Vehicles & Electronic products orders: positive, with strong vehicles orders.
Japan – Industrial Production: A marked slowdown, in several segments.