USA Yields and Coal Trade

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • USA Interest rate yields have been inverted for four weeks now.  However it is markedly longer terms of inversion that normally precede a recession.  
  • Trade wars:  the key protagonists both lose and other bystanders gain!
  • Base metal inventories remain tight. Most prices are in the ‘nose of pinch-point graphs.  Pinchpoint positions are mostly less than 1 week’s consumption.  More commentary is recognising this condition.  
  • Coal trade (seaborne) has evolved markedly over the past two decades, notably post GFC.  China changed from an exporter to an importer.   Coking Coal remains a global market, while thermal coal became even more regional.  New suppliers are emerging.  Demand growth is dominated by emerging markets.

 SUMMARY  

*Copper  Trade war impacts.  Cu supply down but so is demand.

*Cobalt  DRC very dependent upon, and wants to diversify away from, Co and other resources.

*Nickel  Sulawesi flooding impacting Ni supply.

Zinc & Lead  Zn :  Woodlawn (HRR) ramping up.  Pb:  Port Pirie smelter outage is impacting market.

Tin  Malaysia Smelting Corp ‘said’ to be delaying shipments to customers.  – concentrate shortages.

Aluminium  The Portland Al smelters’ future is in doubt.  Electricity prices are to high for it.

Gold  Gold prices increasing on mounting economic (and geopolitical) concerns.

Platinum & Palladium  AMCU threatens strike action in South Africa..

*Oil  USA gasoline demand out-grown by petrochemicals.

*Coal  June19Qtr HCC & SSCC contract price settlements.

Iron Ore  Current prices forecast to hold through September Qtr(at least).

Shipping  Capesize rates up, though Panamax rates down.

General 

*USA – Yields:  USA yield curve inverted, for the past four weeks.

*Trade Wars – Who benefits:  Not USA nor China, but others do.

*Coal Trade – Evolving patterns of exports and imports.

USA – Industrial Production & Capacity Utilisation:  IP OK.  Cap.Utiln. is sub-optimal.