Steel

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • China – Freight traffic continued strong growth.  … China’s energy production / consumption also records strong growth.  The combination of these two key parameters does not really indicate a sluggish nor slow economic growth regime. 
  • Steel production from Asia has positive growth, driven by China & India.  These appear to be feeding strong domestic growth (in addition to some exports, whereas South Korean and Japanese production growth is shrinking, seemingly due to a heavy reliance on export sales (to largely developed world economies that are struggling to themselves grow, in the current high geopolitical volatility of the times. 
  • Base metal inventories continue to remain tight.  In a broad sense not much has changed.  Base metal prices are struggling to cope with the negative fears driven largely by the USA-China trade tensions.  However low base metal inventories are getting more attention in the media than previously.  
  • USA data for durable goods, vehicles and electronics is shrinking.  These are concerning.  

 

SUMMARY  

*Copper  Cu prices up on Chilean disruptions.  Many moving parts in the Cu market makes forecasting hard.

*Cobalt  Closure of Mutanda cut Co mine supply by 17%.  Plus EV uptake is slower than expected.  COB.

*Nickel  Poor demand for stainless steel due to cheap (scrap) imports from Indonesia & China.

*Zinc & Lead  NCZ, HRR.  Zn prices low on fears of hidden stocks.  Pb mkt tight on supply disruptions.  G1A

Tin  A broad risk-off sentiment derived from the USA-China dispute – a factor in low Sn pricing.

Aluminium  RIO evaluating potential closure of NZ’s Tiwai Point Al smelter.

Gold  Gold price up on weak USA data.  Central banks pressured to support flagging economies.

Platinum & Palladium  Potential for Pt-based hydrogen fuel cells is improving.

*Oil  Rosneft has switched from US dollars to euros.  USA oil & gas rig-count has fallen to 2017 levels.

Coal  China has scaled back its anti-pollution plan for winter.

Iron Ore  Chinese steel mills have seen profit margins compress this yr, demand appears to be holding up.

Shipping  Freight rates for Capes and Panamaxes on Asian routes slipped this week.

General 

*World Steel:  Positive Asian output growth driven by China and India.

*USA – Durable Goods, Vehicles, Electronics & Computers:  All fell with negative growth.

*China – Transport:  Freight traffic continues to report strong growth.  Passenger traffic is shrinking.