Comments of particular interest are noted with ‘*’.  

CLI’S

Matau’s Comments:  

When hearing or reading of forecasts of supply or deficits, always consider which side of the story the writer is from (supply or demand), or is the author an impartial analyst or group.  It often helps frame the comments.  

  • OECD Composite Leading Indicators (CLI) provide a mixed set of outlooks.   In this issue we provide the CLI prediction and recent separate economic outlook(s), which do not necessarily agree.  Recent and emerging geopolitical events will impact on the forward economic outlook(s). 
  • As per last week, geopolitical uncertainties continue at pace, many USA driven, and mean that several markets are uncertain as to expected direction.  The surge in political unrest / demonstrations in Iraq, Iran, Chile, France, Bolivia, Hong Kong (still), Haiti, & Algeria, is somewhat surprising with the concurrent timing, though perhaps witnessing Hongkong has led unrest down these paths.  
  • Base metal markets remain fundamentally tight, and are incrementally continuing to tighten.  Prices continue to be relatively low, influenced more by market sentiment that focused on uncertainty.  These conditions cannot be sustained.  Watch for supply disruption(s).   Prices across the base metals picked up, after the news of the “preliminary phase-1” agreement on USA-China tariff disputes.  We note that the signatories to the ‘agreement’ have given different interpretations on what was agreed.  We remind that a couple of weeks ago, senior Chinese officials mused that they were not confident with the robustness or durability of any agreement that might be signed with the Trump administration. 

SUMMARY   

*Copper  Prices boosted with perceived reduced geopolitical risk:  USA-China deal and Brexit. 

*Cobalt  Bullish forecasts for cobalt consumption from the electric vehicle (EV) sector are coming into play.   

*Nickel  Global Ni market expected to tighten in 2020.

Zinc & Lead  Common misconceptions re- DFS’.  VRX.  China’s Pb secondary smelters at low operating rates. 

Tin  LME & ShFE markets swapped roles for Sn.      

Aluminium  Global aluminium demand is widely expected to contract this year for the first time since the GFC.

Gold  Physical demand soft but expected to improve with Indian wedding season and Chinese New Yr..  

Platinum & Palladium  If a country cannot provide reliable power, it cannot operate an effective economy.  

Oil  Prices up on preliminary phase-1 USA-China trade agreement.  

Coal  Glencore – Nippon October annual thermal coal contract price agreed.  

Iron Ore  Prices firming on increased Chinese bank lending.  

Shipping  Cape rates reduced.  Panamax rates increased.   

General  

*OECD Composite Leading Indicators:  A mixed set of outlooks.  Recent events (Brexit elections & USA-China agreement) will also impact economic outlook(s). 

USA Construction Spending:  Private & Residential spending again reduced & Public & Non-Res again increased. 

Baker Hughes Rig Counts:  USA, Canadian & global rig counts down yr-on-yr.