Zinc – China

Of particular note this week: 

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • The economic development window for new large scale zinc deposits, to meet forecast demand, has passed.  ‘Probable projects’ require immediate financing and start of construction, … to achieve supply projections.  If as projections 12 months ago were correct that new mines would see a surge of supply, the current prices might be justified.  However there is no evidence of available stockpiles able to emerge.  
  • Base metal markets generally remain fundamentally tight, notably Cu, Zn, Pb, and are incrementally continuing to tighten.  Watch for supply disruption(s).  In 2020 there are numerous key labour negotiations at Cu operations in Chile.  Supply disruptions such as these, in absence of dramatic (geopolitical) drivers are likely to drive price responses.  Indonesian changes to its market responses is impacting Ni market behaviour
  • (repeat)The USA-China phase-1 agreement for China to buy a huge amount of energy commodities from USA appears difficult to satisfy without disrupting the global oil markets.   OPEC+ is discussing extending production restrictions. 
  • Chinese data continues to show industrial and energy production growth. 

SUMMARY     

*Copper  Wood Mackenzie believes Cu price outlook is skewed to the upside in 2020. 

Cobalt  ERG’s Chambishi Metals (Cu-Co) smelting operations (Zambia) to cease on shortage of feed.  

*Nickel  Ni market balance is being pulled / pushed by Indonesia.

*Zinc & Lead  The surge in Zn mine production 12 mo ago, has not surfaced.  If stockpiled a price rise is needed.   

Tin  Ganzhou Rare Metal Exchange opened.      

Aluminium  Poor production and demand in 2019 anticipated to improve in 2020.

Gold  Fear of potential impacts from coronavirus contributed to higher Au price.  

Platinum & Palladium  Outlook for a prolonged shortage of Pd .

*Oil  OPEC+ discussing extending production cuts to and of 2019.  

Coal  Chinese customs clearances appear to have slowed markedly for thermal and coking coals.  

Iron Ore  Brazil’s weak start for the year bode for sustained firm prices. 

Shipping  Cape and Panamax rates reduced this week (ahead of CNY).  

General  

*Zinc:  The development time ‘window’ for new large scale projects has passed.  

*China – Industrial & Energy Output:  After  lull, growth through 2019 to now shows widely.