Comments of particular interest are noted with ‘*’.
- China is emerging from COVID-19, but its customer countries are still dealing with peak infections and restrictions, so a recovery in demand is lagging a potential supply recovery. Imports of raw materials are surging.
- Gold – Retains safe-haven status through the investment market is starting to look (nervously) toward relaxing coronavirus restrictions and restarting industry.
- Base metals:
- Right now base metals markets are still more focused on the collapse in global demand, both at the first-use fabricator and the end-use consumer stage. However supply is being affected by travel and transport restrictions. Development decisions are being deferred.
- We note that base metal inventory movements on Chinese exchanges are all reductions, while those of European and North American exchanges are additions.
- Oil markets have been roiled by recent abandonment of production agreements with OPEC+’s agreed reductions being still too small, while COVID-19 is still at large.
- Investors should identify and evaluate commodities, and companies, that they plan to invest in when global economies and sectors recover.
- This environment is remarkably volatile with many jumping to conclusions on thinly detailed data.
- Analysis needs to be rigorous, and the commodities and companies robust.
- Turning points may be executed quickly, so investors need to have intended investment targets already understood.
- Whenever you forecast something you will be precisely wrong. What matters is: by how much; in which direction; and how robust your forecast really is.
*Copper Zambia intends revoking Mopani mining licences due to Glencore’s rapid response to COVID-19.
Cobalt DRC to begin massive COVID-19 info campaign. Zero infections in Co-Cu mining region to date.
*Nickel China’s port Ni ore stocks at low levels. Philippine output constraints offset somewhat by demand.
*Zinc & Lead Zn market wrestling with supply/demand balance. Paroo Stn Pb mine restart has finance.
Tin COVID-19 demand shocks on all base metals. Many Sn producers reduced or suspended output.
*Aluminium ATO escalated transfer pricing probes on RIO, and launched probe into Alcoa & AWC smelters.
*Gold Safe-haven status, but sentiment and prospects of re-opening businesses may mute price upside.
Platinum & Palladium South African Pt mined have been idled for 3 weeks.
*Oil Lower prices & wider Brent-WTI price gap. Expect more USA shale-oil rig reductions.
Coal Chinese demand remained but Europeans deferred. Japan traded steel raw materials into China.
*Iron Ore Chinese raw materials demand remained afoot, but others’ streel mills reduced or closed capacity.
Shipping Iron ore supported Cape rates. Panamax softened on seasonal agri-product demand.
USA – Treasury Yields: USA Yields are very low.
Baker Hughes – Rig Counts: Rig numbers falling fast as oil price plummets.
*USA – New House Starts: mild positive growth rate, strongest in the South.
*USA – Industrial Production & Capacity Utilisation: IP slumped. Capacity Util down.