Gold & Rigs & Iron Ore

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • There are abundant conflicting influences on supply / demand balances for most commodities, driven mostly by restrictions and issues related to the COVID-19 pandemic, which coupled with political decision making, makes forecasting with confidence very difficult.  Many companies have withdrawn guidance on their forecast results. 
  • Fundamentals for long term expectations do not appear to have materially, changed, if normal expectations for economics prevail post-COVID.
  • Coronavirus – the battle continues, with China, Australia & NZ emerging from lower infection rates and Europe and notably USA opening up at higher infection rates.  Russian rates have increased markedly too. 
  • Gold – Retains safe-haven status through jump in ETF uptake, though with corresponding slump in Jewellery demand.  
  • Base metals:    Watch the base metals as countries emerge from lockdowns … 
  • Oil markets continue to re-stabilise, as best they can, with significant storage issues.  However rig numbers have been slashed, notably in USA.  Saudi’s rig numbers increased yr-on-yr. (… the benefits of low cash costs).  USA’s traditional ‘driving’ season may be stunted this year.  
  • Iron ore:  Chinese and South Korean demand may be a salve for Australia’s lockdown battered economy

SUMMARY   

*Copper  Mine-supply is starting to ramp back up.  Headwinds and Tailwinds at the same time. 

*Cobalt  China Molybdenum Cu-Co product exports from DRC diverted through non-South African ports.    

Nickel  China port stocks of Ni ores is falling.  

*Zinc & Lead  Zn concentrate TC’s lower in an uncertain market.  China’s Pb-acid battery Capacity util’n is lower.   

Tin  Global tin mine supply to contract in 2020.  Difficult to forecast re-opening timings – uncertain times.  

*Aluminium  Tariffs have done nothing to reduce USA’s import dependency.  “They never could.” 

*Gold  Gold price steady though retains safe-haven.  Market expects equities rallies.  

*Platinum & Palladium  CHN (WA) & IPT (NSW) both report stunning Pt & Pd intercepts at exploration projects.

*Oil  Prices rose despite ongoing increases in USA oil stocks.  Expect volatile prices ahead. 

Coal  China’s long Labour Day holidays slow trade this week.  U/G explosion at Grosvenor mine Qld.

*Iron Ore  Brazil – China shipments reduced while Australia-China & South Africa-China shipments rose.  

Shipping  Despite a resilient iron ore market, long haul Cape-sized shipments pricing fell.  

General  

*Gold – Supply-Demand & Central Bank holdings:  ETF’s up but Jewellery down.  

*Port Hedland – Iron Ore shipments:  Shipments fared well thus far thanks to China & Sth.Korea.

*Baker Hughes – World & North American Rig Counts:  massive cuts in USA oil rig counts.  

Japan – Industrial Production:  continued negative growth over all.