Singapore, Baker Hughes, USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Singapore shipping is a reflection of trade in the SE Asian Region (and passage of ships to northern Asia (China, Japan, South Korea, Taiwan).  
    • Bulk Carriers and tankers registered good positive yr-on-yr growth reflecting, in Matau’s view, raw materials imports into Asia, while
    • Containers reported modest negative growth, reflecting finished goods going to largely developed economy markets.
    • Passenger ship traffic is still down ~90% yr-on-yr. 
  • Global and North American rig counts remain low, with oil prices rising only to about USD 40/bbl.  … not enough to encourage much nre production, particularly as demand in USA is described as about 20% below typical levels.   
  • Base metals’ pinch-point graphs continue to show metal prices beginning to rise, in response to (stimulus driven) expectations of increased demand, and recognition of tight supply.  The markets are looking toward base metals’ supply for potential resumption of industries, supported by various stimulus packages (initially within China, the largest consumer of raw materials), and are beginning to recognise a) the tightness of the supply, and b) the risks that Covid in Sokuth America and Africa could seriously limit supply responses.  
  • Gold prices continued to lift this week, as did share markets. 
    • Oddly the conditions posed by Covid now have positive factors for both markets:  risk & stimulus.
  • USA IP and Housing Starts both recorded modest lifts off large falls in prior months, though the shapes of the recoveries of these critical aspects of USA economy have yet to be credibly forecast. 
  • On a recent ABC program Stan Grant indicated his expectation that globalisation as we knew it will change, to one where most economies (national, state, large city) will be looing to have ‘local’ backup of industry capacity and supply, in case imports become restricted.  Evidence that the national flu infection rate fell from a normal 2.0% to 0.2% during the early Australian COvid-19 restrictions, indicates that some of the practices, (hygiene, distancing, isolation of or stay-at-home for the ill or quarantines) may need to be retained in some format to guard against future outbreaks.  Such capacity will come at a cost. 
  • Matau believes Australia needs to bring the national fuel (oil) supply inventories (some of which are stored in USA) back to home soil as a matter of urgency, to better safeguard against further transport disruptions.  Australia has agreed to maintain a 90 day supply, though even with the USA inventory, my understanding is that Australia’s inventory remains well below 90 days. 

SUMMARY  

*Copper  Chile has largely maintained Cu output, despite Covid, so far. 

*Cobalt  COB has achieved Co benchmarks for sulphate & hydroxide products.  

*Nickel  Woodmac says key to watch China’s NPI industry, and Indonesia’s HPAL plants.

*Zinc & Lead  Peruvian output tumbled.  Japanese producers reopen two Peruvian mines.  

Tin  Fundamentals may weaken in (northern) summer months, though some recovery is seen in June.     

Aluminium  Automotive sector recovery is supporting aluminium demand (from a low base).

Gold  Goldman Sachs raises gold price forecasts. 

Platinum & Palladium  PGMs to improve performance of Li-ion batteries.

*Oil  Global oil demand ‘on the mend’, though is a two-speed recovery, affected by Covid. 

*Coal  China’s import quotas have driven domestic HCC contracts higher, in absence of cheaper imports. 

Iron Ore  Price has increased over USD 100/t cfr, though driving factors might not support further increases. 

Shipping  Cape rates reduced again while Panamax rates jumped again this week. 

General 

*Singapore Shipping:  Bulks & tankers +ve yoy.  Containers slightly -ve yoy.  Passengers crashed.

*Baker Hughes – North American and World Rig Counts:  Rig Nos remain limited by oil prices.

*USA – Industrial Production:  IP decline growth is the deepest for 60 years.  Cap.Util remains low.

*USA – New House Starts: Starts bounced back … just a little