Rigs, Iron ore, UK & German IP, Japan 

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Market activity continues to refocus from sentiment to fundamentals. 
  • Base metal markets are tightening further. (pinch points & prices.
    • Pinchpoint graphs (based on exchange stocks) continue to highlight tightness in markets for Cu & Ni in particular.
    • Reports highlight tight markets in: Cu, Co, Ni, Sn, Zn & Pb
      • Inventories are low in most base metals, some excruciatingly.
  • A brutal cold snap in the northern hemisphere is having (somewhat) unexpected side effects in commodities availability and pricing.
  • For this week also … Aside from China, industrial demand is increasing (slowly) in key nations (USA, Japan & Europe), as well as in the emerging economies. 
    • Industry is recovering, and its outlook is tempering gold outlook somewhat. 
      • However there remain abundant gold price triggers:  geopolitical (China trade, Iran, Venezuela); fiscal (equity markets, bond yields); National stimulus policies (USA, Europe, other)..
    • Key battery minerals (Li, Co, Ni, graphite) are forecast to become tighter.   Matau considers really tight conditions from ~2023-ish, if EV demand forecasts are borne out, depending on the resource industry’s ability to discover, evaluate and develop new supply to match optimistic demand forecasts.
  • Covid-19 is far from peaking, as more is learned about emerging mutating strains, and is still disrupting transport and commercial businesses.
    • Markets are placing inordinate belief that vaccines will solve things, however epidemiologists maintain that while an important tool, vaccines are one of the toolkits (hygiene, distancing / isolation, contact tracing) that are already in use and have successfully contained epidemics, before the advent of specific vaccines.

SUMMARY  

*Copper  Stocks of copper across the LME, Comex and ShFE markets are at multi-year lows 

*Cobalt  End-user demand in China and low inventories provoked Co price increases.   

*Nickel  CZN & LEG each drilling-out to define / expand Ni-Cu Resources.

Zinc & Lead  Chinas’ Zn smelter output is down in January.  Peru’s Zn output was down in 2020.  Spot TC’s low. 

*Tin  Tin continues a huge physical short position (last week’s report).  Backwardation increased again.      

*Aluminium  China’s Al & Cu scrap imports were threatened by semantics (now sorted) and are yet to recover.

Gold  Gold price marking time.  Support from several price drivers likely to support prices near current.  

Platinum & Palladium  Pt price at highest level in 6 yrs, up on increased industrial demand outlook.

Oil  Australia’s 90-day stockpile needs, in future may need to be all imports of refined product. 

Coal  USA met-coal producers taking advantage of Australian limitations but not prepared to invest more. 

Iron Ore  Iron ore demand is included in an outlook for a new commodity super cycle.  

Shipping  Ahead of Chinese New Year demand for Capes reduced while demand for Panamax increased. 

General 

*Port Hedland – Iron ore shipments:  Iron ore shipments continue to grow.  Not only to China.

Baker Hughes – Drill Rig Counts:  Rigs are increasing #s following oil price recovery.

United Kingdom – Industrial Production:  Recovering from Covid, slower than Germany.

Germany – Industrial Production:  Recovering from Covid but still small -ve growth

*Japan – Orders to Machinery:  Orders are turning to an upward trend, in most segments.

*Japan – LNG prices:  Massive price spike due to a brutal cold snap.  Supply is tight.