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.
- Industry is recovering, and its outlook is tempering gold outlook somewhat.
- 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.
*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.