USA- Iron Ore

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • For many countries the depths fo the covid-pandemic were March – June 2020, so yr-on-yr growth rates for modest recovery from covid will likely report strong positive growth rates for Mar-Jun 2021, for perhaps modest recoveries not even back to pre-covid levels.  Being aware of that statistical ‘foible’ it may be wise to look at mo-on-mo growth (and take into account seasonal factors that yr-on-yr rates cope with).
  • Most commodity markets (Cu, Co, Zn, Pb)  are showing signs of increased tight (labour or raw materials) conditions.
    • Precious metals remain under some pressure, though there are abundant geopolitical and other risks available, and visible to the market. 
  • It appears now that Australian coking coal is being discharged at least in some in Chinese ports.  
  • Some of China’s calls for price controls are echoes of those made in the heady days pre-GFC.  Then the SOE’s were commercial, and paid market prices.  If however China imposes price controls, the market usually works these things out … low prices means less investment in new supply which triggers shortfalls then higher prices which brings on (with a 8-10yr delay) new supply …
    • Think of Indonesia’s lack of success with attempts to boost tin prices.  The world’s miners grew wary of investing in Indonesia and in tin supply, so now, about a decade later,  we have a very tight tin market.  
    • Structure and timing may be different with China but we believe the concepts are similar.
    • The real oddity is China’s claims to want to constrain imports of feedstocks and to limit steel production, yet continue to have GDP rates in excess of 6%.  Similarly China’s forecasts of iron ore prices at USD 100/t in 12-18 months seem incongruent with clearly strong demand for iron ore, from China and emerging nations.  With current demand growth Simandou may contribute to growth for about 4-5 years before another is required …?

SUMMARY  

*Copper  The recent lack of understanding & investment in resources is becoming more apparent, to some.  

*Cobalt  DRC’s EGC artisanal trading and oversight company became operative in late March.  

Nickel  China’s yr-on-yr imports of Ni & products are increasing.

*Zinc & Lead  Zn smelter TCs’ halved = very tight.   Pb– G1A to update Resource and begin construction at Abra.  

Tin  Alphamin is the second largest Sn producer outside China, and is expanding. 

Aluminium  ABX has produced aluminium fluoride samples, recycling the waste byproduct of Al smelters.

Gold  Price is fluctuating with focus on USA Treasury yields & USA Fed outlook and announcements. 

Platinum & Palladium  Pt deficit on strong demand from autos, industry & jewellery.

*Oil  Oil price lifted on reduced USA stockpiles, & increased fuel demand.  Saudi Aramco output to lift.

*Coal  SMR to re-open Peabody SSCC & LVPCI mines.  Aust. ships are discharging in  China.

Iron Ore  Vale’s Mar Qtr report is likely to guide outlook for iron ore prices.  Indian output.  MIN trucking.

Shipping  Asian freight rates dropped this week though Capes were supported by iron ore demand.  

General 

Port Hedland – Iron Ore:  Shipments in March ‘steady’ through more were to ex-China.

USA – Industrial Production & Capacity Utilisation:  IP is recovering from lows 12 mo ago. 

UK – Industrial Production:  improving from the lows of covid 12 months ago. 

USA – Electricity End Use:  Appears that electricity demand growth ceased from GFC.

USA New Housing Starts:  recovering, but growth rates are high due to covid lows 12 mo ago.