Tighter & tighter

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Commodity demand growth forecast to 2030 is strong,  The focus should not be so much on supply concentration, but on whether supply can keep up with demand growth. 
  • China’s state planner has halted economic talks with Australia “indefinitely” as the already fraught relationship between Beijing and Canberra takes a turn for the worse.  The National Development and Reform Commission (NDRC) said it has “indefinitely annulled communication with Canberra over economic affairs”.  The suspension marks the first time that Beijing has officially frozen a diplomatic channel with Canberra.
    • Political tensions between the pair boiled over late last year, with China closing the door on a host of Australian exports, including coal, locked out since November. 
  • Pinchpoint graphs show several base metal prices are becoming volatile (upwards) with negligible inventory changes.  i.e. tight!
  • For many countries the depths of the covid-pandemic were March – June 2020, so yr-on-yr growth rates for even 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 outcome it may be wise to look at mo-on-mo growth, of the overall trend rather than the ‘number’.
    • This week again,  several notes refer to disruptions to supply contributed by issues with the covid-19 pandemic.

SUMMARY  

*Copper  Cu TC’s at historically low levels.  Chile increasing taxes.  Outlook – lack of shovel-ready projects 

*Cobalt  Cobalt supply to China disrupted due to a ship’s captain dying of covid en-route.  

Nickel  Ni is in deficit.  A surplus is forecast for the Dec21HY.

*Zinc & Lead  A rising tide lifts all boats but some are heavier than others’.  

Tin  Malaysia Smelting Corp output affected by Covid.  Expect to take 9 mo to resume ‘normal’ output.      

Aluminium  Shanghai Al prices touched 11 yr highs.  Australia is a major producer of bauxite & alumina.

Gold  USA Fed to keep interest rates near zero for longer. 

Platinum & Palladium  Sunrise Energy Metals (SRL)Phoenix Platinum discovery.

Oil  Economic growth and outlook fuelling second weekly oil price increase. 

Coal  Chinese bans on Australian imports remains.  China struggles to find enough coking coal for mills. 

Iron Ore  Spot price > USD 200/t cfr!  … on continued strong steel production.  

*Shipping  Crew changeovers are being paralysed by covid and covid restrictions.  [must read!]

General 

Commodity demand growth 2030.  Supply might be concentrated, but importantly, can it keep up.

USA – Construction spending:  Private & Residential – +ve growth, Public & non-residential -ve.

Japan Industrial Production:  Improving +ve, yet not back to pre covid highs