IP – China, USA, UK, Germany

Comments of particular interest are noted with ‘*’.  … really!  Do read these! *

Matau’s Comments:

  • The depths of the Covid-19 pandemic are about 12 months behind.  This is where one needs to take care to watch what statistics / ratios are actually measuring.   In general, for all high yr-on-yr growth ratios reported for at least the next 6 mo, check if the denominator was a very low (covid-affected) data point.  Preferably look for data trend comparisons with pre-covid levels.
  • China’s industry and energy output yielded largely positive growth for April. 
    • Its Freight transport has almost returned to pre-covid levels, but passenger traffic was hit very hard during the first wave of Covid, and is just starting to recover after a second wave.  Consistent with shipping data out of Singapore, one of the largest transit ports in SE Asia, passenger traffic has some distance to recoup to recover to pre-covid levels.   
    • Output, and demand, from the rest of the world is beginning to grow again, though supply and demand are sourced from different countries, with different phases of the covid pandemic.
  • Base metals’ forecasts are being more widely tinged with commentary reflecting under-exploration and under-investment in new deposits, for replacement, let alone growth. 
    • Even recent EV forecast sales have growth at +8% p.a., for a decade, but not the visible Resources in ground to form (even with new discoveries),a basis for adequate Reserves to much more than a few years of that growth rate.  Large new deposits usually take 8-10 years from discovery, through evaluation, permitting et al, to commissioning.  Matau expects the uptake rates of EVs will be more moderate than the rates currently proposed.  Meanwhile, those who have Resources and Reserves are in good positions.   
  • Shipping issues include inability for shipping companies to organise crew-changeover at many ports due to covid-19 restrictions, lack of flights and quarantine regulations.  This will impact most formats of shipping. 
    • Conceivably the issue regarding crew-changeovers will also have some impact on how airlines manage their crew’s flight hours and breaks from flight times.

SUMMARY  

*Copper  Refined supply deficits expected to start in 2021 (S&P Global Mkt Intel.) will be needed by 2030.  

*Cobalt  Roskill believes new supply equivalent to four ‘Mutandas’ will be required over the period to 2030. 

*Nickel  POSCO to acquire 30% of Ravensthorpe Ni project in JV with FMQ.

*Zinc & Lead  China’s Zn smelters to reduce power consumption by 10%.  Chile and Peru may raise taxes. .  

Tin  Alphamin’s Mpama North reported record output for the Mar21Qtr.     

Aluminium  Graphene aluminium-ion batteries could compete with Li-ion, if commercialised.

*Gold  Labour market shortages are limiting production rates at gold miners in WA.  .

Platinum & Palladium  Expect Pt loadings on China’s diesel trucks to treble this year.

*Oil  Oil price dips upon an expected return to Iranian nuclear deal. 

*Coal  Aust. Met-coal prices rising.  BHP pivoting toward “future-facing commodities” Ni, Cu & potash. 

*Iron Ore  BHP’s South Flank (replacement) mine starts up.  China plans to diversify supply sources.

Shipping  Rates declined on Asian routes though demand for steel, fertilizer, nickel ore, clinker is strong. 

General 

*China Transport:  Freight traffic has almost recovered.  Passenger traffic is still impacted 

*China – Industry & Energy Output:  Industry & Energy recorded positive growth for most items.

*USA – Housing Starts:  Starts are above pre-covid levels but not nearly back to pre-GFC.

*USA – Industrial Production & Capacity Utilisation

*Germany – Industrial Production:  Recovery under way.  Durables well above pre-covid levels.

*United Kingdom – Industrial Production:  Recovery is under way, though not yet to pre-covid.