Japan

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • As for last week … April through June, for most key countries, the base months in 2020 were the lowest base-readings data during the initial Covid-19 wave, meaning that yr-on-yr growth numbers are strongly influenced by the low bases.  Do not be impressed by big positive numbers.   Look instead at recent data relative to pre-covid levels, and trends, as a guide to performance.  
  • Base metal pinch-point graphs remain tight. 
  • OPEC+ is considering raising output, which will temper price increases that arise from recovering economies. 
  • Iron ore prices remain high, despite China’s steel output restriction plans.  China’s steel mill capacity utilisation has reduced.   
  • As per data in the last few weeks, economies are recovering from covid, though many appear as though they will recover to pre-covid trends (several of which were downward).  It remains to be seen whether the early trend will be preserved, improve or get worser post-covid.  USA’s history (written in its industrial electricity demand is that after a crisis recovery is to a level lower than before.

Summary

Copper  SFR granted a ML for Motheo(T3) Botswana. 

Cobalt  China’s imports increased (Australia the largest exporter to China).  Spot prices rising. 

Nickel  Sudbury labour dispute limits supply as EV demand for Ni is supposed to begin. 

Zinc & Lead  Chinese SRB sales did not prevent a deep Zn backwardation.  Demand for Pb-acid batteries grows. 

Tin  Tin supply not expected to meet demand over the next decade. 

Aluminium  China’s supply growth is to slow, but demand growth will continue. 

Gold  Factors driving gold price, including ‘froth’. 

Platinum & Palladium  Expect Pd & Pt prices to increase in line with a global recovery. 

Oil  Oil prices up on reduced USA inventories.  However OPEC+’s output plans are not certain. 

Iron Ore  Concerns re – China’s steel output controls.  Capacity utilisation has reduced. 

Shipping  Expect bottlenecks at ports and congestion-related effects to last until end-2021.

General 

USA 10 yr Bond Yields:  “who needs an EKG when the patient is passed out on the floor?”.  How useful are bond yields other than as a ‘flag’?

Pinch Point graphs:  all tight and getting tighter. 

Japan – Industrial production:  IP segments are recovering, though not yet back to pre-covid.