China, USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Emergence from the Covid-19 Pandemics around the world is facing some headwinds (Northern Hemisphere winter, and likely relaxing too much, too soon, too confidently). 
    • Global recovery growth is noticeably slowing, though not stalling. 
    • Expect more turbulence and slower actual recoveries. …notably:  Austria, Germany, Denmark, China, USA … et al.
  • China Industry & Energy Output and Transport conditions selectively show significant slowing.  … notably steel slowing but energy demand increasing.
  • China this week gets many mentions in other commodity segments, both as a driver and hinderance.
  • USA’s economy is facing some headwinds but (a few) segments are still reasonably robust
  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are responding strongly to low stock levels.  
    • High prices have still NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.  
      • In fact for most of these stock levels are continuing to decline despite high prices. 
      • Implies very tight markets.
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available. 
    • Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates touted by manufacturers and entrepreneurs.  
    • Actual rates will have to work to actual rates of raw materials supply growth.  That said the critical NEV commodities present some attractive investment opportunities.

SUMMARY  

*Copper  “Global markets will need four times the nickel and double the copper in the next 30 years”.

*Cobalt  Li ion batteries still seeking to reduce Co content, but Co price continues to rise. 

*Nickel  Kabanga Ni (Tanzania) to develop a major Ni mine – a history of some political risk.

*Zinc & Lead  USGS proposes adding nickel and zinc into its redrafted critical minerals list.   China Pb exports 

*Tin  Sn exchange inventories at multi-year lows.  Land port from Myanmar to China is closed.     

Aluminium  Explosion at Chinese (Yunnan) Al smelter, pushed prices into backwardation. 

Gold  USD price down on increased USD value and USA Federal Reserve commentary. 

Platinum & Palladium  Implats’ bid for Royal Bafokeng thwarted by Northam Platinum. 

*Oil  Europe at risk of power shortages due to insufficient gas reserves.  

*Iron Ore  Prices lowest since Nov 2020, and expected to fall further on China’s energy controls. 

*Shipping  Multiple factors behind the fall of the dry bulk market since early October, many involving China.  . 

General 

Australia & USA Yield Curves:   Yield curves looking more ‘normal’ … but just at low rates. 

*China – Industry & Energy Output:  Steel products – negative, & Energy positive growth.

*China – Transport:  Freight are at  slower rates (border bans did not help).  Pax are still way down.

*USA Housing Starts:  really slow growth, including non-starts relative to authorisations.

*USA Industrial Production:  reasonable positive growth.