Tag: China energy

Commodity Review 20210723 by Andrew Pedler – Now Available

Commodity Review 20210723 by Andrew Pedler – Now Available

China Industry & Energy, USA IP & House starts

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China’s Henan (industrial and iPhone production centre) was belted by heavy flooding last week.  Another typhoon is right now approaching Shanghai.  Anticipate further disruption to transport, and possibly to industry. 
  • Base metal pinch-point graphs remain very tight.  Markets are now considering something they have ignored for years … the “fundamentals”, which are carrying more weight than the other market force:  “sentiment”.
  • OPEC+ continues to consider raising output.  Supply is forecast to remain tight. 
  • Iron ore prices remain high, despite China’s steel output restriction plans.  China’s steel mill capacity utilisation has reduced.  China’s iron ore output has reduced, somewhat in line with its oft repeated calls to reduce steel output, but demand remains strong and prices have only drifted off a little (i.e. remain high).
  • Droughts in China (Yunnan province) continue to impacting production of Al, Zn & Sn due to hydro-power restrictions (at least for now). 
  • Newmont has flagged that the lockdowns and restrictions brought on by the Covid-19 pandemic is increasing business and operating costs.  Expect that factor to be widespread.
  • As previously … 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 such big positive numbers.  It may not be till the Dec21 Qtr when yr-on-yr growth calulations are more meaningful.  Look instead at recent data relative to pre-covid levels, and trends, as a guide to performance.  

SUMMARY  

Copper  China to release more SRB metal stockpiles, attempting to influence prices.

*Cobalt  First Cobalt successfully recovers metals from recycled Li-ion batteries.  Technical success.  

*Nickel  BHP signs Ni supply agreement with Tesla.

Zinc & Lead  Flooding in Henan disrupts transport but less so for output of key commodities.   

Tin  Sn prices at all time highs!  Pandemic shutdowns are hindering supply chains.    

Aluminium  Al production growth has slowed markedly, on drought / power constraints.

*Gold  Gold price has not really changed since January.  Seek quality production growth.

Platinum & Palladium  World’s major Pt producers turn to renewable energy to offset unreliable Eskom power supply.

*Oil  Expectations that supply will remain tight through 2021. 

Iron Ore  China continues to attempt to limit production to 2020 levels.  Demand is driving prices up.  

Shipping  Cape rates up, Panamax down.   

General 

China:  Another Typhoon approaching Shanghai   

*China – Industry & Energy Output:  Steel and energy output positive growth.

*USA – Housing Starts:  Positive growth (recovery from covid), rates are moderating.

*USA – Industrial Production:  Growth strong yoy but flat mo-on-mo.

Commodity Review 20210723 by Andrew Pedler – Now Available

Commodity Review 20190125 by Andrew Pedler – Now Available

Comments of particular interest are noted with ‘*’.

As with last week’s report on OECD CLI, commodities markets and other economic data are indicating slowing growth.  However base metal markets remain tight with most prices increasing this week.

 .SUMMARY  

*Copper  Outlook for Cu is supported by ‘digital age’ demand, despite IMF reduced growth outlook.

Cobalt  Major consumers teaming up, using blockchain, to track Co sales from DRC.

*Nickel  Outlook for Ni is for deficits.

*Zinc & Lead  Zn prices at 3mo highs.  Market is balanced … ‘knife-edge’.  PEX drilling.

Tin  Sn market tension ‘eased’ by large LME delivery.

Aluminium  USA-China trade tensions supporting Al prices, and Indian import volumes.

Gold  Au price up.  USA Fed, IMF, China-USA trade talks, all in the pot to influence Au price moves.

Platinum & Palladium  South Africa is seeing an increase in Pt output.

Oil  Venezuela:  contributes to uncertainty of supply for oil.

Coal  Chinese thermal prices up ahead of Chinese NY.  Indonesia pursuing domestic cargo insurance.

Iron Ore  China’s economic growth slowing.  Uncertain how much effort Govt will make to boost demand.

Shipping  Panamax and Supramax rates down.

General 

*World Airport Runway Elevations:  About 10% are less than 5m above sea level.

*China:  Industrial and Energy output:  +ve growth focussed in high tech, tspt & consumer.

*Germany – Industrial Production Durable Goods, Construction:  -ve IP & durables. +ve constr.

*United Kingdom – Industrial Production & segments: negative growth.