Comments of particular interest are noted with ‘*’.
*Copper Pakistan’s military to take a key role in development of Reko Diq.
*Cobalt Sector investors may not appreciate how quickly EVs are being adopted.
*Nickel Nickel Sulphate: demand growth to be driven by the auto and chemicals industries.
*Zinc & Lead Namibian Zn refinery suspends operations. Global Pb markets to be in ‘sizable’ deficit for 2019.
Tin Reduced Chinese consumption in 2018 was offset by consumption in the rest of the world.
Aluminium Venezuela: no power, no aluminium.
Gold USD gold price fell against others, so at least USD gold price increased.
Platinum & Palladium Pd price at record levels. Russia considered export bans for Pd.
*Oil Price gains limited by concerns of rising USA production. OPEC meeting this (16-17th) weekend.
Coal Australian HCC exports continue to be stable. Outlook on China ports still uncertain.
Iron Ore India’s iron ore imports up significantly in 9mo to Dec18. Exports also decreased markedly.
Shipping Capesize rates recovered.
*Japan LNG prices : prices may be about to bottom, though perhaps not just yet.
*USA & Australia – bond yields: curves approaching inversion.
*China Industrial and Energy Output: Strong growth in electricity, gas, batteries, glass.
It has been a volatile week, driven primarily by reactions to USA sanctions and pending sanctions, fears of Chinese and global slower growth. Fundamentals are being pretty much ignored. Fear is driving prices, but inventories continue to decline.
This week Matau focusses on the USD TWI and correlations with gold and other commodities, then at the AUD, CNY and USD indices reflected by several other key and emerging currencies, and at gold price indexed in the same key and emerging currencies.
This week’s comments of particular interest are noted with ‘*’.
*Copper Copper supply faces shortages in the medium to long term.
*Cobalt Cobalt faces a supply squeeze, or disruption, if demand is as forecast.
*Nickel Exchange inventory is suited to batteries, and is falling.
*Zinc & Lead Spot TCs are low, Chinese smelter margins are tight. Steel (galv) demand remains strong.
Tin Tin demand is expected to increase markedly with forecast of EVs.
*Aluminium Chinese demand growth for Al forecast to peak in 2023.
Gold A volatile week, with gold’s response to bad news a lot softer than years past.
Platinum & Palladium Unions threaten to bring South Africa’s Pt industry down.
*Oil Swings in oil prices forecast on Trump’s sanctions and forecast changes in shipping rules.
Coal SSCC & high CV thermal prices to close to consider selling SSCV on spot markets.
Iron Ore Japan’s largest steel maker playing down tariffs and plans to boost steel output.
Shipping Panamaxes preferred over Capes this week with better flexibility and comparable prices.
*USA TWI correlations. Strongest with gold. Not so much other commodities.
*Foreign Exchange relations – AUD, USD CNY & gold: A perspective on currency movements.
PinchPoint updates: inventories continue to fall. Prices fell on sentiment, not fundamentals.
*China – Industrial and Energy Output: growth negative except positive for select items, and for energy.
USA – Industrial Production and Capacity Utilisation: steady positive growth.
The escalating trade conflict between USA and China has unnerved base metal markets this week on the uncertainty of outcomes. We note potential and outcomes in this issue according to the perceived strategic motives and goals of the major participants.
However most economic parameters we can see to date (see this and recent Commodity Reviews) remain sound, and we expect fundamentals will ultimately win out over sentiment. 20180706
*Copper Still 12x labour contracts to be negotiated in 2018, many in Chile.
*Cobalt India is actively seeking to source battery minerals Li, Co et al. COB & CLQ comments.
Nickel CLQ comment. **Escalating trade conflict between USA & China. What are the likely outcomes.
Zinc & Lead China’s Zn & Pb goals complicated due to co-production of Zn & Pb. MYL, NCZ comment.
Tin Interest in Cornish tin revived, in part due to associated Li brines.
Aluminium China has issues with shutdown declarations and practise.
Gold EXU outlining shallow mineralisation near Tampia.
Platinum & Palladium US-European trade issues are impacting auto imports into USA.
*Oil Russia has boosted crude production rates.
*Coal JFY2018-19 thermal contract settlement is unsettled (Glencore/Tohoku) though others may deal.
Iron Ore Capesize demand is up on iron ore, while Panamax is reduced..
Shipping Capesize demand up for iron ore, though Panamax down this week.
Pinch Point updates: Ni is tightening. Pb, Al & Zn, then Cu, are fundamentally tighter
*USA – PMI: US economic outlook is strong.
*China- Industrial & Energy Output: +ve growth in electricity and other select segments.
*USA – Construction Spending: positive growth Residential, Non-Res, Public, Private
*Japan – Orders to Machinery: robust growth.