Tag: Industrial Production

Commodity Review 20191018 by Andrew Pedler – Now Available

Commodity Review 20191018 by Andrew Pedler – Now Available

China

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • China – Industry & Energy output for September was notably widely positive.
  • Singapore shipping traffic is also positive for September …
  • Still …  USA – China tariff talks & trade wars continue to stunt trade oriented decisions.
  • Base metal inventories continue to remain tight.  In a broad sense not much has changed.  Base metal prices are struggling to cope with the negative fears driven largely by the USA-China trade tensions.   However low base metal inventories are getting more attention in the media than previously. 
  • USA data for house starts, and IP remain low.  These are concerning.
  • USA yield curves:  … have technically reverted to ‘normal’. 

 SUMMARY  

*Copper  Positive Chinese property and infrastructure growth data improved outlook.

Cobalt  Glencore contract with GEM, & Trafigura financing Mutoshi mine in DRC.  Confident of outlook.

Nickel  Bit of a roller coaster between supply fears and outlook subject to growth rates.

Zinc & Lead  Zn TC/RCs expected to stay high.  South Korea is the third largest producer of refined lead.

Tin  Sn use contracting in 2019.  Changing tariffs are disrupting supply chains.

Aluminium  Energy intensive industry in eastern Australia is subject to commercial reviews.

Gold  Prospect of a Brexit deal is muting Au & Ag price reactions.  (UK votes Sat 19th).  Geopolitics fears are rife.

Platinum & Palladium  Pt surplus ahead, and a Pd deficit .

Oil  Asia-Pacific deficit of refined oils by 2025, while region excluding China likely to face surplus.

Coal  China unlikely to escalate import controls, on fears of a harsh winter & need for economic growth.

Iron Ore  RIO maintains guidance, taking #1 now ranked iron ore producer, pending Vale ramp-up.

Shipping  Cape & Panamax rates reduced.

General 

*Singapore Ship Traffic:  positive growth in each major segment:  bulks, tankers & containers.

Baker Hughes – World & American Rig Counts:

*China – Industrial & Energy Output:  widespread +ve growth incl electricity, but not vehicles.

USA Industrial Production – Capacity Utilisation:  IP growth is flat.

USA – Housing Starts:  low total growth.  Only +ve in the South.

 

Commodity Review 20191018 by Andrew Pedler – Now Available

Commodity Review 20190816 by Andrew Pedler – Now available

USA – Housing Starts, Industrial Production, Electricity End-Use, Bond Yields

Matau’s Comments:  

  • USA   is slowing!  Data this week reinforces last week’s OECD CLI implications.
  • Base metal inventories continue to remain tight.   Most prices are in the ‘nose of pinch-point graphs.  Pinchpoint positions are mostly less than 1 week’s consumption.   However sentiment (geopolitical) continues to drive prices over fundamentals.  
  • Several metals (Ni & Co this week)  are showing signs that reduced supply is likely to lead to higher prices.
  • Outlook is for ‘not enough’ new mine supply in coming years (the next decade), for several key commodities. 

The theme of the Resources Rising Stars conference at the Gold Coast earlier this year is appropriate:  “Pick the stock, not the market”.

 

SUMMARY  

*Copper  Codelco optimistic about long term price for Cu.  Short term prices pressured by growth concerns.

*Cobalt  Co price is up on news that Glencore is shutting its large DRC mine.

*Nickel  Philippines’ largest exporter of ‘high’ grade Ni laterite ore is to shut upon depletion of its Reserves.

*Zinc & Lead  ORN calling for ongoing need for more Zn & Cu production.  Nyrstar Pb smelter stopped again.

*Tin  Trump acknowledges that tariffs increase domestic prices.  Delays new tariffs till after Christmas.

Aluminium  Beijing announced additional import scrap quotas.

*Gold  Gold price gains as faith in Central Banks is about to be tested again.

Platinum & Palladium  Progress … of sorts … being made in wage negotiations with AMCU..

*Oil  .Russia & China have stuck by Venezuela, though that may change.

Coal  A weaker CNY, a safety campaign, shipment restrictions, though premium HCC is preferred.

Iron Ore  Beijing’s stimulus restraint driven by low infrastructure spend, impacting prices.

Shipping  Baltic indices, Cape, Panamax & Handymax up this week.

*General 

Port Hedland – Iron Ore shipments:  Shipments down in July after a bumper June effort.

USA – Electricity End-Use:  Total demand slowing, mostly in residential demand.

USA – Bond Yields:  A historical review + Current 10yr-2yr curves ‘almost’ inverted.  10yr-3mo is!

USA – Industrial Production – Capacity Utilisation: Really slow IP growth.  Cap Util is sub optimal.

USA – Housing Starts:  House starts almost stalled.

Commodity Review 20191018 by Andrew Pedler – Now Available

Commodity Review – 20190802 by Andrew Pedler – Now Available

Yields – USA

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • USA Yield curves are an odd shape in the current form, with a huge sag in the middle.  A review of current and pre-GFC curves shows some differences.  Some commentators consider the current duration has not been long enough.  Others comment on the ‘shape’ of the curves.  Opinions are invited.
  • Base metal inventories continue to remain tight.  Most prices are in the ‘nose of pinch-point graphs.  Pinchpoint positions are mostly less than 1 week’s consumption.  More media commentary is recognising this condition.  However sentiment (geopolitical) continues to drive prices over fundamentals.
  • The USA Fed met last week and cut rates a bit.  Trump took umbrage and announced further “taxes” (tariffs) on Chinese imports.  The markets took this hard, as a further level of uncertainty and volatility, and parts of the market appear to have capitulated.  Base metals’ contangos is one example.

SUMMARY  

*Copper  The size of the world copper market has been progressively underestimated.

*Cobalt  Indian JV Co formed to seek sources of Li, Co, et al.  Volvo cars with recycled Co produced.

*Nickel  BHP Group plans to start production of nickel sulphate in the Jun20Qtr.

Zinc & Lead  ZMI’s Kildare Zn project.  Pb supply improving (for now).

Tin  China switched to being a net exporter of refined tin last year.

*Aluminium:  quote: “Trump’s trade war with China is backfiring and impacting the US economy”.

Gold  Central Banks adding to holdings. Trump vows more tariffs on China. Global uncertainty increases.

Platinum & Palladium  WPIC upbeat on surge in Pt EFT holdings.

*Oil  USA share of growth is strong, with light crude;  heavier Iranian and Venezuelan output is down..

Coal  China again planning to limit imports, after a strong start to the year.

Iron Ore  China prices fell as Brazilian exports picked up, on Vale restarts.

Shipping  Freight rates slowed from a peak earlier in July.

General 

*USA – Yield Curves:  an examination of the current and an earlier period.  A signal not a cause.

USA – PMI:  Still positive, though still slower outlook.

*USA – Construction Spending:  -ve growth for Total and Private & Residential spends.

Japan – Industrial Production:  slow down for IP and several segments.

 

Commodity Review 20191018 by Andrew Pedler – Now Available

Commodity Review 20190712 by Andrew Pedler – Now Available

LNG

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • Base metal inventories continue to remain tight.  Most prices are in the ‘nose of pinch-point graphs.  Pinchpoint positions are mostly less than 1 week’s consumption.  More media commentary is recognising this condition.  However sentiment (geopolitical) continues to drive prices over fundamentals.
  • Base metal (industrial metal) trade volumes though exchanges have slowed markedly during 2019, with ‘trade-war fatigue’ and the lack of apparent progress emanating from the USA-China trade talks, which  is affecting the confidence to make decisions and trade in markets.  
  • USA economic data (industrial production, orders to durable goods, housing starts, construction spending) that relate directly to commodities demand, are all showing signs of slowing or negative growth.  employment is usually a lagging data series, orders to durable goods and new housing starts are both indicators of confidence that normally lead employment data changes.  The USA Federal Reserve Chairman commented that there is a concern that slowing global economies may impact upon the USA.  Matau’s observations are that the USA economy is already slowing. 

 

SUMMARY  

*Copper  Term concentrate TC/Rs between Chinese and Chileans.  DRC’s Cu output down.  AIS doing well.

*Cobalt  Artisanal Co miners in DRC are the global swing producer.

*Nickel  Indonesia may reinstate Ni-ore export ban in 2022.   WSA, PAN.

Zinc & Lead  Nyrstar extends force majeure.  NCZ production ramping up.  Plans to double capacity..

*Tin  *Tin market under greater pressure from economic slowdown & falling demand than supply issues.

Aluminium  Trade conflict with China which investors expect to weaken economic growth and metals demand.

*Gold  Gold and financial markets may be a little ahead of themselves.  No details on talks still.

Platinum & Palladium  Wage negotiations: talks begin.

*Oil  Market tightening, though not clear how long will last.

Coal  Chinese mills restocking met coal, ahead of possible import controls.

Iron Ore  China’s iron ore imports fell in June.  Heading into the maintenance and antipollution half year.

Shipping  Capes boosted by iron ore.

General 

*LNG markets:  demand will start to outstrip supply by 2022-2023

UK – Industrial production, manufacturing et al:  positive growth in most segments.

USA – Construction spending:  remains negative growth, particularly in private & residential segments.

Germany – IP, durable goods, & construction:  IP & Durables -ve.  Construction +ve.

Commodity Review 20191018 by Andrew Pedler – Now Available

Commodity Review 20190315 by Andrew Pedler – Now Available

China

Comments of particular interest are noted with ‘*’. 

SUMMARY  

*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.

General 

*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.