Tag: Japan

Commodity Review 20200710 by Andrew Pedler – Now Available

Exploration Spending, Iron Ore, Japan Orders

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:  

  • Japan’s Orders to Machinery (May data) also hitting lows not seen for a long time (last week reported on IP segments).
  • Port Hedland iron ore exports at record highs, reflecting China’s surging steel output, also demanding coking coal to match.  However while Cape vessels demand is now flat demand for Panamaxes has jumped.
  • Australian exploration expenditure (Mar20Qtr) showed strong growth for Au & Cu exploration spend.
  • Base metals’ pinch-point graphs show metal prices beginning to rise, in response to (stimulus driven) expectations of increased demand, and recognition of tight supply.
  • Gold prices lifted this week, as did share markets.  Oddly the conditions posed by Covid now have positive factors for both markets:  risk & stimulus.

SUMMARY  

*Copper  RIO slashed forecast Cu output from Oyu Tolgoi.  Further tightens markets.

*Cobalt  KoBold Metals, a start-up by a coalition of billionaires, plans exploring Canada for cobalt.  

*Nickel  Ni prices in recovery mode.  Near term supply issues.  Long term demand growth to squeeze.

*Zinc & Lead  Zn & Pb mine supply and demand both disrupted.  Downstream activity is picking up

Tin  Alphamin-Bisie performing well.  Long term Sn demand to outstrip production.  Way to go yet.  

Aluminium  China is unlikely to dominate growth in the Al market in the next two decades.

*Gold  Both equities and gold prices are increasing.  Current conditions may suit both.

Platinum & Palladium  Russian Pd output un-phased by Covid.  Provides Russia with stronger market position.

*Oil  IEA’s 2020 demand forecast lifted, though USA covid-19 cases may dampen demand growth. 

Coal  Steel production growth needs to be matched with coking coal supply.  Met-coal cost curves.

Iron Ore  China’s iron ore stocks are stable.  This year’s wet season has had minimal impact on miners.

Shipping  Panamax rates jumped this week, with Cape rates unchanged. 

General 

*Pt Hedland – iron ore exports:  China’s steel industry is surging.  Iron ore export levels are high.  

*Pinch-point graphs – Base metals:  Prices are rising while inventories return to low levels.

*Australia – Mineral and Petroleum Exploration Spending:  Growth in spend on Au & Cu.

*Japan – Orders to Machinery:  negative growth for total orders.  Limited positive segments.

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Please click on the following link for this week’s publication.  Commodity Review –10 July 2020 link

Regards,

Andrew

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Andrew Pedler

Matau Advisory Pty Ltd

Resources & Finance – Research & Analysis

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Matau Advisory is a resource-finance consultancy, offering consulting services in resources finance, research, analysis and advice, including bespoke reports or published research.  Matau Advisory also monitors and evaluates key commodity and currency markets and economic metrics.  The principal of Matau Advisory, Andrew Pedler, has a strong background in research and analysis of resource companies, including technical and financial evaluation, sensitivities, capital structure and requirements.  Andrew has been involved in capital raising for companies including for IPO’s, funding of expansions and for existing operational growth.  His background includes experience as an exploration and mine geologist, and in financial analysis specialising in resources, including in project (debt) finance and in equities (resources).  

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Commodity Review 20191011 by Andrew Pedler – Now Available

Commodity Review 20191011 by Andrew Pedler – Now Available

Lithium

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • Lithium:  South American miners are struggling to put downstream added value projects into place. 
  • The USA – China tariff talks & trade wars The recent “phase 1” agreement details have yet to see the light of day.   
  • Base metal inventories continue to remain tight.  Low base metal inventories are beginning to get more attention in the media than previously. 

SUMMARY  

*Copper  Strikes in Peru to affect output.  RIO exploring (JV) in China.

Cobalt  GEM Co agreement with Glencore for provision of cobalt hydroxide.  Supply is ‘precarious’.

*Nickel  Ni market is concerned about potential future supply shortfalls.

Zinc & Lead  ZMI hits high grade Zn.  NCZ achieves stable Zn operation.  EPA lead pipe rules changed.

*Tin  Chinese refined Sn output down on reduced feedstock supply.  Conflict minerals’ compliance.

Aluminium  A gap between alumina prices in China and in rest-of-world. Alunorte returns to production.

Gold  High gold price dampens Indian buying ahead of Diwali festival.  The world is nervous.

Platinum & Palladium  Merger agreed for Implats to acquire North American Platinum.

Oil  Attacks on Iranian tanker escalates issues.  USA to send troops to Saudi Arabia.

Coal  Aust coking coal exports increased.  Chinese buyers acting ahead of expected port restrictions.

Iron Ore  China’s Tangshan city extended steel production restrictions, that may favour lump iron ore.

Shipping  New fuel regulations making freight rates more volatile.

General 

*Lithium:  supply chain issues for South American countries.

Port Hedland Iron Ore:  China extended restrictions on steel mills that may favour lump ore..

*PinchPoint Graphs:  tightening further and beginning to get price responses.

*Japan – LNG prices:  Higher oil prices and ship-fuel costs could boost LNG prices further.

Commodity Review 20191011 by Andrew Pedler – Now Available

Commodity Review 20191004 by Andrew Pedler – Now Available

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • OPEC+ participants are girding their loins for potentially more production cut commitments.
  • The USA – China tariff talks & trade wars continue to stunt trade oriented decisions.  Some unexpected consequences (see tin).
  • 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.  Low base metal inventories are getting more attention in the media than previously. 

 SUMMARY  

*Copper  Trade wars continue to deter activity.  Outlook for future supply remains tight.

Cobalt  Co inventory from the previously failed Fanya Metal Exchange to be auctioned on Oct 5th.

*Nickel  Ni prices responding to low refined Ni stocks and looming ban on ore exports.

*Zinc & Lead  Northern Canadian infrastructure proposed to deliver remote new mine production.   IBG Citronen.

*Tin  A bad vegetable harvest stings tariff affected USA steel makers.

Aluminium  Vietnam imposes anti-dumping tariffs on Chinee products.

*Gold  “Global policy uncertainty is at an all-time high”.

Platinum & Palladium  Pd prices have run to record highs, on demand growth and supply deficit.

*Oil  Nigeria prepared to make cuts to meet its OPEC+ commitments.

Coal  Chinese buying of low price met coal imports continues.

*Iron Ore  India to auction mining leases.  May disrupt local supply and require imports to balance demand.

Shipping  Cape & Panamax rates reduced this week, on easier grain & iron ore demand.

General 

*Port of Singapore Shipping Traffic:  Bulk Carriers & Tankers +ve growth.

*USA – Construction Spending:  public non-residential spending +ve, but private residential is -ve.

*USA – PMI:  Still indicating a contracting manufacturing economy.

*Japan – Industrial Production:  Overall modest contraction in IP.

Commodity Review 20191011 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 20191011 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.