Tag: USA

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 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 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 20190726 by Andrew Pedler – Now Available

World Steel and China

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • There is a lot in this week’s issue … reading is recommended.
  • World steel output continues positive growth, supported by expected Chinese infrastructure spending, and despite sanctions / tariffs.
  • Chinese industry and energy output for June reported largely positive growth.  Electricity generation remains strong.  The rise of electricity and natural gas is closely connected in the industrial and residential sectors, as these energy sources provide a good match for the needs of lighter industrial sectors and for a population increasingly concerned about local air quality, according to IEA.  It is estimated that by 2040, the average Chinese household will consume twice as much electricity as today.  
  • 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 meets Wednesday to consider rate cuts.  A 0.25% cut is anticipated, however a 0.5% cut would likely change the USA yield curve back, from inverted, to normal.  Gold bulls are hoping for the latter cut.

 SUMMARY  

*Copper  Concentrates penalised for As content.  TC/RC’s strongly favour ‘clean’ concs.

*Cobalt  International consortium plans large Ni-Co plant at Morowali in Sulawesi.

*Nickel  Recent Ni rally on ‘not news’ easing.  Potential medium term shortfalls for Co, Li, & Ni.

*Zinc & Lead  Qld miners hit by anti FIFO rules.  Neves Corvo Zn expansion delayed and increased cost.

Tin  PT Timah expects to double Sn output in 2019.  … may acquire output of illegal miners

Aluminium  Canadian Al producers benefit from tariffs, USA consumers do not.

Gold  Central Bank Gold Agreement (CBGA) to be discontinued upon expiry.

*Platinum & Palladium  Zimbabwe talking (so far) of unwinding high political risk elements, to attract investment.

*Oil  Natural gas gaining more traction as best on-demand energy production source.

*Coal  Japanese utilities testing off-spec thermal coal products.

Iron Ore  Expectations of Chinese infrastructure stimuli continues to support Fe ore prices.

Shipping  Capesize & Panamax rates slipped this week.

General 

*World Steel:  positive growth continues led by China and other Asia.

Marine Traffic & Port of Singapore traffic:  Tanker traffic +ve, Bulks & Containers -ve growth.
USA – Interest rates, yields:  Fed to consider rate cuts on Wednesday.

USA – Durable Goods, Vehicles, Electronics & Computers: Durables -ve, Vehicles +ve, Elect +ve.

*China – Industrial & Energy Output:  more positive than negative growth items.