Tag: yields

Commodity Review 20190816 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 20190816 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 20180921 by Andrew Pedler – Now Available

Commodity Review 20180921 by Andrew Pedler – Now Available

China – Interest Rates

This week’s comments of particular interest are noted with ‘*’.

SUMMARY  

Copper  Concerns of impact of trade tensions continue to ease.

Cobalt  Low cost of mining in DRC provides buffers against new high royalties for strategic minerals.

Nickel  Inventories continue to fall.  Prices yet to really recover from the trading war rout.

Zinc & Lead  Zn market deficit deepens.  G1A and PMY developing Pb-Ag deposits.

Tin  Tin usage growth is slowing as tariffs compound longer term weaknesses in the Sn usage profile..

Aluminium  Japanese premiums reduced slightly.  Global output increasing.

Gold  Indian dowrys.

Platinum & Palladium  Pd outperform short term.  Pt outperform long term.

*Oil  Russia’s oil production increased to a new post-Soviet high, ahead of OPEC meeting.

Baker Hughes Rig Counts:

*Coal  NipponSteel benchmark metallurgical coal settlements.

Iron Ore  China’s iron ore (physical) trading platform seeing record volumes.

Shipping  Demand eased for Capes and increased for Panamax.

General 

*Interest Rates/Yields – Australian and USA:  comparisons link short term differentials to FX

*PinchPoint updates:  Holidays are now over.  Inventories are falling with some price responses.

*China – Industry and Energy Output:  slower but positive for energy, & other select areas.

USA – New Housing Starts:  strong positive growth.