Tag: Zimbabwe

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.