by Marg | Oct 7, 2019 | Commodity Review, 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.
by Andrew Pedler | Aug 4, 2019 | Blog by Andrew Pedler
Contango is when forward prices (3mo fwd) are higher than cash (spot) prices, i.e. the market is more confident of supply now than into the future. Backwardation is the reverse, when cash prices > fwd prices, i.e. markets are more worried about (prepared to pay more for) near term supply than future supply.
Last Friday, after Trump’s decision to tax / tariff all imports from China, markets appear to have capitulated in frustration, at trying to determine what direction the market(s) will move next. We have seen previously that when a base metal (Cu, Zn, Pb, Ni, Sn, Al) market cannot figure out the direction of the market, that the prices (cash & 3mo fwd) move to parity (cash = 3mo fwd). I cannot recall seeing all six base metals markets heading so close to parity as they have last Friday. Such convergence is very unusual.
For some further detail see this week’s commodity review Commodity Review – 02 August 2019 .
by Marg | Mar 18, 2019 | Commodity Review, 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.
by Marg | Feb 18, 2019 | Commodity Review, Now Available
Venezuela
Comments of particular interest are noted with ‘*’.
Supply issues continue to abound, keeping some tension in most metals markets. However as China’ ShFE resumed trading, seasonal factors are reported to have led to significant increases in Cu and Zn stock on that exchange.
Geopolitical factors continue to daunt and disrupt global investment and industrial markets.
SUMMARY
*Copper Outlook improved on: Chinese funding stimuli, & USA China trade talks, & dearth of new projects.
*Cobalt Outlook for ample Co supply, (DRC and others) for the next few years. Low cash costs needed.
Nickel PAN restarts Savannah. KGHM Sudbury shutters Morrison. Importance of Ni in Li batteries.
*Zinc & Lead Qld floods disrupt transport for at least a month. MYR reports world-largest primary Pb Resource.
Tin Potential demand surge from Li batteries from ~ 2020, though surpluses forecast this year.
Aluminium China’s Al exports at record high. Iranian Al output increasing.
Gold Investors awaiting further developments before making big moves.
Platinum & Palladium Pd market in deficit. Pt market in oversupply.
*Oil Asian oil refineries stuck between OPEC production cuts and USA sanctions.
Coal Spot met-coal buying by Chinese resumed. Australian total coal exports up in 2018.
*Iron Ore Chinese iron ore mines not likely assist supply, instead may cut output due to grades and costs.
Shipping Asian freight markets returned strongly post Lunar New Year.
General
Port of Singapore – ship traffic: Tanker & Bulks traffic strong in January ahead of Lunar NY.
Baker Hughes Rig Counts – World & North America: rigs widely increasing (lagging oil price).
Japan – LNG prices: tracking (lagging) oil price movements.
by Marg | Jan 28, 2019 | Commodity Review, Now Available
Comments of particular interest are noted with ‘*’.
As with last week’s report on OECD CLI, commodities markets and other economic data are indicating slowing growth. However base metal markets remain tight with most prices increasing this week.
.SUMMARY
*Copper Outlook for Cu is supported by ‘digital age’ demand, despite IMF reduced growth outlook.
Cobalt Major consumers teaming up, using blockchain, to track Co sales from DRC.
*Nickel Outlook for Ni is for deficits.
*Zinc & Lead Zn prices at 3mo highs. Market is balanced … ‘knife-edge’. PEX drilling.
Tin Sn market tension ‘eased’ by large LME delivery.
Aluminium USA-China trade tensions supporting Al prices, and Indian import volumes.
Gold Au price up. USA Fed, IMF, China-USA trade talks, all in the pot to influence Au price moves.
Platinum & Palladium South Africa is seeing an increase in Pt output.
Oil Venezuela: contributes to uncertainty of supply for oil.
Coal Chinese thermal prices up ahead of Chinese NY. Indonesia pursuing domestic cargo insurance.
Iron Ore China’s economic growth slowing. Uncertain how much effort Govt will make to boost demand.
Shipping Panamax and Supramax rates down.
General
*World Airport Runway Elevations: About 10% are less than 5m above sea level.
*China: Industrial and Energy output: +ve growth focussed in high tech, tspt & consumer.
*Germany – Industrial Production Durable Goods, Construction: -ve IP & durables. +ve constr.
*United Kingdom – Industrial Production & segments: negative growth.
