Tag: zinc

Commodity Review 20191004 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 20191004 by Andrew Pedler – Now Available

Some markets are capitulating … too much uncertainty to make decisions.

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  .

Commodity Review 20191004 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.

Commodity Review 20191004 by Andrew Pedler – Now Available

CommodityReview 20190215 by Andrew Pedler – 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.

Commodity Review 20191004 by Andrew Pedler – Now Available

Commodity Review 20190125 by Andrew Pedler – 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.