Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20220128 by Andrew Pedler – Now Available

Gold, Durable Goods

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

·                     Base metal markets remain excruciatingly tight!  

·                     High power costs are widely impacting global smelters’ output(s).

·                     The Chinese New Year (Year of the Tiger) begins 01 February 2022, with a week long holiday break  for many operations.

    • 2022 is a year of the Tiger, starting from February 1st, 2022, and ending on January 21st, 2023.  It is a Water Tiger year.
    • The Tiger is known as the king of all beasts in China.  The zodiac sign Tiger is a symbol of strength, exorcising evils, and braveness.  

·                     SUMMARY  

·                     Copper  Copper required for EVs is multiples of that required for ICE.  

·                     Cobalt  Demand growth forecasts are strong.  Supply is likely to struggle.  

·                     Nickel  Ni supply will be stretched to meet forecast demand.  POS’ outlook for redevelopments is good. 

·                     Zinc & Lead  Zn & Pb TCs increased.  European power cuts continue to hamper Zn & Pb production. 

·                     Tin  Tin is experiencing scarcity pricing, in the grip of a prolonged supply-chain crunch. 

·                     Aluminium  European power prices, Russia/Ukraine, China approaching holidays with minimal stockbuild.  

·                     Gold  Gold price’s worst week since November. 

·                     Platinum & Palladium  Pt prices expected to increase over the next two years, on substitution for Pd, which may drift.   .

·                     Oil  OPEC+ unable to meet proposed production increases (so far). 

·                     Iron Ore  A renewed building boom in China & fears of Australian supply disruption.

·                     Shipping  Merchandise world trade volumes +10.6% yr-on-yr in 2021, surpassing its pre-pandemic level..

·                     General 

·                     World Gold – demand:  Strong demand in the Dec21Qtr, notably jewellery.  Negative long yields.

·                     USA – Durable Goods orders:  Durables growth is strong, but vot Vehicles, nor Electronics.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20220114 by Andrew Pedler – Now Available

Ports & USA-IP

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

·                     Base metal markets remain excruciatingly tight!  

·                     High power costs are widely impacting global smelters’ output(s).

·                     The Chinese New Year (Year of the Tiger) begins 01 February 2022, with a week long holiday break  for many operations.

    • 2022 is a year of the Tiger, starting from February 1st, 2022, and ending on January 21st, 2023.  It is a Water Tiger year.
    • The Tiger is known as the king of all beasts in China.  The zodiac sign Tiger is a symbol of strength, exorcising evils, and braveness.  

·                     Iron ore offtake from Port Hedland in December was strong, as (many of them Asian) smelters and furnaces stock up ahead of Chinese New Year breaks. 

·                     Japan’s offtake of iron ore has resumed growth.  It will be interesting to see Japan’s December IP data, when it reports.

SUMMARY  

Copper  Cu price up on positive sentiment.  NRX’ projects in Namibia are of interest.

Cobalt  Demand for Co and Co intermediate products is growing.  

Nickel  Ni price at highest in a decade on concerns about supply and stock levels. 

Zinc & Lead  Fitch revised Zn forecast prices upward.   China removed import tariffs on lead battery scrap.

Tin  KLTM tin price at historic high levels. 

Aluminium  Soaring electricity prices in Europe have triggered cuts in aluminium production. 

Gold  Au prices down Friday but up on the week, on a weaker USD and mixed economic releases. 

Platinum & Palladium  A summary of uses and investment appeal..

Oil  China’s annual crude oil imports for 2021 were reduced for the first times since 2001.   

Iron Ore  Market is looking for indications of China’s policy after the Winter Olympics. 

Shipping  Dry Bulk was good in 2021, looks promising for 2022.  Indonesia allows some thermal coal exports.

General 

Port Hedland – Iron ore:  December offtake was strong.  SE Asian demand ex China is growing: 

Port of Singapore:  Container traffic is becoming more robust, though bulks traffic is down .

USA – IP & Capacity utilisation:  IP has resumed modest growth rates.  Cap.Utiln is improving.

Bond Yields:  Long term yields are approaching pre-pandemic levels.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20220107 by Andrew Pedler – Now Available

USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Base metal markets remain excruciatingly tight!  
  • High power costs are widely impacting global smelters’ output(s).

SUMMARY  

Copper  Cu price is watching equities, supply & interest rate expectations. 

Cobalt  Outlook for cobalt prices is higher..  

Nickel  Reduces supply disruption in Indonesia & Philippines to assist supply. (still tight). 

Zinc & Lead  Korea Zinc – Sun Metals agrees to renewable power supply MOU’s . 

Tin  Outlook for 2022 softened slightly on increased supply. 

Aluminium  A major aluminium smelter in France is to reduce production, on high power costs. 

Gold  The gold price reaction suggests the market is focussed on inflation risks. 

Platinum & Palladium  Podium Minerals (POD):  extending mineralisation for Resources.

Oil  Doubts emerge as to OPEC+’s ability to increase output (to forecast levels) quickly. 

Iron Ore  China’s demand expected to increase after the Beijing Olympics.. 

Shipping  Indexes for Capesize & Panamax increased though Supramax & Handysize reduced..

General 

Australia – USA – Yields:  Yields now rising and expected to increase further.

Baker Hughes – Rig Counts:  Rig counts increasing on higher oil prices and recovery expectations.

USA Construction Spending:  Growth still dominated by Private & Residential spending.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211231 by Andrew Pedler- Now Available

Nickel – Japan, South Korea

Dear Margaret

(ref no: 902)

Wishing you a Happy & prosperous New Year for 2022., and the ability to travel (safely when you want to)!  

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Nickel outlook is for need for considerable expansion for stainless steel alone.
  • Copper outlook is for significant demand growth. 
  • Base metal markets remain excruciatingly tight!  
  • Japan’s IP is recovering well. 
  • South Korean IP appears to have resumed an upward growth tre3nde.
  • High power costs are widely impacting global smelters’ output.

SUMMARY  

*Copper  China’s factory activity unexpectedly accelerated in December.  The world needs much more Cu.

*Cobalt  The global cobalt supply chain is relatively fragile, sensitive to disruption.   

*Nickel  Primary nickel consumption to rebound yr-on-yr due to stainless steel capacity expansions alone. 

*Zinc & Lead  Power costs threaten production.  Ag-rich Pb concentrates are in demand.

Tin  Myanmar concentrate supply issues unable to be covered by Australian and Bolivian supply. 

Aluminium  Norsk Hydro cuts Slovakian output due to power costs. 

Gold  Price fell year-on-year though has risen in recent weeks.  Price drivers are the usual suspects.

Platinum & Palladium  Prices have reduced this year, though ongoing auto demand is rising.

*Oil  China continues to rely in the Middle East for oil supply. 

Iron Ore  Prices registered first annual decline in three years. 

Shipping  The dry bulk market fared much better than the tanker market, during 2021..

General 

South Korea – Industrial Production:  Recovering well from covid-19.

Japan – Industrial Production:  IP is recovering, supported by steel & machinery (& other).

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211224 by Andrew Pedler – Now Available

USA – Germany – UK

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Saudi’s oil exports soared!  
  • Base metal markets remain excruciatingly tight! .
  • Gold markets still range trade, pressured by uncertainty and improving economic outlooks.  Everyone has a different time horizon.
  • USA’s economy, appears, over all, to be recovering.
  • China – keep watching for the Winter Olympics and particularly estimates for what China will do during and afterwards (politically and economically).

SUMMARY  

Copper  Protesters agreed to lift a blockade of one of Peru’s biggest copper mines. 

Cobalt  Cobalt has the potential to extend gains in 2022 after doubling in price this year.  

Nickel  LME nickel and the (Chinese) domestic pure nickel inventories have continued to hit new lows. 

Zinc & Lead  Zinc prices touched a two-month high on Wednesday on persistent worries about supply. 

Tin  SRZ:  Assay results at Severn (Tas) have confirmed wide zones of high-grade tin mineralisation. 

Aluminium  European Union will place extra tariffs on aluminium foil coming from China. 

Gold  Thin trading and Christmas buying are keeping gold above the USD 1,800 level. 

Platinum & Palladium  Palladium’s price had an eventful year.  

Oil  Saudi Arabia’s oil exports soared in October as it benefited from higher crude prices. 

Iron Ore  Iron ore, a barometer for China’s economy and driver of the AUD, is having its wildest year ever. 

Shipping  Ocean freight costs are likely to remain high in 2022.  

General 

USA – Industrial Production:  IP continues to recover.  Capacity Utilisation has improved rates.

USA – Housing Starts:  positive growth (dominated by two regions with the other regions slowing).

USA – Durable Goods:  Durables show strong recovery, Vehicles weak!  Electronics are more solid.

UK – Industrial Production:  IP reports slow +ve growth, though at levels below ‘pre-covid’.

Germany – Industrial Production:  IP reports slower -ve growth, after peaking in 2017.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211212 by Andrew Pedler – Now Available

Pt Hedland, USA-CPI

Dear Margaret

(ref no: 902)

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Australia’s CPI has increased to a relatively comfortable 3% (Sep21Qtr) while USA’s CPI has jumped to >6% in November.
    • The USA CPI jump has had impacts on outlook for commodities, outlook for sentiment driven markets (gold).
  • China’s CNY has been progressively increasing in value against USD (over the past 18 months).  PBoC has indicated it will lighten its controls over the trading of CNY. 

SUMMARY  

*Copper  The global refined copper market is expected to be in a significant surplus in 2022. 

**Cobalt  Power struggle developing for access to cobalt supply, & other ‘Clean Energy’ metals..  

*Nickel  Primary Ni market may move to surplus but ‘class 1’ nickel may remain in deficit.  

*Zinc & Lead  Zn TCs increased.  ‘Renewable hydrogen facility planned for Port Pirie SA. 

Tin  Chinese tin output reduced on output restrictions. . 

Aluminium  Chinese output constraints are skewing the market. 

Gold  Price moved by USA CPI and USA 10yr yields’ impact on fiscal policies. 

*Platinum & Palladium  Reduced demand for both Pt & Pd is over semiconductor chip shortages. 

*Oil  Prices up buoyed by easing sentiment over the Omicron coronavirus variant. 

Iron Ore  Prices slipped on rising China ports inventory.

Shipping  Baltic indices reduced Friday though increased for the week.

General 

*Inflation – USA & Australia:  USA inflation rockets to >6%.

*USA Purchasing Managers’ Index:  Outlook reported at a strong >60 level.

*Port Hedland – Iron Ore Exports:  +ve growth from China, Japan, Taiwan, Indonesia & Vietnam

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211203 by Andrew Pedler, Now Available

DRC, Japan, USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Emergence from the Covid-19 Pandemics around the world is facing some new headwinds. (new variant)
    • Global recovery growth has slowed, though not stalled.   
    • South African doctors who discovered the new Omicron variant stated it appears more contagious, but more benign, than the Delta strain, and that many are over-reacting to a ‘new variant’ without knowledge of its character.  
    • Expect more turbulence and slower actual recoveries. 
  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are responding strongly to low stock levels.  
    • High prices have still NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.  
      • In fact for most of these stock levels are continuing to decline despite high prices. 
      • Implies very tight markets.
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available. 
    • Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates touted by manufacturers and entrepreneurs.  
    • Actual rates will have to work to actual rates of raw materials supply growth.  That said the critical NEV commodities present some attractive investment opportunities.

SUMMARY  

*Copper  MMG plans to end Cu production from Las Bambas (Peru).  [~2% of global Cu output]. 

*Cobalt  DRC EGC monopoly plans to start buying of artisanal cobalt in January.  

Nickel  Nornickel arranged infrastructure service agreements, with associated Russian parties.  

*Zinc & Lead  Zinc prices are forecast to remain firm over coming mo’s.  Pb-acid batteries to coexist with Li-ion. 

*Tin  Sn prices doubled in 12 mo on tight demand. 

Aluminium  China is running short of Al metal.  NZ’s Tiwai Point Al smelter may extend its life, on high prices. 

Gold  Physical gold demand in major Asian hubs rose this week, on reduced prices. 

Platinum & Palladium  The global platinum market is expected to remain in a surplus in 2022. 

*Oil  Oil price reduced for a sixth week, on fears of Omicron. 

Iron Ore  Iron ore price increased despite sluggish steel mills’ output. 

Shipping  Baltic sea freight indices increased this week, on improved demand, for ships.

General 

*DRC cobalt processing:  Potential to produce Co precursor products cheaper than elsewhere. 

  • This would be a great boost to DRC,  though may depend on how it is funded and controlled, and by whom,

USA – Construction Spending:  Private & Residential spend is strong.  Public & Non-Res is weak.

*Japan – Industrial Production:  Total IP is down a little. Segmental growth varies.

  • Some variations may relate to the computer chip shortages

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211119 by Andrew Pedler – Now Available

China, USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Emergence from the Covid-19 Pandemics around the world is facing some headwinds (Northern Hemisphere winter, and likely relaxing too much, too soon, too confidently). 
    • Global recovery growth is noticeably slowing, though not stalling. 
    • Expect more turbulence and slower actual recoveries. …notably:  Austria, Germany, Denmark, China, USA … et al.
  • China Industry & Energy Output and Transport conditions selectively show significant slowing.  … notably steel slowing but energy demand increasing.
  • China this week gets many mentions in other commodity segments, both as a driver and hinderance.
  • USA’s economy is facing some headwinds but (a few) segments are still reasonably robust
  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are responding strongly to low stock levels.  
    • High prices have still NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.  
      • In fact for most of these stock levels are continuing to decline despite high prices. 
      • Implies very tight markets.
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available. 
    • Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates touted by manufacturers and entrepreneurs.  
    • Actual rates will have to work to actual rates of raw materials supply growth.  That said the critical NEV commodities present some attractive investment opportunities.

SUMMARY  

*Copper  “Global markets will need four times the nickel and double the copper in the next 30 years”.

*Cobalt  Li ion batteries still seeking to reduce Co content, but Co price continues to rise. 

*Nickel  Kabanga Ni (Tanzania) to develop a major Ni mine – a history of some political risk.

*Zinc & Lead  USGS proposes adding nickel and zinc into its redrafted critical minerals list.   China Pb exports 

*Tin  Sn exchange inventories at multi-year lows.  Land port from Myanmar to China is closed.     

Aluminium  Explosion at Chinese (Yunnan) Al smelter, pushed prices into backwardation. 

Gold  USD price down on increased USD value and USA Federal Reserve commentary. 

Platinum & Palladium  Implats’ bid for Royal Bafokeng thwarted by Northam Platinum. 

*Oil  Europe at risk of power shortages due to insufficient gas reserves.  

*Iron Ore  Prices lowest since Nov 2020, and expected to fall further on China’s energy controls. 

*Shipping  Multiple factors behind the fall of the dry bulk market since early October, many involving China.  . 

General 

Australia & USA Yield Curves:   Yield curves looking more ‘normal’ … but just at low rates. 

*China – Industry & Energy Output:  Steel products – negative, & Energy positive growth.

*China – Transport:  Freight are at  slower rates (border bans did not help).  Pax are still way down.

*USA Housing Starts:  really slow growth, including non-starts relative to authorisations.

*USA Industrial Production:  reasonable positive growth.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211112 by Andrew Pedler – Now Available

Singapore, Port Hedland, LME

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are responding strongly to low stock levels.  
    • High prices have still NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.  
      • In fact for most of these stock levels are continuing to decline despite high prices. 
      • Implies very tight markets.
  • LME – what happens if LME runs out of inventory?
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available. 
    • Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates touted by manufacturers and entrepreneurs.  
    • Actual rates will have to work to actual rates of raw materials supply growth.  That said the critical NEV commodities present some attractive investment opportunities.

SUMMARY  

Copper  Codelco’s Chinese customers reluctant to sign supply contracts due to backwardation. 

Cobalt  China Molybdenum (CMOC) has increased Co output.   

Nickel  Indonesia’s anti-monopoly agency is investigating domestic smelters. 

Zinc & Lead  Zn TC’s steady.   AON’s Kroussou Pb-Zn project has large scale promise. 

Tin  Extreme tightness continues in the tin markets. 

Aluminium  China’s power curbs continue . 

Gold  Prices increased, responding to USA CPI data. 

Platinum & Palladium  Palladium – a market summary.

Oil  Oil prices increased – Significant new supply cannot be brought to market quickly. 

Iron Ore  Prices continue to reduce.  Property sector accounts for about a quarter of China’s steel demand.

Shipping  Dry-bulk sea freight posted its first rise in five weeks.

General 

Port of Singapore – shipping:  traffic reduced in October, for all but tankers.

Port Hedland – Iron Ore:  Shipments widely down though Indonesia & Vietnam are well up.

LME – what happens if LME exhausts its stocks:  It is really tight.  Policies are being reconsidered.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211105 by Andrew Pedler – Now Available

Japan – US

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Japan’s Orders to Machinery reports respectable growth with many segments’ order levels back to pre-pandemic levels.
  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are now responding strongly to low stocks.  
    • High prices have still NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.  
      • In fact for most of these stock levels are continuing to decline despite high prices. 
      • Implies very tight markets.
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available. 
    • Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates touted by manufacturers and entrepreneurs.  
    • Actual rates will have to work to actual rates of raw materials supply growth.

SUMMARY  

*Copper  Chile politics:  Gabriel Boric does not plan to interfere with existing mining concessions. 

*Cobalt  China seeking to secure Ni & Co Resources.    

Nickel  NIC has signed a limonite supply agreement. 

Zinc & Lead  Gelion Technologies developed a Zn-Br flow battery, with potential.  

*Tin  Fitch increases Sn price forecasts.  SRZ reports multiple wide high grade Sn intercepts. 

Aluminium  Russia’s expected removal of export taxes likely to boost supply. 

Gold  Gold price up on USA Fed comments for a ‘slow’ increase in rates. 

Platinum & Palladium  Unprecedented demand for Pt for jewellery. 

*Oil  USA refiners are exporting the most gasoline in three years. 

*Iron Ore  Chinese industrial demand remained sluggish due to steel output curbs. 

Shipping  Maritime industry under scrutiny to reduce emissions.  Shipping accounts for 80% of global trade.

General 

USA & Australia – Yields:  Curves ‘normal’, but 10yr rates recently reduced, on uncertainty.

*USA – Purchasing Managers’ Index:  New Orders reduced but still strong outlook.

*USA – Construction Spending:  Private & Residential continue to grow.  Not Public & Non-Res.

*Japan – Orders to Machinery:  Machinery orders broadly improving.  Many at pre-covid levels.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211029 by Andrew Pedler – Now Available

Copper – Gold – USA – Japan

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Japan’s steel industry reports decent recovery growth from the pandemic period, though still has some way to go.  However its vehicles output is well down.
  • USA’s Durable goods orders report decent growth (perhaps enhanced by covid induced low past year data.  However vehicle output is well down (like Japan’s and as reported last week – China’s). 
    • Matau believes it likely that global vehicle  output is being restricted by the shortage of micro-chips, which is also reported to be impacting demand for Pt & Pd
  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are now responding strongly to low stocks.  
    • Copper markets report as being under continued supply pressure.
    • Ni & Co have been shown to enhance catalysts for production of hydrogen, which may add to demand for these two key New Energy metals.
    • High prices have still NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.  
    • In fact for most of these stock levels are continuing to decline despite high prices. 
    • Implies very tight markets.
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available.  Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates of the manufacturers and entrepreneurs.  Actual rates will have to reduce to the actual rates of raw materials supply growth.

SUMMARY  

*Copper  Chile’s Cu output recorded its worst month this year, with falling grades and labour disputes. 

*Cobalt  Catalysts with Co & Ni make ‘green’ hydrogen production cheaper and more efficient.  

*Nickel  Ramu Ni (PNG) Ni-Co output suspended due to pandemic (for an est 2-3 wks). 

Zinc & Lead  Teck’s Red Dog mine output increased yr-to-date. 

*Tin  The tin market has yet to solve the supply-demand imbalance. 

Aluminium  USA and the European Union (EU) have agreed to ease tariffs on steel and aluminium products. 

Gold  Au price fell on rising USA bond yields & stronger USD. 

Platinum & Palladium  Analysts’ price forecasts reduced for Pt & Pd.

*Oil  Nov 4th OPEC+ meeting expected to extend production cuts. 

*Iron Ore  The iron ore seaborne market supply might lose 40 million tonnes (Mt) in 2022. 

*Shipping  Coal exports have staged a significant recovery so far in 2021, helping the dry bulk market’s rally.

General 

Top 10 Copper miners: Production in Chile was impacted by the pandemic in 2020-21.

World Gold Council:  Sep21Qtr demand down largely due to ETF sales.

*Japan – Industrial Production:  Steel products up but vehicles down (chip shortages?)

*USA – Durable Goods Orders et al:  Durables up but vehicles down (chip shortages ?).

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211022 by Andrew Pedler – Now Available

China – USA

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China’s industry & energy data continue to show effects of its trade sanctions, and production curbs.  Steel products output is down.  Energy production is up.  Renewables related products mostly appear with positive growth.  Manufactured goods have varied growth profiles. 
  • USA’housing and industrial production data records growth, but we consider these data still have a covid affected (low) denominator. 
    • Los Angeles port is utterly clogged, mostly with empty containers.  Only allowed to stack them 2x high … no floor space left … so ships waiting offshore cannot bert to unload as ther eis nowhere to put their containers.  Appealing to change regulations to allow stacking to 6x high. 
  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are now responding strongly to low stocks.  
    • High prices have NOT drawn additional stocks onto exchanges for: Cu, Zn, Pb, Ni nor Sn.  
    • In fact for most of these stock levels are continuing to decline despite high prices. 
    • Implies very tight markets.
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available.  Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates of the manufacturers and entrepreneurs.  Actual rates will have to reduce to the actual rates of raw materials supply growth.

SUMMARY  

Copper   China views Cu as a highly strategic (& critical) metal. 

Cobalt  Top ten Cobalt producers (outside DRC).  Outlook to be driven by batteries. 

Nickel  Prices at 7 yr highs on supply concerns relative to forecast demand. 

Zinc & Lead  Rising power prices could lead to metal producers relocating operations away from Europe.  

Tin  Sn prices have been the best performers this year-to-date.  Stocks low and demand good.      

Aluminium  Aluminium alloys are also in short supply.

Gold  Prices reduced gains upon USA Fed comments on inflation in 2022, and on winding back stimulus. 

Platinum & Palladium  PBoC launched ‘Panda’ (Pt) coins..

Oil  Oil prices boosted by concerns of coal and gas shortages. 

Iron Ore  RIO plans massive power investments for its projects. 

Shipping  USA scrambling to clear US port logjams. 

General 

USA – Bond Yields:  Marked lift in yields, now implying economic improvement sooner 

China – Industry & Energy Output:  Mixed: steel products down but energy & renewables better.

China – Transport:  Freight is growing slowly while Passenger traffic is still struggling.  

USA – Housing Starts:  positive growth likely still enhanced by (covid) low-denominator. 

USA – Industrial Production – Capacity Utilisation:  Growth rates still enhanced by covid effects.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211015 by Andrew Pedler – Now Available

Shipping

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China’s power constraints and blockading of roads & highways in Peru are impacting the production output of several of the base metals.  (mostly of Cu & Zn +/- Pb).  We believe these events will have temporary effect, but the markets are already tight.
  • The world is progressively recovering from the Covid-19 pandemic.  Increasingly talk is turning to ‘living with covid’, however it appears that many people are not paying attention and are expecting the ‘old normal’ to return.  Epidemiologists caution that we still need to be careful, as there is still much to be learned about the Covig-19 strain(s). 
  • Shipping data illustrates the slowing of activity in response to multiple drivers that are restricting supply and demand for many commodities during a period of high uncertainty, despite economies showing signs of recovery.  Recovery will progress and make good, but at present it is a battle. 
  • Base metals’ pinchpoint graphs continue to highlight (very) tight markets.  The prices are now responding strongly to low stocks.
  • New Energy Vehicles’ much touted massive growth rates might grind to a halt in a couple of years if some battery configuration changes do not become available.  Matau believes that the resources industry will struggle to supply raw materials at the optimistic growth rates of the manufacturers and entrepreneurs.  Actual rates will have to reduce to the actual rates of raw materials supply growth.

SUMMARY  

*Copper  The power crises could shift forecasts of copper oversupply next year to shortfalls.  + Mexico – changes its rules!

Cobalt  Sales of NEVs reduce upon cuts to subsidies in China.  Co is scarce and sought after. 

*Nickel  If Ni-free batteries do not become available, the EV revolution grind to halt in only ~2 years. 

Zinc & Lead  Refined output of Zn is stressed (power shortages).  China’s Pb-acid battery output is growing.  

Tin  The tin market has yet to resolve the supply-demand imbalance evident throughout this year. 

Aluminium  Rusal plans to supply Al to China to meet its (uncharacteristic) shortfall in production. 

Gold  Gold price up fractionally (in USD).  Hallmarking is now mandatory in India.

Platinum & Palladium  Top 10 Platinum producers. 

*Oil  Power cuts in China.  Coal shortages in India.  A scramble for petrol in Britain.  … and more!

*Iron Ore  China’s northern steel mills asked to cut production from mid-Nov21 to mid-Mar22. 

*Shipping  Dry bulk market – two more solid Qtrs.  Watch Mar22Qtr & Jun22Qtr. 

General 

Port of Singapore – Shipping:  impacted by numerous disruptive forces. Containers are strongest.

Port Hedland – Iron Ore:  impacted by numerous disruptive forces.  Excl-China sources have best growth.

USA – Yields, Gold, Copper & Oil prices:  As expected

USA Energy End Use:  Trying to recover from disruption(s), but how much will it achieve?

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211008 by Andrew Pedler – Now Available

BH rig Counts – Germany

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China’s power constraints and blockading of roads & highways in Peru are impacting the production output of several of the base metals.  (mostly of Cu & Zn +/- Pb).  We believe these events will have temporary effect, but the markets are already tight.
  • The world is progressively recovering from the Covid-19 pandemic.  Increasingly talk is turning to ‘living with covid’, however it appears that many people are not paying attention and are expecting the ‘old normal’ to return.  Epidemiologists caution that we still need to be careful, as there is still much to be learned about the Covig-19 strain(s). 
  • German economic data is showing a recovery in Durable GFoods and Construction, though these data have yet to translate into improved industrial production.  So far it looks like German IP has recovered to the pre-covid downtrend, and has not digested the news of the improving durables data. 
  • Base metals’ pinchpoint graphs continue to highlight tight markets.  Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.
  • Baltic shipping indices report on the demand for shipping, which is at 13 yr highs!  This is not the language the general media is speaking in terms of the global economy …?

SUMMARY  

Copper  Mongolian Govt warns RIO on delays to Oyu Tolgoi.  Peruvian blockades continue.  

*Cobalt  Prices for cobalt intermediate products are expected to lift following China’s Golden Week.    

*Nickel  Despite widespread poorer outlooks, Ni & Sn are expected to fare well on booming EV sales.  

*Zinc & Lead  China power rationing and blockades in Peru are impacting supply of Zn & Pb. 

*Tin  “Another week, another wild ride on the tin roller coaster”.  It is really tight!

*Aluminium  Power shortages are impacting Al smelters in China and Europe. 

Gold  Gold price is trading in a band, with price volatile, but little changed this week. 

Platinum & Palladium  PDI reported notable increases in Pt jewellery sales in the Jun21Qtr.

*Oil  Oil prices surged on tighter supply, at least until OPEC+ increases supply in November. 

Iron Ore  BHP forges ahead with its new South Flank mine despite reported softer outlooks for the sector. 

*Shipping  The Baltic Index, reflecting shipping demand, increased to a 13 year peak.

General 

*Baker Hughes Rig Counts:  Global rig #s recovering from Covid, which made crew logistics hard.

*Germany – Industrial Production:  IP has low growth, the strong growth from Durables has yet to tsfr into IP.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20211001 by Andrew Pedler – Now Available

China – USA – Power – Japan

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China’s power constraints, largely self imposed, are restraining China’s production and also demand for particular products.  Part of the target is to have clear skies over Beijing for the 2022 Winter Olympics.  This situation is still to work through.  However there has already been impact on several commodities’ production and prices, attributable to the power cuts, on top of China’s trade tactics. 
  • The world is progressively recovering from the Covid-19 pandemic, though Covid is still seriously impacting shipping causing meaningful delays and cost increases
  • USA economic data is showing a recovery from the covid-19 pandemic under way with several data series now back to pre-covid levels.    
  • Base metals’ pinchpoint graphs continue to highlight tight markets.  Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.  

SUMMARY  

Copper  RIO declared Force Majeure on its Kennecott Cu operations.  Temporary, but still, a disruption. 

*Cobalt  Demand is leaning toward Australian Co, to avoid the stigma(s) associated with DRC material.  

Nickel  BHP’s Kwinana plant yielded its first nickel sulphate crystals.   

*Zinc & Lead  China’s power rationing & impact on supply & demand for Zn.  Pb: Mt Isa smelter 90 years old. 

Tin  China’s power crisis impacted Ni & Sn production & prices.  … might need Australian coal.

Aluminium  Winter is coming to the PRC, with more power cuts.  Expect impact on Al output. 

Gold  Strong retail & ETF demand, but less than outflows. 

*Platinum & Palladium  Russian govt proposed changes to mineral extraction taxes (MET) for Russian firms from 2022.

Oil  If prices reach higher than USD 90/bbl, could drive demand destruction. 

Iron Ore  FMG’s Solomon shut down upon accident.  India’s monsoon reduced output in September.. 

Shipping  Baltic indices all higher on China port congestion, demand for iron ore & coal.  Grains reduced.

General 

USA & Australia – Yields & Rates:  inverted curves for prior financial crises but not for covid.

Japan – Industrial Production:  growth positive though is the last mo ‘flattered’ by low prior mo

USA – Purchasing Managers’ Index:  Strong at >60, though PMI usually peaks at ~60.

USA – Industrial Production:  IP is back to pre-covid levels (which were declining).

USA – Durable Goods et al:  Durables are strong, though Vehicles are weak.

USA – Construction Spending:  Private & Residential spending strong, Public & Non-Res weak.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20210917 by Andrew Pedler – Now Available

China, Singapore

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Sorry Gold Bugs!” A major investment house has sold its interests in gold, assessing that the returns in such a low interest rate environment from a non-earning risk protection investment, do not justify holding costs.  Matau prefers to hold gold interests in equities that have production growth.  Production growth (along with other key criteria being met) assures better cash flow growth in all phases of price cycles, than non-growth entities.
  • While the world is progressively recovering from the Covid-19 pandemic, Covid is still seriously impacting shipping causing meaningful delays and cost increases.  An example here shows the impact and delays in shipping a container of shoes (per shoe) from China to Los Angeles.
  • Singapore shipping traffic shows a reduction in traffic in July & August, notably in bulk commodities, with recent reductions also in tankers.  Container traffic is also affected but less do than other segments.
  • In the light of the above, and China’s trade battles, China’s Industry and Energy data is worth examination, as it provides granularity to what is otherwise usually highly generalised statements.  
  • Base metals’ pinchpoint graphs continue to highlight tight markets.  Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.  

SUMMARY  

*Copper  Concerns over labour action in Chile is dissipating, as labour contracts are agreed. Chile’s miners have widely settled labour contract agreements (ranging fro 3-5 yrs) without notable strike action.

*Cobalt  China plans to encourage mergers in the NEV segments to achieve size (market power).   This is consistent with China’s other campaigns (iron ore & other) to merge intra-segment entities to generate larger companies with more global market power. 

Nickel  Nickel mine production is forecast by Fitch to grow strongly from 2021-2023.

*Zinc & Lead  Zn mines recovering from Covid (ex China).  Covid outbreaks in China are threatening mine growth.

*Tin  New tin supply is not keeping pace with growing demands.     

*Aluminium  A disruption to bauxite supply from Guinea remains a concern, particularly for China & Russia.

*Gold  “Sorry gold bugs!”.  World’s largest fund manager steps away from gold.

Platinum & Palladium  Of the PGE’s Pd has is in the best position for price recovery.

*Oil  Iran plans to boost oil exports despite remaining USA sanctions. 

Iron Ore  Reduced Chinese steel output drives less iron ore imports and lower prices. 

Shipping  Baltic indices show that shipping is in strong demand.  Possibly tightness due to covid delays. 

General 

*Singapore Shipping:  Traffic generally slowed down for the past couple of months. Passenger shipping traffic has recovered (oddly in total gross tonnage terms, though the numbers of ships reported have dropped markedly, implying that it is only the big ships that are returning … so far).

*China – Industry & Energy Output:  Steel down markedly, manuf. goods mixed, generally up.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20210910 by Andrew Pedler – Now Available

Vietnam, South Korea, UK, Germany

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • South Korea & Vietnam are two of the Asian countries that are actually ‘growing’, as emerging industrial nations.  (South Korea has been doing this for longer than Vietnam).  Chinese and Japanese companies migrated some manufacturing operations to lower cost jurisdictions during the 2000’s and onward.  This benefited countries like Philippines, Thailand, Malaysia, Vietnam and Indonesia. 
  • UK & Germany are recovering from covid, though often the recovery is to the pre-covid downtrend (so far). 
  • Iron ore shipments from Port Hedland reduced modestly in August, notably in China, though the ex-China destinations reported strong growth (from much smaller bases than China’s). 
  • Base metals’ pinchpoint graphs continue to highlight tight markets.  Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.  

SUMMARY  

*Copper  Chilean miner strikes appear (largely) to have been averted. 

*Cobalt  Tightening feedstock supplies expected to support prices for the rest of 2021.  

*Nickel  BSX continues to get strong Ni massive-sulphide intercepts. .

Zinc & Lead  Zn conc TCs increased upon more availability.  Pb remains tight in Europe but ample in China.

Tin  China’s tin output increased despite restricted power consumption.      

Aluminium  The coup in Guinea could upset global aluminium if bauxite operations are affected.

*Gold  USA Fed Governors widely talking about tapering off on bond purchasing.  ‘Healthy’ economy. 

*Platinum & Palladium  Pt demand increasing on increased catalyst loadings in China, and substitution of Pd. .

Oil  Iraq is rebounding from the coronavirus pandemic.  Total is committing to large projects in Iraq. 

*Iron Ore  Brazilian red-tape may slow output growth and support prices further. 

*Shipping  Shipping demand has continued to growth through 2020-21..

General 

*South Korea – Industrial Production:  Growth since 1975, & back to pre-covid levels.

*Vietnam – Industry output:  Strong growth to 2019.  Covid knocked 2020 about in segments.

*Port Hedland – Iron Ore exports:  Total exports reduced, China down, but ex-China up strongly.

Germany – Industrial Production:  IP & durables are recovering, construction is work in progress.

United Kingdom – Industrial Production:  Recovery appears to be to lower than pre-covid levels.

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Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20210827 by Andrew Pedler – Now Available

China Industry and Energy – USA Durables

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China’s Industry reported lower steel product output and stronger Energy demand, though manufactured products in July had quite mixed outcomes.  This may be related to the proximity to the location(s) of the Beijing Olympics and China’s desire for clean air during the games.  
  • Copper fundamentals remain strong.  
  • USA’s industry seems to have mixed outlooks, with good Durables growth, though poor vehicles demand, and relatively stable demand for electronics.
  • Base metals’ pinchpoint graphs continue to highlight tight markets.  Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.  

SUMMARY  

*Copper  Fundamentals remain intact and there will be growing copper demand ahead.

Cobalt  Fall in China’s Co imports in July due to ongoing issues at Durban port – South Africa.  Not over yet

*Nickel  BSX reported a 375m Ni-sulphide intercept at Ban Phuc in Vietnam.  Development PFS under way.

Zinc & Lead  Chinese Zn smelter outage due to gas leakages.  TC’s for Pb concs up on steep price backw’dn..

*Tin  DRC waiver on export ban for concentrates (which was put in to ‘encourage’ in-country refining).  

Aluminium  Pricing surged on expectations China will curb supply & emissions (at least for Beijing Olympics.

Gold  USA Fed anticipated to reduce bond purchases, with the ‘taper’ to begin later this year.  

Platinum & Palladium  Global vehicle markets facing reduced demand due to covid and disrupted parts supply..

*Oil  OPEC+ expected to continue with plans to revive production despite recent price falls. 

Iron Ore  Global iron ore production growth will accelerate in coming years according to Fitch. 

*Shipping  The dry bulk market has rallied to levels not seen since 2010, though fundamentals have softened. 

General 

*Tungsten:  Outlook for APT demand and prices into Dec21HY is strong.

*China – Industry & Energy Output:  Steel output dropped markedly, though Energy output is up .

*USA Durable Goods:  Durables are strong but vehicles are weak and electronics are flat.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Review 20210820 by Andrew Pedler – Now Available

USA-IP, China-Tspt.

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China’s transport data reports freight traffic has largely recovered, though passenger traffic has redcovered to about half way to pre-covid levels.
  • Copper production in Chile is threatened by water shortages. 
  • Gold price has been fairly flat for a year, and may have found a floor.  Sentiment is a key driver.  Investors should include production growth among their investment criteria.
  • Base metals’ pinchpoint graphs continue to highlight tight markets.  Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.  

SUMMARY  

*Copper  Water shortages threaten Cu production in Chile.  

*Cobalt  New Zambian President to ramp up Cu & Co mining.   

Nickel  Supply, Demand & Quality – Sulphide or NPI.  The Ni market could bifurcate.

Zinc & Lead  Pb in deep backwardation.  Zn: AON in Gabon is testing a long strike length with good results.  

Tin  Producers struggling to lift production to meet high prices. 

Aluminium  Tomago Al smelter (NSW) to move toward renewable power.

Gold  USA’s economic recovery has slowed.  Fed may slow the taper plan. 

Platinum & Palladium  Major Pt miners leaning to renewable power generation to avoid Sth Africa’s unstable system.

*Oil  Slowig demand for crude oil is in contrast to increased OPEC+ output. 

*Iron Ore  Demand growth for iron ore historically outstripped steel.  However that may be in balance now.

*Shipping  Demand for bulk-freight shipping is strong.

General 

*USA – New House Starts:  on mo-on-mo data growth is slow.

*China – freight & passenger traffic:  Freight largely recovered.  Passengers only half way.

*USA – Industrial Production:  IP has returned to slightly above the pre-covid down-trend.

Commodity Review 20220128 by Andrew Pedler – Now Available

Commodity Reveiw 20210813 by Andrew Pedler – Now Available

Shipping

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • China has  issued an air quality control plan for the Beijing Winter Olympics in February 2022, imposing ultra-low emission standards across the steel and power sectors until March 2022.  This is one of the reasons for curbing steel production and power generation, at least in the interim.   
  • Shipping data for Port Hedland and Singapore highlights falls in traffic in July despite 12mo yr-on-yr modest +ve growth. 
    • Container recoveries reflect a recovering world economy (despite covid) even to the extent that some bulk carriers are being seconded to carry containers (creating a separate set of safety & bureaucracy headaches).  
  • Copper prices are responding to strikes in Chile with more mines’ workers to vote on any action.  High prices have emboldened workers to push for improved pay (possibly as profit share).  
  • Gold price has been fairly flat for a year, and may have found a floor.  Sentiment is a key driver.  Investors should include production growth among their investment criteria.
  • Base metals’ pinchpoint graphs continue to highlight tight markets.  Matau believes such short supply is ill-positioned to feed supply into the strong growth forecasts for uptake (particularly manufacture) of ‘new-energy’ goods.  

SUMMARY  

*Copper  Copper miners on strike in Chile at Andina and are voting at Escondida.  

Cobalt  Tesla is using two blockchain solutions to track sources of raw materials (Co & Ni) for its batteries.  

*Nickel  Demand for stainless steel has soared, and outlook for electric vehicles is good.

Zinc & Lead  Wood Mackenzie forecasts strong growth in demand for Al, Cu & Zn for solar panels.  Pb is tight.

Tin  Sn & Al prices forecast, by Antaike, to outperform other base metals in Dec21HY.  Limited supply.  

Aluminium  Rusal increased Al sales for Jun21HY, but faces export taxes which may reduce Dec21HY sales.

*Gold  Asian retail demand (India & China) picked up markedly on recent lower gold prices. 

*Platinum & Palladium  Palladium prices may moderate as platinum re-substitution into catalytic converters emerges.

Oil  Newer Chinese oil refineries, ‘Teapot 2.0’, are better suited to China’s goals than ‘Teapot 1.0’. 

*Iron Ore  Iron ore prices have fallen markedly, Miners still very profitable.  Volumes have slipped in July.

*Shipping  Container ships in high demand as economies, even seconding bulk carriers to carry containers.

General 

*Port Hedland – Iron Ore:  yr-on-yr growth is modest +ve, but mo-on-mo growth fell markedly.

*Singapore – Ship Traffic:  Containers continue recovery, but bulks fell in July.  Tankers stable.