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.  


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.


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.