• Audere Research

Commodities Monthly Roundup ~ May 12th

Global growth continues to recover, and with the recovery comes increasing whispers of another supercycle. China’s entry into the global market drove the previous supercycle of the 2000’s and, although those conditions are no longer present, a combination of stimulus packages and under investment in commodity production as well as demand recovery off the back of COVID is pushing prices higher. These factors are mostly short term but there are long term drivers too. Many countries are embarking on expansionary infrastructure programmes to boost economic recovery as well as address historic under investment. Greening the economy is another driver as we switch from the internal combustion engine to electric and its associate infrastructure.


Energy


Energy prices, and particularly oil has also rallied strongly although this is a slightly different phenomenon. OPEC+ have curtailed supply and are likely to release more oil as prices rise, but there are other factors such as a lack of investment in fossil fuel infrastructure which has been slow to recover since the 2014 Saudi led drive to kill US shale. That attempt failed but US shale is no longer growing.


Goldman Sachs is expecting a massive demand surge which could result in the largest move ever over the next six months. Citing higher demand for travel and the acceleration of vaccinations in Europe GS are predicting a 5.2 million barrel per day surge with Brent set to rise to $80 a barrel this summer. The 2020 COVID shutdown of economies was unprecedented and surely the recovery of markets will be too. Expect supply to struggle to keep up!





Metals


Aluminium continues to gather pace, up 75% YoY. There are several factors around infrastructure demand and investment that suggest the current boom cycle can continue. How long will depend partly on the degree that real demand takes over from the speculative investment demand that is currently driving markets.


Copper, is seeing some investor caution as they question just how high prices can rally in the near term, but the longer term outlook remains very positive. Inventories continue to trend lower and demand is robust. $20,000/tonne is beginning to appear on the radar.




Precious Metals


Gold is holding above the $1,835/oz mark as investors await the US inflation data due later this week. With gold being a hedge against inflation and the need to raise rates if inflation starts to spike, negative pressures are building for the yellow metal.


Platinum is above $1,250/oz and a recovery in the motor car industry will support prices further. Chinese car demand continues to rise strongly, boding well for the metal. Environmental policies and higher emissions restrictions are here to stay and frankly so is the internal combustion engine, for now.



News Links


OPEC pins oil demand hopes on second-half recovery as India dents Q2

OPEC on Tuesday stuck to its prediction of a strong recovery in world oil demand in 2021 as growth in China and the United States counters the coronavirus crisis in India, an outlook that bolsters the group's plan to gradually ease output cuts.

Reuters


EIA: how the US petroleum sector will cope while the Colonial Pipeline is shut down “Colonial Pipeline, a major delivery system spanning from the US Gulf Coast to the East Coast for transportation fuels and other refined petroleum products, halted operations on Friday 7 May to contain the effects of a cyberattack. As of Monday, 10 May, the pipeline had not resumed operations of its main lines, although some smaller lines are operational. The company announced that it hopes to restore service by the end of the week. World Pipelines


Can fossil fuels survive? According to a recent report by International Energy Forum, demand for gasoline is unlikely to ever return to pre-pandemic levels. So has Covid-19 provided an opportunity for the world to finally turn its back on dirty fossil fuels?

News EU


Gold storms past $1,800 barrier

After a volatile start to the week, gold has made strong gains the past two days, breaking through the $1,800/£1,300 per ounce barrier that has proven a resistance point for prices in recent weeks. Silver also enjoyed strong gains, up 4.56% in the past week.

Bullion By Post


Today’s Market View Adriatic Metal,Cornish Metals, Altus Strategies and more… Palladium, copper, nickel, tin and iron ore prices continue to rise.

Proactive Investors


Today's Market View Anglo Asian Mining, Botswana Diamonds, GoldStone Resources and more... Recovery optimism drives risk sentiment and markets higher Copper, tin and PGM prices jump higher

Proactive Investors


Larry Berman: History of commodity cycles suggests prices don't go up forever

BNN Bloomberg


Third wave’ of price rises to come for European secondary aluminium - market sources

Fastmarkets MB



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