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Commodities Monthly Roundup ~ October 4th

The dominant theme for September was the potential fall out of the debt crisis in China, or more specifically Evergrande, and the effect this could have on world markets. Additionally, Chinese Regulatory moves are proving unnerving and increasingly business and investor unfriendly. Inflation fears have returned to the central bank discourse in the West and supply chain bottlenecks are curtailing economic resurgence. As the northern hemisphere heads back into winter, relaxations of Covid 19 strategies will soon expose whether the vaccination programmes have been successful. Tensions between China and the West, particularly the USA, UK and Australia are rising as Beijing flexes its muscle in the South China sea.


Brent enjoyed a strong month in spite of the negative issues impacting markets in September, reaching a high of $80.75 and gaining 7.6% for the month. Bank of America has boldly stated that Brent may top $100/bbl if strong trade, low stockpiles and an air travel rebound collide with a colder winter. Energy shortages in China and Europe ahead of winter may see OPEC+ adjust their strategy and increase supply. At the timing of writing this article, OPEC+ were meeting to discuss supply issues. A failure to agree a boost to supplies will be bullish for oil.

Asia remains the preferred destination for LNG cargoes and Europe will require high prices to attract cargoes in a tight physical market.


Fears of a slowdown in the Chinese economy resulted in a selloff of 6% in copper for September, together with a fall in Nickel and Lead. Copper was also negatively impacted by resurgent discussions on US tapering. The supply and demand equation for copper should remain very tight, even with market-wide uncertainties and a global energy crunch.

Continued aluminium shortages bucked the trend with the metal managing a 5.19% gain for the month. The Brazilian steel and aluminium sectors are preparing for a period of short electricity supply in the coming months due to continued drought conditions which may impact supply of both steel and aluminium.

Precious Metals

Gold has been trading in a $1,730 to $1,830 range since June with the Fed taper, inflation and the USD providing a cap, and geopolitical tensions and the Evergrande debt crisis supporting a floor. Near term technical postures for both gold and silver continue to invite short sales although risk aversion continues to limit the downside.

Palladium remains under pressure, having sold-off a whopping 23% in September, with attention now turning to the 200-week moving average at $1,768.

News Links

Column: China energy crunch may boost overseas metal producers

Indian Oil linked to six-figure LNG fixture as open ships become hard to find. Enquiry for LNG tonnage turns upwards upping expectations for charter rates

GLOBAL ZINC & LEAD WRAP: Supply, logistics issues keep zinc premiums rising in Europe, US; signs of demand growth in Southeast Asia

Gold price analysis: how likely is a breakout in October?

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