Commodities

3

UBS: Iron ore all about Brazil

Yep. Via UBS: Iron ore appears well-supported by current tightness The iron ore price (62% CFR China) has averaged US$89/t YTD with spot now over US$100/t and above our CY 20e forecast of US$86/t. We are comfortable with our forecast based on 1) a strong recovery in Vale iron ore production which will require a

1

Commodity price rebound continues

The RBA has released its commodity price index for May, which rebounded 1.8% in SDR (currency weighted) terms – the key determinant of the terms-of-trade – but slumped by 7.4% over the year: Preliminary estimates for May indicate that the index increased by 1.8 per cent (on a monthly average basis) in SDR terms, after

29

Sailing barley ships show limits of Chinese power

Via The Australian: Australian barley on its way to China has been diverted mid route to Japan and the United Arab Emirates following China’s decision to impose punitive trade tariffs on the grain. Four ships carrying Australian barley have changed course or cargo after rising trade tensions led to China — Australia’s biggest barley buyer

5

Daily iron ore price update (Brazil warns)

Iron ore prices for May 21, 2020: Everything flew late as this: After Brazilian iron ore miner Vale SA cut its 2020 production outlook to 310 million-330 million tonnes, from 340 million-355 million tonnes previously, “more downgrades may be on the way as COVID-19 infections accelerate in Brazil’s key mining provinces”, said Morgans Financial Ltd

34

Bravo! China changes iron ore import rules

Via the AFR comes a huge laugh out loud: China has changed its inspection procedures for iron imports under new rules that analysts say could be used to block Australia’s most important export, as trade tensions between the two countries escalate. China’s Customs authorities said in a notice the new supervising rules, which take effect

1

Daily iron ore price update (flame out)

Iron ore prices for May 20, 2020: The latest high-frequency data from Capital Economics is not very good: If it were not for Brazilian risks these numbers would suggest that iron ore should be falling. Though there this: Local government debt issuance is mad as the infrastructure pipeline refills. Still, the recovery remains fitful and

9

CS: Stay long iron ore

Via the excellent Damien Boey at Credit Suisse: “Hard” indicators in China improving. Official headline data for China were mixed in April. Industrial production surprised to the upside, while retail sales and fixed asset investment surprised to the downside. But there was general improvement in the “hard” indicators we track for the sake of the Australian commodities outlook. Year-ended growth in electricity

1

Daily iron ore price update (strong)

Iron ore prices for May 13, 2020: I see this latest strong price action as a combination of restocking, exaggerated by Brazil worries, and strong seasonality. The last will reverse into June but the former will last as long as the virus threatens supply. Capital Economics high-frequency indexes look better today too: The major pulse

2

Inside the coal crash

From Westpac’s excellent Justin Smirk: Coal prices tumbled in April, iron ore was more stable while base metals firmed a little Coal prices have been falling rapidly with the latest spot Qld met coal prices down –39% in the last three months and Newcastle thermal down –21%. As a result we have lowered our near,

18

Can Australia be a green steel superpower?

So says Grattan: Australia has an historic opportunity to create a multi-billion-dollar, export-focused manufacturing sector based on globally competitive renewable energy. Using Australia’s plentiful wind and solar resources to make energy-intensive ‘green’ commodities could create tens of thousands of jobs in regions that currently employ tens of thousands of coal miners and other ‘carbon workers’

2

Daily iron ore price update (Brazill)

Iron ore prices for May 10, 2020: Spot jumped, I suspect over two days. Steel output is now roughly tracking last year’s output despite the vast inventory overhang. The Brazil risk is rising: Concerns about Brazilian iron ore supply resurfaced among market participants this past week due to expectations that exports of the product would

1

Australia’s gas chance is NOW

Rio wants it fixed, at The Australian: Rio Tinto boss Jean Sebastien Jacques says sorting out Australia’s long-term energy policy should be a key plank in the federal government’s plans to bring the national economy back from the coronavirus crisis, saying cheap and reliable power is one of the keys to economic recovery. Speaking to