Commodities

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Daily iron ore price update (running on empty)

Iron ore prices for Febraury 29, 2020: The miracle price boomlet goes on. Mills are restocking like zombies, via Bloomie: The collapse in economic activity amid China’s unprecedented measures to contain the coronavirus outbreak means there are few buyers of steel, which has sent prices tumbling and put margins under intense pressure. However it’s difficult

3

UBS raises iron ore price outlook

Coronavirus leads to GDP downgrades The outbreak of the coronavirus has forced downward revisions to our GDP forecasts from our (US, China, & Global) economists (2020e GDP growth -20bp to 2.9%). The downgrades have been most severe in 1) China & 2) Q1 2020. While uncertainty over the severity and duration of the outbreak remains,

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Fortescue mines money

Here it is. El Dorado: The key, of course, is the realised price. Thanks Vale! At these kinds of prices, FMG is literally printing money. Roughly $7bn of it over the full year delivering a trailing P/E of just 5x. But is it sustainable? At 2019 prices, the profit is slashed in half and the

1

Oil is buggered

The one commodity market that is behaving rationally about global growth right now is oil. The world is swimming in the stuff despite oodles sitting on the sidelines. Chinese demand is down 4mb/d. There has been some offset in supply thanks to Libyan troubles removing 1mb/d but nobody there has much incentive to keep the

1

UBS: Will demand or supply hit shape iron ore in 2020?

Via UBS: Checking in with Platts Steel Raw Material Analysts We hosted Paul Bartholomew (Senior Managing Editor, Steel Markets) and Jeffery Lu (Managing Editor, Met Coal) to discuss their respective markets and COVID-19. While the LT implications of the outbreak remain uncertain, the immediate impact on productivity is becoming apparent. Platts is concerned that the

16

Of course the RBA is going to cut

Via the AFR: “You just have to look at the numbers of Chinese tourists and Chinese students that come to Australia – it’s significant – it’s in the millions,” JPMorgan Asset Management’s head of fixed income Bob Michele said. “Coming off the bushfires, and now with coronavirus, everyone is trying to estimate what the impact

3

BHP warns it might warn

Via BHP just now: Six months ago, at the time of our full year results for the 2019 financial year, an air of prudent caution permeated commodity markets. On balance, events since that time have justified that caution. The result has been a mixed price performance by our key commodities.1 Demand for oil, metallurgical coal and copper was weaker

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Iron ore, coking coal bogged down across China

Via Argus: Chinese steelmakers remain partially blocked from shipping steel and steel feedstocks as a result of transport restrictions across provinces and at ports. Government officials restricted deliveries to slow the spread of the coronavirus, with the most stringent controls in Hubei province, eastern China’s Zhejiang province and neighbouring areas. Beijing has urged businesses to restart,

0

Baltic Dry still pancaked

Via Reuters: * The Baltic index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities, rose 7 points, or 1.7%, to 418. * The main index slid to its lowest level since March 2016 in the previous session. * Demand has already been hit strongly in China, which accounts for

3

Iron ore catches a bid, lifting Australian dollar

It’s not clear why but it’s looking pretty excited: There’s no news that I can find beyond some snippets from Brazil: For the first five working days of February, soybean exports declined to 198,600 tonnes per day on average from 263,500 tonnes per day for February 2019, according to Economy Ministry figures. Iron ore exports

1

Sickening China waves off copper

Via the FT: Copper traders in China, the world’s largest buyer of the metal, have asked miners from Chile to Nigeria to cancel or delay shipments as the deadly coronavirus outbreak hits demand. …“Coronavirus has had a huge impact on copper demand as downstream users [involved in processing raw copper] have stopped acquiring raw material,”

11

Chinese LNG demand “disappears”

Via The Australian: “LNG demand has fallen off a cliff since January. An LNG trader just told me Chinese demand has ‘disappeared’, and buyers will be looking at all options.” The move could prove a major risk for Australia’s LNG export industry, which supplied 46 per cent of Chinese LNG in the 2019 financial year,