Commodities

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Still more bearish commodity signals

I love Bear Traps Report as a contrarian signal. Just do the opposite on commodities: Complacency is off the charts. Per a BofA survey released Friday,nearly 72% of investors believe inflation is transitory–a decade of conditioning will do the trick every time. This is a startling statistic and the oxygen behind the recent growth-tech sector

1

Daily iron ore price update (Rennie rout)

The ferous complex was weak yesterday for no apparent reason as spot fell, paper fell more overnight and steel eased: Perhaps it was yesterday’s Twitter assault by Westpac Robert Rennie which made a good case for a major price correction in H2: 2.Steel prices have dropped sharply from May record highs. Indeed, rebar down 18/20%

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Daily iron ore price update (CISA up)

The ferrous complex was roughly stable on June 24, 2021 with spot iron ore down, paper flat overnight and steel going nowhere: A couple of extra charts today from mid-June CISA steel output which has rebound though is still flattening out: Year-on-year growth firmed but is still trending lower: No change from me. Firm pricing

10

Oil to $100! Yawn

Oil is the last bastion of the commodity scoundrel. A completely manipulated market upon which just about any fantasy can be projected. Take BofA for instance: Brent prices should average $68/bbl in 2021 but… Back in June of last year, we argued that crude oil prices would be on an upward path into 2021 as

12

Chinese megadevelopers approach Minsky moment

The divergence between iron ore prices and what is happening on the ground in the only market that matters for iron ore demand is reaching new wides daily. Readers will know that China’s “three red-lines” policy for deleveraging the property development sector is delivering with distressed developers defaulting and dumping assets, credit lines being pulled

12

Commodity supercyclers begin to squirm

For the last few months, MB has had to battle a torrent of Wall Street (and local) drivel about a “new commodities supercycle”. This notion was never well-thought through. It mistook a global inventory supercycle for some kind of MMT supercycle. It mistook post-pandemic supply-side frictions for some kind of inflation supercycle. It mistook a

9

Spiralling Chinese megadeveloper forms Australian black hole

Evergrande. Remember the name. Because it may just be forming the dark nucleus of an economic singulatory in China that will suck Australia across an income shock event horizon. Throughout 2021, I’ve been tracking the evolution of a new policy regime for Chinese mega-developers called the “three red-lines”. It aims to deleverage one of China’s

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China property developers a potential global growth shock

The great Chinese property developer shakeout is intensifying. This has global significance because this sector alone accounts for an enormous slice of global bulk and base metals demand and therefore inflation. Bloomie has a great article today on the unfolding drama around the “three red lines” policy: Many developers have gamed the new deleveraging rules.

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Daily iron ore price update (Stern Hu time)

The ferrous complex was smashed on June 21, 2021 as steel broke down, paper was obliterated and spot fell sharply: Much of this is seasonal. The Chinese rainy season is stalling construction and lifting steel inventories: EOFY adds more downside as mills rebalance. That said, China’s jawboning campaign continues, via FT: Beijing has launched a

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Commodity bubble turns manure pile

Truly, global markets do not understand commodity cycles. Some of this is folks talking their books. Some of it is pure ignorance. What we can say for sure is that as the commodities bubble pops, the leftover space is being filled with balderdash. All areas of the commodity market are being covered in rhetorical manure,

1

Vale dam panic resolves

As we know, I triggered about a $30 rally in iron ore prices in the past week when I reminded the market that Vale was facing another possible dam bust and crisis (or it was thew wind). The news today is that that crisis ie easing swiftly: Brazilian regulators have inspected the Xingdu damn and

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Daily iron ore price update (rainbow butt)

The ferrous complex was weak on June 16, 2021 as spot, paper and steel all fell: There was a pretty nasty combination of factors. First this: The State-owned Assets Supervision and Administration Commission has ordered state-owned enterprises to control risks and limit their exposure to overseas commodities markets, according to people with knowledge of the

6

Another sell commodities signal

The Bear Traps report goes full inflation. The few missing facts include that it was Republicans that ravaged the US budget, no mention of China, no reference to vast deflationary forces. This is Australian extremism not analysis. Ironically, this contrarian is a great contrarian signal. Sell metals! In 1787, with remarkable foresight, Scottish historian Alexander

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Chinese construction sector crashes

As expected, China continues its systemic push towards tighter credit and economic restructuring away from construction. This time it’s wealth management products, an old favourite for developers to raise cash: Highly rated WMP will be prevented from buying junk debt from developers. This addresses the underlying duration mismatch. $400bn in junk debt will need to