Commodities

4

RBA index of commodity price soars

As expected: Preliminary estimates for January indicate that the index increased by 7.3 per cent (on a monthly average basis) in SDR terms, after increasing by 8.5 per cent in December (revised). The non-rural, rural and base metals sub-indices all increased in the month. In Australian dollar terms, the index increased by 4.8 per cent in January. Over the past year,

23

China plots the doom of iron ore

It’s not new. We’ve seen it before. Every attempt fails. But a new plan is afoot to end China’s real estate driven growth addiction that keeps Australian iron ore above $30. Via Societe Gereral: Policy directions in 2021: normalisation, de-risking and reforms The Central Economic Work Conference reiterated policymakers ’intention to continuing with policy normalisation

9

China mulls lifting coal ban as Aussie trade war backfires big

Via Morgan Stanley: Increasing noise on possible policy reversal: Shanghai Metals Market (SMM) reported yesterday that the Chinese government was in the preliminary stages of lifting its informal ban on Australian coal imports, but that such a move would still need to be approved by senior leaders. There has been no official comment on the article.

3

Aussie coal booms despite China blockade

Via Westpac: December saw a sharp increase in coal exports with volumes from Newcastle at a 4 month high; Dalrymple/ Hay Point at a 6 month high and Gladstone at 1yr high. This jump in volumes brings the total for 2020 to 364mt, down 5% versus 2019 and 3% versus 2018. Exports in Q42020 were

2

Daily iron ore price update (the bust)

Iron ore price for January 18, 2021: Spot is firm. Paper took off. Rebar has not updated. Looking forward, Clive Russell has the right idea: At the same time Beijing opened the stimulus taps, there were supply concerns, particularly in number two exporter Brazil, and third-ranked South Africa, as mines and transport systems were hit

47

The death of coal comes to Asia

Via the AFR: Policy changes flagged by politicians and government departments in Vietnam, Indonesia and Bangladesh, and a full moratorium on new coal plants in the Philippines, may result in just 25 gigawatts (GW) of new coal-power projects getting built this year. That is an 80 per cent reduction from the 125GW planned five years ago,

1

Can China replace Australian iron ore?

Via SCMP: Brazilian port operator Grao Para Multimodal’s executive director, Paulo Salvador, knows there is plenty of untapped high-grade iron ore in northern Brazil, but a mix of bureaucracy and limited capital have stymied efforts to begin production for years. Across the states of Para, Piaui and Tocantins, there are at least three mines amounting

2

Goldman’s 10 reasons for a new commodity super cycle

Via Goldman: 1) OPEC and Georgia help neutralize near-term risks. The events of last week substantially reduced the downside risks to our bullish commodity narrative — a fact reflected in the rise in oil and copper alongside the sharp decline in gold. First, Saudi Arabia agreed to a unilateral production cut that neutralized current lockdown

9

China trade war on itself sends LNG prices mad

Via Argus: Strong consumer demand, lower-than-expected temperatures across northeast Asia and a severe shortage of prompt LNG supplies and spot tanker availability have combined to send northeast Asian spot LNG prices to an all-time high — just nine months after hitting record lows. The front half-month ANEA price surged to $21.785/mn Btu for first-half February

14

How long can China keep building 14k skyscrapers per year?

That’s the question that has plagued me for ten years. Via James White of Lessep Investment Management, at the AFR: If China’s annual residential property sold was built in Eureka Towers (14,000 of them) and one constructed every 65 metres, it would line the Hume Highway from Sydney to Melbourne. In terms of population, 14,000