COLUMN-LME warehousers slash capacity as metal stocks drain away – by Andy Home (Reuters – February 17, 2022)

https://www.reuters.com/

LONDON, Feb 17 (Reuters) – Glencore’s decision to sell its warehousing and logistics business looks like a well-timed call on the metals storage market.

It bought Access World in 2010 in the wake of the financial crisis, which generated a surge of metal, particularly aluminium, into London Metal Exchange (LME) warehouses. Total LME inventory of all metals mushroomed from 3.41 million tonnes at the start of 2009 to a peak of 7.75 million in June 2013.

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Commodities traders brace for a war in Ukraine (The Economist – January 26, 2022)

https://www.economist.com/

Tight markets mean that prices are all too responsive to rising tensions

“IF RUSSIAN TANKS cross the border, markets will freak out.” That is the considered judgment of Helima Croft, head of commodity strategy at RBC Capital Markets, an investment bank, and a former analyst at America’s Central Intelligence Agency.

Were Russia to invade Ukraine, the biggest impact would first be felt on Europe’s gas markets. But Ms Croft is not alone in thinking that the shock waves would spread widely.

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Posthaste: ‘An impending supercycle’: Commodities are going gangbusters, but oil may sit out the big rally – by Yadullah Hussain (Financial Post – January 19, 2022)

https://financialpost.com/

Commodities were on fire in 2021 and there is no let-up this year amid low inventory levels, an investment squeeze hindering supply and soaring demand in emerging markets, according to a new report.

“We anticipate this demand leadership trend to continue over the next several years,” wrote Orest Wowkodaw, analyst at Scotiabank Global Equity Research, in a report titled ‘Tight commodity markets ahead of impending super cycle.’

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Metals Traders Brace for the Next Big Squeeze as Supply Dwindles – by Mark Burton (Bloomberg News – January 12, 2022)

https://www.bnnbloomberg.ca/

(Bloomberg) — Industrial metal markets are marching higher again, as production outages and shrinking inventories revive worries about global supplies of some of the key building blocks of the economy and the green-energy transition.

Metals from aluminum to zinc surged in 2021 after the pandemic hit production at mines and smelters, wreaked chaos in global logistics networks, and sparked a boom in demand. In both copper and tin, London Metal Exchange inventory levels collapsed in squeezes that drove spot prices to records in wild trading.

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Five charts ask if mining is in a supercycle, one screams no – by Frik Els (Mining.com – December 9, 2021)

https://www.mining.com/

COP26’s climate goals necessitate massive new investments in mining, but how does today’s boom stack up to the aughts? Supercycle or no? is a favourite parlour game in mining and there is no shortage of opinions and arguments on whether the industry can party like it’s the aughts or if the mid-2010 hangover is just around the corner.

The latest entry in the genre is by Julian Kettle, senior VP and vice chair of Woodmac’s metals and mining business (read it here). Kettle’s first exhibit in Supercycle demand. Are we there yet? would be rather dispiriting if you’re in the bull camp. (A bull? Me?)

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We can’t recycle our way to a green economy – by Alex Hamer (Investors Chronicle – December 7, 2021)

https://www.investorschronicle.co.uk/

The ‘green’ economy will need massive amounts of metals and while reusing materials such as copper, steel and aluminium are critical to global metals supply, there just isn’t enough scrap to keep up with demand. But there also aren’t a sufficient number of mines in development to keep up with forecast needs, especially as the metals-intensive energy transition ramps up.

One recently announced solar project in Australia demonstrates just how much copper the energy transition could need. Sun Cable plans to export electricity to Singapore from the Northern Territory through a 4,200km undersea cable.

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A new commodity squeeze could soon rival lumber’s recent historic shortage – by Mark Burton (Bloomburg News – December 1, 2021)

https://www.bnnbloomberg.ca/

Tin is in the grips of one of the longest-running squeezes ever seen in commodities markets, and there’s little sign of it letting up. A relatively small market — used mainly for soldering in electronics — tin is often overshadowed by metals like copper and aluminum that are more widely used in manufacturing, infrastructure and the green-energy transition.

This year, though, tin has been red hot. Demand is booming and supply is sputtering, creating a chronic shortage of metal that’s been exacerbated by global logistics snarl-ups.

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Faster decarbonisation: back to basics for the mining industry? – by Julian Kettle (Wood Mackenzie – November 2, 2021)

https://www.woodmac.com/news/

Julian Kettle is Senior Vice President, Vice Chair Metals and Mining at Wood Mackenzie.

To the uninitiated, rugby is a technical and complicated game. As young schoolboys it was all a wee bit confusing and we invariably ended up on the wrong side of the score line. However, we had a wonderful Welsh coach called Billy, who, when the chips were down, would always roll out his go-to phrase: “back to basics!”

These wise words seem quite pertinent right now. With COP26 underway, the world awaits tangible evidence that the huge expense and carbon footprint of the conference will be worthwhile. With that in mind, delegates do need to go back to basics in terms of what must be achieved: clear commitments that will put us on the pathway to net zero.

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These green economy commodities are beating the best runs of the China supercycle – by David Rosenberg and Marius Jongstra (Financial Post – November 5, 2021)

https://financialpost.com/

The surge in commodity prices has been impressive since mid-2020, predictably resulting in calls that a new “supercycle” is underway. We have questioned that narrative, given the apparent supply-demand imbalances plaguing the globe and boosting prices in the process.

But one theme we do agree with is the long-term secular tailwinds behind a number of commodities required in the transition to a green economy in order to address climate change.

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Upward trend in global exploration budget to continue in 2022 — report – by Staff (Mining.com – October 19, 2021)

https://www.mining.com/

The aggregate annual global exploration budget is expected to increase between 5% and 15% year over year for 2022, according to a new report by S&P Global Market Intelligence.

The market researcher’s prediction is based on its own data that show that in 2021, the aggregate annual global nonferrous exploration budget has increased by 35% year over year to $11.2 billion from $8.3 billion in 2020, signalling that the sector has emerged from the downturn caused by the covid-19 pandemic.

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Metals head for record, zinc spikes as energy crisis hits supply (Bloomberg News – October 14, 2021)

https://www.bnnbloomberg.ca/

Base metals surged, led by zinc which spiked to the highest since 2007 after European smelters became the latest casualties in a global energy crisis that’s knocking supply offline and heaping pressure on manufacturers.

Zinc rose as much as 6.9 per cent on the London Metal Exchange, and a gauge of six industrial metals rapidly closed in on an all-time high. Aluminum, one of the most energy-intensive commodities, is at the highest since 2008.

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Wild markets gatecrash London Metal Exchange Week party – by Andy Home (Reuters – October 2021)

https://www.reuters.com/

This year’s London Metal Exchange (LME) Week was a subdued affair by comparison with past excess. Put on ice last year due to covid-19, the annual metals party returned in slimmed-down form with many opting for virtual over physical drinks. Analysts were in equally sober mood. Everyone’s still positive on the longer-term energy transition story but more immediately worried about China.

The debt problem faced by real estate developer China Evergrande Group is no Lehman Moment, to quote Bank of China’s head of commodity strategy Amelia Fu, speaking at the LME Seminar. But weakening Chinese property sales spell trouble for what is a big metallic demand driver.

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Four signals from soaring fossil fuels – by Terence Corcoran (Financial Post – September 30, 2021)

https://financialpost.com/

Find your favourite indicator of fossil fuel prices. Let’s begin with the price of coal in China, where futures have surged to US$212 a metric tonne, up 20 per cent through September and 300 per cent over the past year.

Natural gas futures approached US$6 per British thermal unit. A litre of gasoline at some Toronto stations hit $1.40, a new high in nominal dollars as the price of crude oil hit US$80 a barrel. So what’s going on and what does it mean?

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Column: Power is a double-edged sword for global metals sector – by Andy Home (Reuters – September 28, 2021)

https://www.reuters.com/

LONDON (Reuters) – The world will need a lot more of metals such as copper, nickel and aluminium if it is going to decarbonise. The potential “green” demand boom from more renewable energy, more power infrastructure and more electric vehicles is tomorrow’s promise for such “energy transition” metals.

Yet, as first China and now Europe is discovering, power is a double-edged sword for metals producers and manufacturers. A power crunch in China has idled over two million tonnes of the country’s aluminum production capacity.

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‘A wild time’: Why commodities are in a supercycle of volatility – by Gabriel Friedman (Financial Post – September 22, 2021)

https://financialpost.com/

For months, economists have debated why the price of so many commodities — from aluminum, iron ore and copper to natural gas and lumber — have been so volatile: Are these the first signs of structural shifts in supply chains related to the energy transition, or just temporary blips?

There’s consensus on a few points: The pandemic, by halting and then restarting supply chains, threw supply and demand fundamentals out of whack, and pushed many commodity prices up.

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