Commodities Daily - April 19, 2021

> Oil ticks lower on dollar strength, surging Covid cases in India. There are no noteworthy data releases today, and we expect Brent to continue targeting the $65.2-65.7/bbl technical range, as it has failed to break a strong resistance zone of $66.8-67.2/bbl.> Gold climbs amid decline in 10y US Treasury yields. Gold is trading at $1,780/oz as we write. Investors today await the Bloomberg economic survey for the eurozone. We expect bullion to trade sideways at $1,755-1,785/oz today.> Non-ferrous metal prices fall on Friday after rallying earlier in the week, while PGM prices continue to rise. Aluminum fell 1.0% to $2,315/tonne, copper 0.8% to $9,211/tonne and zinc 0.3% to $2,856/tonne, while tin rose 1.0% to $26,616/tonne. Platinum rose 0.7% to $1,206/oz and palladium 1.3% to $2,776/oz. The dollar continued to weaken against global currencies on Friday, falling to the weakest levels in four weeks. Its likely continued retreat should buoy interest in metals going forward. Market participants are awaiting data from Vale on the supply of Brazilian ore in March and a forecast for shipments this year. This data is likely to have a significant impact on the market.OIL TICKS LOWER ON DOLLAR STRENGTH, SURGING COVID CASES IN INDIAOn Friday, Brent peaked at almost $67.4/bbl ahead of the European trading session before sliding below $67/bbl to eventually end the day at $66.77/bbl, $0.17/bbl below the previous settlement. Last week, Brent posted its biggest weekly gain since early March as Chinese and US economic data strengthened expectations of a recovery in global fuel demand. One important highlight early on Friday was Chinese industrial production data, which showed crude oil processing volumes in March holding very close to the January-February levels at slightly below 14.2 mln bpd, despite the start of refinery maintenance. This was thanks to the recovery in refining margins, especially gasoline refining economics, with some refineries even delaying or cancelling planned maintenance to capitalize. Lower turnarounds should support Chinese oil refinery runs in 2Q21 before they are very likely to hit record highs in 3Q21. We expect China's summer buying binge to be a key factor driving Brent above $70/bbl this summer.Supporting this optimistic outlook is preliminary data suggesting Chinese oil demand rose m-o-m to 14.5 mln bpd in March, with gasoline demand on track to climb in 2Q21 with warmer temperatures and the long Labor Day holiday (May 1-5) releasing pent-up travel demand from a soft Lunar New Year. Diesel demand should also be supported by increased usage in the agricultural and construction sectors, especially as March excavator sales surged by more than 60% y-o-y from their last record high in March 2020. Growing demand and refinery maintenance should lead to a drawdown in gasoline and diesel inventories during 2Q21.Brent is trading near $66.5/bbl as we write as the dollar has rebounded following a five-day losing run and as India reported a whopping 261,500 new coronavirus infections on Sunday, which prompted concerns that stronger measures to contain the pandemic will hit economic activity, along with demand for commodities in one of the largest oil-consuming nations. There are no noteworthy data releases today, and we expect Brent to continue targeting the $65.2-65.7/bbl technical range, as it has failed to break a strong resistance zone of $66.8-67.2/bbl. Further pointers on the demand outlook will come later this week when the IEA unveils its global energy review on Tuesday, which will lay out the agency's take on the global demand trajectory over 2021. Aside from the weekly updates on US oil and refined product inventories, this week will see preliminary April DM PMIs on LD CLIMBS AMID DECLINE IN 10Y US TREASURY YIELDSOn Friday morning, gold was wrestling with resistance at $1,765/oz and broke through as 10y US Treasury yields touched a month-low of 1.53%. Gold eventually advanced to $1,775/oz and the 10y UST ended the week just below 1.58%. EUR/USD traded flat around 1.198. Eurozone CPI data for March showed the same number as for February (1.3% y-o-y), which provided slight help for gold in the absence of support from the euro. US housing starts for March were better than expected, jumping 19.4% m-o-m versus the consensus of 13.5% growth. However, the University of Michigan consumer sentiment index for April came in at 86.5 points, below the consensus of 89. That helped gold and moved yields lower as the US economic data proved mixed. Meanwhile, the Fed reiterated that it will keep monetary policy accommodative until the crisis is over, while Fed Governor Christopher Waller said any spike in inflation would likely prove only temporary.Gold is trading at $1,780/oz as we write. Investors today await the Bloomberg economic survey for the eurozone for April. This Thursday will see the ECB monetary policy statement, a press conference by ECB President Christine Lagarde and US initial jobless claims, while Markit PMIs for the eurozone and US for April are due on Friday. Also, US existing and new home sales data for March are due on Thursday and Friday, respectively. We expect bullion to trade sideways at $1,755-1,785/oz N-FERROUS METAL PRICES FALL ON FRIDAY AFTER RALLYING EARLIER IN THE WEEK, WHILE PGM PRICES CONTINUE TO RISEOn Friday, prices on non-ferrous metals declined on the LME, while PGMs rose in price. Aluminum fell 1.0% to $2,315/tonne, copper 0.8% to $9,211/tonne and zinc 0.3% to $2,856/tonne, while tin rose 1.0% to $26,616/tonne. This marked a correction following the gains earlier in the week as the dollar retreated.Platinum rose 0.7% to $1,206/oz and palladium 1.3% to $2,776/oz. The dollar continued to weaken against global currencies on Friday, falling to the weakest levels in four weeks. Its likely continued retreat amid rising inflation in the US and expectations over President Biden's second massive stimulus package should buoy interest in metals going forward, especially precious metals. Brazil's Vale, the world's largest iron ore supplier, is expected to publish operating results today. The disruption in iron ore supply following Vale's accident in 2019 and a rebound in steel demand were the main drivers behind the rise in iron ore prices to their currently elevated levels. Market participants are awaiting data on the supply of Brazilian ore in March and a forecast for shipments this year. This data is likely to have a significant impact on the market. Spot iron ore prices (Fe 62% FOB Qingdao) have risen 6.9% since the beginning of April to $165/tonne. In early March, Chinese leaders indicated an intention to curtail support for the economy this year, which caused iron ore prices to start declining. However, toward the end of March, it became apparent that steel smelting and demand for iron ore in China were still growing at a steady clip, providing a fresh boost to prices.