LIBERUM: Commodity snapSHOT - China's seasonality, illustrated

‘Sell in May and go away’. Is there a fundamental basis for this old trade expression in Commodity World? We think so, at least for China’s 1Bnt/yr steel & iron ore trades. For many years now, we’ve been flagging China-related upside risk in steel/ore trade flows and prices, in the early months of every calendar. It’s that country’s post-northern winter competitive restock, to secure its 80%-share of seaborne ore supply. This seasonal kick almost always reports across China’s trade/conversion/de...

LIBERUM: Restocking Indicator stays on SELL - Demand deteoriates sharp...

The Restocking Indicator is having a bearish year. The signal has reported a SELL, or very close to it, since late January. This month saw the sharpest new orders contraction since last July. Mills remain firmly in destock mode; China’s reopening trade continues to disappoint; confidence in real estate is weak. We still expect market signals to define floors in H2, with upside risk building later in the year – most likely on 2024’s industrial restock.

LIBERUM: Commodity snapSHOT - What value, Commodity World?

What are global commodity markets worth? About US$6.5tn – Metals, Steels and Energy. While this figure’s down a massive 20%YoY, it’s still the 3rd-highest on record. Why did it fall? Dominant driver’s the passing of 2022’s war-prompted inflation, partly a response to a US Fed-led rate hikes. Curiously, commodity supply/demand/trade shifts over the past year have been quite modest, with most markets expanding in-line with broader economic growth, while shouldering extreme price trend-shifts and v...

LIBERUM: Morning Comment

Commodity snapSHOT, easyJet, IDS, Tyman, Market Highlights

LIBERUM: Morning Comment

 Ilika, ATOME Energy, Anglo American, British Land, Mitchells & Butlers, Uniphar, Ashtead Technology, On the Beach, Safestyle, Market Highlights

LIBERUM: Anglo American - Diamond prices continue to soften

DeBeers announced the fourth diamond sale of the year of $480m, down from $604m in the previous year. Prices appear to be driven by the fall in polished diamond index, down 7% YTD or -23% from the peak in March last year. Demand outlook is tough, given the global economic slowdown, featuring a weak post-lockdown China story. Bullish price events: slowing synthetic supply growth, and the West continues to seek a ban on Russian trade – more a hopeful than an effective strategy, in our view.

LIBERUM: Morning Comment

Commodity snapSHOT, Centamin, SigmaRoc, AB Dynamics, Card Factory, Loungers, hVIVO, Flowtech Fluidpower, Mining LOWdown, Market Highlights

LIBERUM: Commodity snapSHOT - Gold’s price containment, explained

‘Mate, I don’t get it: we’ve had a virus sweep the planet, multiple inflation shocks, bank failures, deteriorating growth/trade conditions – and Russia’s war drags on …but this wonderfully bullish backdrop for gold can’t lift its price much above $2,000/oz. Why?’ There are lots of frustrated gold investors out there right now. For years now, anyone buying gold for some longer-term price upside on this collection of dramatic macro-themes has had a tough time. Since 2020’s lockdown, gold’s price h...

LIBERUM: Commodity snapSHOT - Steel & Rust – seasonal peak

LIBERUM: Restocking Indicator stays on hold - Mills lack confidence on...

The Restocking Indicator stays on HOLD, and so matches up with our short-term expectation that iron ore prices will be range bound for the next couple of months. There has been an improvement in domestic demand, but no post-lockdown ‘fireworks’ in play. Certainly not enough to get China’s steel mills, or us, excited on the short-term steel/ore outlook. Worth keeping an eye on rising pollution levels, for this could prompt policy action and lift lump/pellet/high grade premiums – bullish for AAL/F...

LIBERUM: Commodity snapSHOT - Bank-rattled commodities, illustrated

FACT: if gold’s price lifts, when those of industrial metals fall – that’s bearish. High-profile bank failures – SVB and Credit Suisse – prompted this rare, but widely understood signal divergence. Also, price sensitivity to the event was probably enhanced by the fact that Resources’ sector activity is subdued right now. Why? President Xi just flagged a modest 5% GDP target for 2023 + US Fed’s still chasing inflation + Russia’s war troubles the growth outlook …so, Commodity World was vulnerable ...

LIBERUM: Commodity snapSHOT - Tactical trading ideas

The epic rally across most metal/steel-related prices, which began last November, has ended. Bear factors? We see three: 1. market’s disappointment with China’s 5% GDP growth target for 2023 (last week’s NPC); 2. US Fed’s undaunted inflation-targeting hawkish pitch (ignores collapse in global energy prices; further hikes support US real rates/currency = drags on demand for no-yield commodities); 3. on-going deterioration in geo-political backdrop (saps investor confidence on growth outlook). Yes...

LIBERUM: Restocking Indicator back to Hold - Demand improves, but inve...

The Restocking Indicator has upgraded to HOLD, after reporting a sell last month. Domestic demand has improved, although it is still being outpaced by the expansion in finished inventories. We believe a neutral sector call is sensible, ahead of China’s National People’s Congress this weekend. This annual event typically features the central government’s growth strategy for the year. Note, we do not expect stimulus fireworks, given the demand recovery reported over recent months. Statements on po...

LIBERUM: Commodity snapSHOT - Lithium's bearish price drivers, listed

Lithium’s reporting one of the weakest commodity price performances of the New Year, down 25% year-to-date, and 35-40% down from this trade’s record-highs of 2022. It’s a big move. And while most market forecasters like us have been calling for this correction for months now, we’re probably a tad surprised that it has finally occurred. Why? Because EV-backed demand growth (66% of total lithium demand) has far exceeded most forecasts since 2021. We’ve basically struggled to assess the bullish hit...

LIBERUM: Morning Comment

Commodity snapSHOT, Bytes, Morgan Sindall, Genus, Tracsis, Amedeo Air Four Plus, Market Highlights

LIBERUM: UK Small & Mid Cap Dispatches

Commodity snapSHOT, Bytes, Morgan Sindall, Genus, Tracsis, Amedeo Air Four Plus, SMID Market Highlights

LIBERUM: Commodity snapSHOT - Metallurgical Coal World, falls apart

Last week, Canada’s mining giant, Teck Resources, announced plans to spin off its 22Mtpa Elk Valley metallurgical coal mines. This week, BHP confirmed that it’s selling higher-cost/lower-quality BMA JV met-coal mines, Blackwater/Daunia (15Mtpa). These are the world’s two biggest met-coal exporters – together delivering 30% of total met-coal supply, incl. 40% of seaborne’s top-shelf HCC – a global trade worth US$80bn, with prices holding close to record-highs. So, why spin-off/sell these mines? M...

LIBERUM: Commodity redEYE - Copper’s mine supply grief, illustrated

This past year, copper’s global mining industry reported a spike in war-/energy-related costs, asset closures, project delays, geo-political constraints – across all key sources of exported metal/concentrates – particularly Chile + Peru + Panama. Popular investor requests right now? Data on size/scale of copper’s industry + state of trade flows + our forecast refined supply/demand/prices. Most are just trying to get some perspective on frequent media/industry reports on mine failures/closures. H...

LIBERUM: Restocking Indicator down to SELL - Inventories grow fastest ...

The sharp market bounce in January would suggest that a strong fundamental lift is coming. Problem is, China’s steel mills haven’t seen it yet. Domestic demand has slightly improved, typical for this time of year, but inventories are rising at their fastest rate since Feb 2020. Possible timing issue for the Restocking Indicator, given the earlier Chinese New Year, but the signals move from Hold to SELL anyway. So, we tell investors to be cautious chasing this rally.

Short term view - ANGLO AMERICAN : Weak reaction on resistance.

Peaks and troughs are not clearly tilted, the trend is neutral. Prices are consolidating.Arguments :- The moving average is supporting prices.- Prices are evolving within a rectangle.- The reaction at the resistance is weak, we anticipate its break soon.