Abans Group Commodity World Round Up

01 Mar - 05 Mar

1. OPEC+ extends output cuts into April

Mar 05, 2021

OPEC and its allies agreed not to increase supply in April as they await a more substantial recovery in demand amid the coronavirus pandemic. Also, Saudi Arabia had decided to maintain its voluntary cut of 1 million barrels per day through April even after oil prices rallied over the past two months. Oil prices jumped more than $1 a barrel on Friday, hitting their highest levels in nearly 14 months, after OPEC and its allies agreed not to increase supply.

Source: Reuters

2. Jerome Powell did not consider Bond Yields move as a “disorderly”.

Mar 04, 2021

 U.S. Federal Reserve Chairman Jerome Powell disappointed investors with his views on the Treasury yields. Powell repeated his pledge to keep credit loose in a speech to the Wall Street Journal jobs summit on Thursday and added that although the rise in yields was “notable”, he did not consider it a “disorderly” move.

Source: Reuters

3. Gold-backed ETF holding declined by 84.7 tonnes last month

Mar 04, 2021

According to the World Gold Council's latest report, holdings in gold-backed ETF declined by 84.7 tonnes last month, a drop of 2% compared to January. This is the third time in four months that the gold market has seen outflows in ETFs. The World Gold Council noted that global assets under management currently stand at 3,681 tonnes, the lowest level since June. The drop in ETF demand came as the gold market saw its worst monthly price decline in four years, falling 6.5%. Although bond yields have moved sharply higher since the start of the New Year, the analysts at WGC note that real yields are still extremely low. Looking at regional data, North American funds led the way in outflows, with gold holding declining by 71.2 tonnes. European-listed funds saw outflows of 23.8 tonnes; however, Asian-listed funds increased by 10.6 tonnes.

Source: Yahoo Finance

4. China’s Oil Demand May Be Overestimated

Mar 04, 2021

Chinese, oil imports have been strong since the start of the year; however signs have already emerged that no crude buying spree will occur in the second quarter with oil prices above $60 eating into refining margins, and with planned maintenance at Chinese refineries beginning in March and April. China, significantly boosted its crude imports in January 2021 compared to the end of 2020, on the back of strong buying from independent refiners who started to use their allocated import quotas for 2021. Buying from the Chinese refiners had already used up their quotas earlier in the year, taking advantage of the lowest prices in years to stock up on low-priced crude. China is also reportedly close to reaching its storage capacity limits, and it would not make sense to fill it to capacity with $60-plus oil, like it went on a buying spree at $20-30 oil last spring.

Source: OilPrice.com

5. Supply pressure in Nickel to keep prices lower

Mar 05, 2021

Nickel prices on Friday were set for their worst week in 9-1/2 years in London and plunged in Shanghai on rising battery-grade supply outlook following a major supply deal. China's Tsingshan Holding Group said it would supply 100,000 tonnes of nickel matte - an intermediate product that can be used to make battery-grade nickel for electric vehicles - to two other Chinese firms within a year from October.

Source: Reuters

6. Aluminium trades near 9-1/2-year high on supply worries

Mar 03, 2021

Shanghai aluminium prices rose to a near 9-1/2-year high on Wednesday, buoyed by concerns of supply cuts in China, the world’s biggest user and producer of the metal. China’s Inner Mongolia, a major aluminium producing region, will stop reviewing new projects in industries which consume large amounts of energy, including aluminium, as it attempts to meet energy efficiency targets.

Source: Reuters

7. U.S. factory orders surge

Mar 04, 2021

New orders for U.S.-made goods increased more than expected in January, pointing to a sustained recovery in manufacturing even as the pace of business spending on equipment is slowing. The Commerce Department said on Thursday that factory orders shot up 2.6% after rising 1.6% in December. Economists polled by Reuters had forecast factory orders advancing 2.1% in January. Orders increased 1.3% on a year-on-year basis. Manufacturing, which accounts for 11.9% of the U.S. economy, has been driven by strong demand for goods, like electronics and furniture as 23.2% of the labor force works from home because of the virus. 

Source: Reuters

8. China's factory activity growth slips

Mar 01, 2021

China's factory activity expanded at the slowest pace in nine months in February. The slowdown in the manufacturing sector underscores the fragility of the ongoing economic recovery in China, although domestic COVID-19 cases have since been stamped out and analysts expect a strong rebound in full-year growth. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) fell to 50.9 last month, the lowest level since last May. A sub-index for production fell to 51.9, the slowest pace of expansion since April last year, while another sub-index for new orders fell to 51.0, the lowest since May.

Source: Reuters