Abans Group Commodity World Round Up

22nd Feb – 26th Feb

1.Gold subdued as U.S. Treasury yields stay elevated

Feb 24, 2021

Rising bond yields continue to weigh on the gold market. Gold has not found any path to a sustainable recovery even with talks about additional stimulus measures. U.S. benchmark 10-year Treasury yields touched 1.4% for first time since February 2020. Rising yields tend to hurt bullion's appeal as an inflation hedge since they increase the opportunity cost of holding the metal. Investors kept a close watch on developments over a $1.9 trillion U.S. coronavirus relief package, which could contribute to a speedy economic recovery but at the cost of rising inflation.

Source: Reuters

2.Fastest oil price rise in 30 years: Bank of America

Feb 25, 2021

Oil prices are set to rise by the fastest rate since the 1970s over the next three years, Bank of America said in a new report, joining the growing group of analysts forecasting a return of oil to three-digit territory. The average price of Brent over the next five years, however, will be between $50 and $70 per barrel, according to the bank, as quoted by The National. The bank also said OPEC+ might decide to reverse its production cuts now that Brent is trending above $60, but added that a slow return of U.S. shale to international markets might lead to an extension of the production cut agreement to make sure prices stay higher.

Source: Oilprice.com

3.China's economy could grow 8-9% this year from low base in 2020

Feb 25, 2021

China's gross domestic product (GDP) could expand 8-9% in 2021 as it continues to rebound from the COVID-19 pandemic, Liu Shijin, a policy adviser to the People's Bank of China, said on Friday. This speed of recovery would not mean China has returned to a "high-growth" period, said Liu, as it would be from a low base in 2020, when China's economy grew 2.3%. Analysts from HSBC this week forecast that China would grow 8.5% this year, leading the global economic recovery from the pandemic. If 2020 and 2021's average GDP growth is around 5%, this would be a "not bad" outcome, said Liu, speaking at an online conference. China is set to release a government work report on March 5 which typically includes a GDP growth target for the year.

Source: Reuters

4.US GDP growth this year could be strongest in decades: NY Fed's Williams

Feb 25, 2021

A combination of strong fiscal support and continued vaccine distributions could help lift the U.S. economy as it recovers from the coronavirus pandemic and lead to the strongest growth in decades, New York Federal Reserve Bank President John Williams said Thursday. Williams's upbeat outlook mirrored optimism shared by several Fed officials this week who expect economic growth to rebound strongly. Like other policymakers, he made it clear the Fed is not planning to pare back its support in the near future. Also, Fed Chair Jerome Powell, testifying before Congress on Tuesday, said the U.S. economy could grow in the range of 6% this year, in line with some private forecasts.

Source: Reuters

5.The 10-year U.S. yield adjusted for inflation rose to its highest in seven months

Feb 25, 2021

 The 10-year U.S. yield adjusted for inflation rose to its highest level in more than seven months, a warning sign for riskier assets that have benefited from exceptionally loose financial conditions amid the pandemic. The rate, or real yield, climbed over five basis points to minus 0.7352% -- surpassing a high of minus 0.75% set days after the U.S. presidential election in November. While higher real rates signal the economy is gaining traction, they can feed in to steeper borrowing costs and lessen the appeal of other asset classes including stocks, which are currently trading near all-time highs.

Source: Bloomberg

6.World refined copper market showed a deficit of 77,000 mt in November: ICSG

Feb 22, 2021

As per the International Copper Study Group (ICSG) report, world refined copper market showed a deficit of 77,000 mt in November. Between January and November last year, the copper market registered a deficit of 589,000 mt compared to a deficit of 427,000 mt in the same period of the previous year. World stocks of refined copper stood at 1,265 million mt at the end of November compared with 1,329 million tonnes at the end of October. The world copper mine production fell by around 0.2% in the first eleven months of 2020. Preliminary data indicates that world refined copper production increased by 1.8% during the first eleven months of 2020.

Source: Reuters& ICSG

7.Historic Copper Shortage Loom As Prices Rocket: Goldman Sach

Feb 21, 2021

Goldman Sachs said in a report that Copper supply will not be able to keep up with the strong demand expected as Copper concentrate finds itself in shortage. Goldman Sachs released a note last week reiterating its bullish stance on metals. 2021 has seen a more or less coordinated rally across all commodity prices. It also notes that stocks at LME have fallen to a multi-year low level of 74,000 tonnes last December.

Source: Oilprice.com

8.OPEC+ to weigh modest oil output boost at meeting 

Feb 26, 2021

OPEC+ oil producers will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, cut output by a record 9.7 million bpd last year as demand collapsed due to the pandemic. As of February, it is still withholding 7.125 million bpd, about 7% of world demand. Three OPEC+ sources said an output increase of 500,000 barrels per day from April looked possible without building up inventories, although updated supply and demand balances that ministers will consider at their March 4 meeting will determine their decision.

Source: hellenicshippingnews.com