Abans Group Commodity World Round Up

25th Jun - 1st Jul

1. Asia’s manufacturing slows, adding to global recession fears

1 July 2022

China’s manufacturing activity expanded at its fastest pace in 13 months in June, a private survey showed, as the lifting of COVID lockdowns sent factories racing to meet robust demand. The rollbacks of China’s lockdowns could ease supply chain snags, and allow automakers and other manufacturers to resume operations after suffering severe disruptions. The final au Jibun Bank Japan Manufacturing purchasing managers’ index (PMI) slipped to 52.7 in June from 53.3 in the previous month, staying above the 50-mark separating contraction from expansion. South Korea’s S&P Global PMI also fell to 51.3 in June from 51.8 in May, dropping for a second month due to the drag from supply constraints and a truckers’ strike in June. Taiwan’s S&P global PMI fell to 49.8 in June from 50.0 in May, while that of Vietnam was down to 54.0 in June from 54.7 in the previous month.

Source: Aljazeera

2. OPEC+ would only increase output in August as previously announced

30 June 2022

On Thursday OPEC+ confirmed it would only increase output in August as much as previously announced despite tight global supplies, but left the market wondering about future output. The OPEC+ group of producers, including Russia, on Thursday agreed to stick to its output strategy after two days of meetings. The producer club avoided discussing policy from September onwards. Previously, OPEC+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August. Sanctions on Russian oil since Russia's invasion of Ukraine have helped send energy prices soaring, stoking inflation and recession fears.

Source: Reuters

3. India: Import Duty On Gold Increased By 5% to 12.5%

1 July 2022

The government has raised the basic import tax on gold to 12.5 per cent from 7.5 per cent. The step has been taken in an effort to curb imports, as the rupee slumped to a record low. The imports of gold totaled 107 tonnes in May and shipments are also likely to have been significant in June. India, the world’s second biggest consumer of gold, is currently staring at higher trade and current account deficits amid volatile global macroeconomic conditions. The country’s trade deficit in May ballooned to record high $24.29 billion. India imported gold worth $6.03 billion in May, a nine-fold rise from a year earlier. India had imported the most amount of gold in a decade last year, as demand recovered after the pandemic.

Source: Moneycontrol

4. Palladium, Nickel Rise as U.K. Sanctions Norilsk Owner Potanin

29 June 2022

Prices of platinum group metals and nickel rose in London on Wednesday after the U.K. placed Vladimir Potanin, the chief executive and principal shareholder of Russian mining giant Norilsk Nickel, on its sanctions list. The U.K. government had sanctioned most of the oligarchs identified as close to President Vladimir Putin's government immediately or soon after Russia's invasion of Ukraine in February. However, it had held off from sanctioning Potanin, apparently out of concern at the possible disruption to supplies of vital metal supplies to the world economy. Similar measures applied by the U.S. to Oleg Deripaska, the majority owner of aluminum giant Rusal and Potanin's co-shareholder in Norilsk, had caused extreme volatility in the aluminum market due to the inability of exchange warehouses to accept metal from Rusal.

Source: Reuters

5. Metals set for worst quarter since 2008 on global downturn angst

30 June 2022

Base metals headed for the worst quarterly slump since the 2008 global financial crisis as China’s economy recovered only gradually and fears of a world recession intensified. The London Metal Exchange Index has tumbled 23% since the end of March, although the decline has been magnified due to prices spiking that month following Russia’s invasion of Ukraine. Tin has been the worst performer, plummeting 38%, while aluminum is down by around a third, and copper has fallen by about a fifth. It will be the first quarterly decline for the entire index since the start of the pandemic.

Source: Bloomberg

6. U.S. natural gas plunge 17% Freeport LNG outage leaves more fuel for storage

30 June 2022

U.S. natural gas futures plunged about 17% on Thursday to a three-month low as the shutdown of Freeport LNG's liquefied natural gas (LNG) export plant in Texas allowed utilities to stockpile more fuel than expected even as hotter weather had generators burning more gas to keep air conditioners humming. The market extended earlier storage-related losses of around 9% after U.S. pipeline safety regulators said they found unsafe conditions at Freeport and that they will not allow the plant to restart until an outside analysis is complete.

Source: Reuters

7. Global iron ore production growth to accelerate until 2026

27 June 2022

Global iron ore production growth will accelerate in the coming years, bringing an end to the stagnation that has persisted since iron ore prices hit a decade-low average of $55 a tonne in 2015, market analyst Fitch Solutions asserts in its latest industry report. Fitch forecasts global mine output growth to average 2.7% over 2022-2026 compared to -1.3% over the previous five years. This would lift annual production by 361.7mn tonnes in 2026 compared to 2022 levels, roughly the equivalent of Russia, India, and South Africa’s combined 2022 output. Supply growth will be primarily driven by Brazil and Australia, while Brazilian miner Vale has aggressive expansion plans, Fitch notes, adding that miners in Australia including BHP, Rio Tinto and Fortescue will reinvest currently buoyant profits into additional production.

Source: Mining.com