Abans Group Weekly Commodity Round-Up

13th Jul – 17th Jul

1. ECB would continue with its massive stimulus program announced in March, but hold rates steady

Jul 16, 2020

The ECB opts to wait and see, and leaves rates, and the stimulus program unchanged. It would continue with its massive stimulus program announced in March to mitigate the economic shock from the pandemic. Last month, it expanded its Pandemic Emergency Purchase Program by 600 billion euros, bringing the size of the stimulus program to 1.35 trillion euros ($1.54 trillion) to be deployed until June 2021. It has pointed to an 8.7% contraction (IMF Projected 10.2% contraction) in GDP for the Euro zone this year.

Source: ECB and CNBC

2. China’s June imports of crude oil hit their highest on monthly and daily bases

Jul 14, 2020

China’s June imports of crude oil hit their highest on monthly and daily bases, according to Reuters calculations, based on customs data released on Tuesday. June imports reached 53.18 million tonnes, or 12.9 million barrels per day (bpd), the data from the General Administration of Customs showed, surpassing a previous record of 11.3 million bpd in May. (1 tonne=7.3 barrels of crude) 

Source: Reuters

3. OPEC + agreed to ease record supply curbs from August

Jul 15, 2020

OPEC and allies, such as Russia, agreed to ease record supply curbs from August, though the drop was cushioned by hopes for a swift US demand pick-up, after a bigger-than-expected drawdown from the country's crude stocks. OPEC+ has been cutting output since May, by 9.7 million barrels per day, or 10% of global supply, but from August, cuts will officially taper to 7.7 million bpd until December.

Source:OPEC

4. The Bank of Japan kept monetary policy steady

Jul 15, 2020

The Bank of Japan kept monetary policy steady on Wednesday and maintained its view that the economy would gradually emerge from the coronavirus pandemic's devastating blow, signalling a pause after delivering stimulus twice so far this year. The BOJ left unchanged its short-term interest rate target at -0.1%, and a pledge to guide the 10-year government bond yield around 0% by an 8-1 vote. According to the BOJ outlook report, Japan's economy is expected to gradually improve from the latter half of this year. But, the pace of recovery will be moderate, as the effect of the global coronavirus pandemic will remain.

Source: BOJ, Reuters

5. Online gold market accelerated during covid lock down in India: WGC

Jul 16, 2020

Covid-19 disruption has caused jewellery retailers in India to re-evaluate their existing business models, and the WGC has noted that online retail adoption accelerated during Covid-19, across categories. While an economic contraction will likely result in lower demand for gold in the form of jewellery, technology or long-term savings, behavioural changes in consumers will be far more impactful than the economic changes.

The WGC expects consumer demand to remain soft due to reduced economic activity, concerns about increasing unemployment, and income erosion. However, additional economic packages from the government, and the forecast of a positive monsoon season, could help soften the negative impact of an economic deceleration.

Source: WGC, Business Standard

6. Copper prices dipped as heightened Sino-U.S. tensions sparked economic worries

Jul 17, 2020

London copper dipped on Friday, as heightened Sino-U.S. tensions sparked worries of a tit-for-tat retaliation, which could dampen economic growth and demand for metals. The Trump administration is considering banning travel to the United States by all members of the Chinese Communist Party and their families, a person familiar with the matter said on Thursday.

Source: Reuters

7. India's Soybean output set to rise by 15% over good monsoons, and an increase in MSP

Jul 15, 2020

India's soybean production is set to jump by at least 15% in 2020, from a year earlier, as farmers are increasing the oilseed's acreage due to the timely arrival of the monsoon rains. The Government has also raised the minimum buying price by 4.6%, from a year earlier, to 3,880 rupees per 100 kg. It could reduce import dependence, and also revive Indian exports of animal feed ingredient soymeal to places such as Bangladesh, Japan, Vietnam and Iran.

Farmers have planted soybean on 10.15 million hectares, as on July 10, compared with 5.17 million hectares, a year earlier, as the monsoon covered the entire country, nearly two weeks earlier than usual. India produced 9.3 million tonnes of soybean in 2019. Indian carry forward stocks would be around 1.28 million tonnes, up from 170,000 tonnes a year ago.

Source: CNBC & Indian Farm Ministry

8. Pepper imports via Sri Lanka shoot up in June, which is a 89% rise since 2014-15

July 16, 2020

Imports of pepper from Sri Lanka, for domestic use, have shot up to 717 tonnes in the January to June period, out of which nearly 50 per cent, or 372 tonnes, came in the month of June.  In the first six months of 2019 (January-June), imports were 408 tonnes, up by 56 per cent in the same period. Total imports of pepper under various heads, including for domestic use, shot up from 14,559 tonnes in 2014-15, to 27,557 tonnes in 2018-19, a jump of 89.28 per cent (Indian Pepper and Spice Traders, Growers, Planters Consortium).

Source: New Indian Express