Commodity Traders Weekly Outlook: Soybeans Rise; Oil, Heating Oil and Gasoline Crash

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  • #48884
    MoneyNeverSleeps
    Participant

    Alcoa (AA) and Century Aluminum (CENX) noticeably higher on reports the US and EU are weighing new tariffs on Chinese steel and aluminum, according to Bloomberg

    AA up 0.8%; CENX up 2.0%

    #49047
    TradersCom
    Keymaster

    Copper rose on Thursday on hopes that an easing of coronavirus controls in top consumer China will increase demand, with Goldman Sachs predicting prices could reach a record high of $11,000 in a year.

    Benchmark copper CMCU3 on the London Metal Exchange (LME) was up 0.5% at $8,501.50 a tonne at 1122 GMT.

    Weakening growth in China and elsewhere dragged prices from a high of $10,845 in March, but the market is now anticipating economic recovery.

    Copper is up 3% this month after rising 10.6% in November as expectations began to build that China will retreat from its zero-COVID policies

    Analysts at Goldman Sachs said they now expect copper to be undersupplied in 2023 and “peak supply is now immovably fixed in mid-2024 … generating deficits from that point.”

    Commenting on that forecast, Nicholas Snowdon, metals strategist at Goldman Sachs said :

    The sequential increase in policy targets and commitments to green transition, alongside a minimal supply response so far… have resulted in earlier and larger open-ended deficit conditions that essentially are already here, not beginning at some point in the future…

    Another deficit in the market next year will take fundamental conditions to an unprecedented extreme in terms of tightness.

    They said China may seek to rebuild depleted inventories CU-STX-SGH, SMM-CUR-BON next year, adding to copper demand, and predicted prices would average $9,750 a tonne in 2023 and $12,000 in 2024.

    Goldman Sachs forecast that prices will exceed their record high in the next year, increasing its 12-month price target to $US11,000 a tonne from $US9000 a tonne.

    The new target implies 31 per cent upside from copper’s current price of $US8405 a tonne.

    Goldman Sachs upgraded its average price forecast for 2023 to $US9750 per tonne, from $US8325 per tonne previously. The broker now expects prices to average $US12,000 a tonne in 2024, from $US10,750 a tonne previously.

    China’s Bank of Communications meanwhile said it had signed pacts to support eight property firms, easing a liquidity crunch in the sector, which is a major user of metals.

    Data showed that China’s passenger vehicle sales fell for the first time in six months in November, Chinese copper import premiums SMM-CUYP-CN are falling and some fear that relaxed COVID rules will cause a huge increase of infections.
    Demand remains subdued in the short term, however.

    #49048
    TradersCom
    Keymaster

    Glencore overnight echoed predictions that the copper market is facing an imminent supply shortage.

    “There’s a huge deficit coming in copper, and as much as people write about it, the price is not yet reflecting it,” its chief executive Mr Nagle said.

    Mr Nagle added that Glencore will wait to lift its copper production until the world is “screaming” for it, according to comments reported by Bloomberg. “We want to see that deficit,” Mr Nagle said.

    Glencore could lift its annual copper output by more than 60 per cent from current levels of 1 million tonnes by expanding its current assets, Mr Nagle said.

    #49099
    TradersCom
    Keymaster

    Gold futures settled $9.20 higher (+0.5%) Friday to $1,810.70/oz, up a little less than +0.1% on the week
    – The gains limited with US support from rebound in treasury yields after PPI and consumer confidence reports.

    #48827
    KnovaWave
    Participant

    A mixed week for commodities with oil breaking down more getting all the attention. The Bloomberg commodity index dropped 2.4% (up 12.7% y-t-d). The U
    [See the full post at: Commodity Traders Weekly Outlook: Soybeans Rise; Oil, Heating Oil and Gasoline Crash]

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