Following Malaysia’s condemnation of India’s treatment of the Kashmir issue, the Indian government has threatened to reduce imports of palm oil from Malaysia. The Malaysian reaction has been to propose increasing its imports of Indian sugar.
China, which imports 3 Mt of sugar a year, is facing a smuggling problem which, in 2018, will have reached 1.5 Mt from Thailand and India.
With its third consecutive drought, Australia now accounts for only 5% of world wheat exports compared to 12% in 2016/2017.
Hydropower represents 82% of the energy consumed to produce aluminium in Latin America, 75% in Europe (including Russia), only 10% in Asia, mostly in China. Alcoa in particular seeks to enhance its ‘green aluminium’.
According to the International Tin Association (ITA), worldwide demand for tin is expected to decrease by 2% in 2019: 47% of uses are in tin solders used in electronics, but these tend to be increasingly miniature. Tinsmithing now represents only 13% of the demand.
According to the INSG, global demand for nickel in 2020 will be 2.52 Mt for a production of 2.48 Mt. From 80,000 tonnes in 2019, the global deficit will be only 40,000 tonnes in 2020.
According to Donald Trump, China has committed to buying $40 to $50 billion worth of US food products each year, whereas in 2017, before the start of the trade war, Chinese purchases had only risen to $24 billion. Over twelve months, at the end of August 2019, we were at $93.2 billion…
Never since 1909 has the United States had such limited winter wheat plantings. In Texas in particular, cotton has taken preference.
According to Oil World, global production of fats (plants and animals) in 2019/2020 will be 242 Mt, up 4 Mt. Palm oil alone represents 76 Mt, a new record, but lower growth than in previous years due to Malaysian stagnation.
The nickel market is rife with rumours that Chinese stainless steel maker Tsingshan is holding 70,000 to 90,000 tonnes of metal (valued at $1.4 billion) above its needs.
World steel production declined in September by 0.3% to 151.5 Mt. Chinese growth was only 2.2% at 82.77 Mt ahead of India at 8.96 Mt (+1.6%). Over nine months, global production remained up by 3.9% to 1.39 billion tonnes. According to Worldsteel, global steel demand will increase by 3.9% to 1,775 Mt in 2019 and by 1.7% in 2020 to 1,806 Mt. The Chinese demand in 2019 should increase by 7.8% and should exceed 900 Mt.
The World Bank estimates that by 2050, lithium demand will increase by 965% to 415,000t, cobalt by 585% to 644,000t, indium by 241%, and nickel by 108%. But who can anticipate what the technologies used in 2050 will be?
By mid-October 2019, China had purchased 201 million tonnes of soy, 700,000 tonnes of pork, 700,000 tonnes of sorghum, 320,000 tonnes of cotton and 230,000 tonnes of wheat. The figure given by the Chinese for pork is more than double that published by the USDA (300,000t) and does not fit with overall Chinese pork import data over the first nine months of 1.3 Mt. In addition, China has granted exemptions for an additional 10 Mt of soybean imports.
In 2019/2020, according to the CONAB, Brazil with a production forecast of 120 Mt will become the world’s largest soybean producer exceeding the drought-affected United States, which will produce only 96 Mt according to the USDA.
The ICSG almost doubled its estimate of the world copper market deficit from 190,000 tonnes in May to 320,000t. World consumption should only increase by 0.3% in 2019, but mining output will decrease by 0.5%. Refined metal production will only grow by 0.5%, with a drop of 2.5% outside China.
Soaring oil freight rates are starting to impact the competitiveness of US oil. It costs $5 a barrel to ship oil from the Gulf of Mexico to North Asia whereas it’s only $1.25 for Middle East oil. WTI arriving in Houston costs only $2.61 less than Brent (data from mid-October 2019). By mid-October, rates for chartering a Gulf super-tanker could exceed $20 million or more than $10 per barrel. Thereafter, the rates go down a little. The highest tension is on the VLCCs. Of 700 such ships in the world, 60 are stationary in order to be fitted with ‘scrubbers’ made mandatory by the IMO rules and 26 are affected by US sanctions.
Russia has become the world’s third largest exporter of coal behind Australia and Indonesia. With a FOB cost of about $41 to $45 a tonne, Russia is by far the most competitive source, especially to Asia.
All natural gas liquefaction terminal projects for the export of LNG to the United States represent a capacity of 300 Mt, equivalent to current world trade! Some of these projects, however, are challenged by market conditions.
JP Morgan, Goldman Sachs, Citibank and BNP Paribas, together with Shell have overseen the oil export hedge program in Mexico for 2020 to the tune of $1 billion on a basis of $49 a barrel for Mexican crude oil.
According to Reuters, OPEC produced 29.59 mbd of oil in October, 690,000 bd more than in September. At 9.9 mbd, Saudi output is up 850,000 bd.
In August, US oil production broke a new EIA record of 12.4 mbd. There was also a new record for natural gas production at 104.2 billion cubic feet.
President Jair Bolsonaro wants Brazil to join OPEC! In August, Brazil produced 3.1 mbd of oil.