Newcastle coal futures pushed through US$400 a tonne this week as the supply deficit narrative continues to gather momentum.
This week in coal headlines:
India relaxes environmental compliance rules for coal mines to ramp up production amid soaring temperatures prompting higher energy demand
Coal makes up approximately two-thirds of India's energy needs
Shanghai begins lifting lockdowns, still in its early days but an encouraging sign for industrial activity
EU plans to burn more coal to move away from Russian gas and oil
The European Commission said the EU would use 5% more than previously expected over the next 5-10 years
Gold seems to have found a potential bottom at US$1,810 after an -8.5% tumble from US$1,980 a month ago.
The bounce off US$1,810 this week was broadly in-line with the US dollar topping out and the US 10-year Treasury yield falling below 3.0%.
Gold does not bear any yield, and therefore competes with interest-bearing assets such as bonds for demand. The pullback in US treasury yields has helped bring buying back into the yellow metal.
The market seems to have shifted its interest from the fear of higher interest rates to the threat of slower economic growth and a potential recession. The shift has driven yields lower and helped stabilise weak gold prices.
Shanghai nickel futures soared more than 6% to 215,400 yuan a tonne (~US$32,100) on Thursday.
According to the Shanghai Metals Market:
Downstream demand for stainless steel was weak due to the impact of the pandemic and lockdowns, market transaction remain thin
Approximately 70% of global nickel consumption is used to create stainless steel
Steel mills have been quite cautious when purchasing raw materials
Nickel supply issues in the Philippines was the main catalyst behind the price spike on Thursday
Overall, it appears that nickel prices have managed to stay elevated but the demand side remains subdued due to persistent pandemic related issues in China.
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