Commodities Roundup: Gold in India, Rising Nickel Prices and Talking Tariffs

For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.

From price movements to policy decisions, we scour the landscape for what matters. This week:

Indian Gold Prices

According to MetalMiner’s Sohrab Darabshaw, analysts forecast a rise in Indian gold prices this year, possibly aided by increased purchasing power in the country.

“What may push up gold consumption is more purchasing power in the hands of Indians this election year, as the present government unveils policies with an eye on the polls,” he explained.

“Much of this growth is anticipated from the country’s rural sector. Almost all of India’s gold is imported, and this incoming movement has been affected by the Indian government’s efforts to restrain its trade deficit by measures to discourage investors who used gold to evade taxes.”

Glencore in Congo

According to a Bloomberg report earlier this month, miner Glencore has plans to cut its workforce at its Mutanda copper and cobalt mine in the Democratic Republic of the Congo (DRC).

Per the report, the miner aims to boost its investment in technology geared toward cobalt extraction from sulfide deposits, rather than oxide ore.

Talking Tariffs, Part 3

MetalMiner’s Lisa Reisman penned the third and final part of a three-part series on tariffs that surveyed the history of tariffs, mainstream coverage of them and the role of tariffs with respect to China.

Of course, the issue of tariffs — particularly in the context of the Trump administration’s Section 232 steel and aluminum tariffs imposed last year — is a complicated one. As such, Reisman notes when it comes to mainstream discourse about tariffs, it is important to strive to know what we don’t know.

“It’s easy to glob onto the mainstream trade war discourse and assume the widely circulated studies must serve as the whole truth,” she writes.

“The truth, however, requires the media and the public to acknowledge real anti-tariff media bias, the actual overcapacity conditions that led to the imposition of Section 232 in the first place, and the impacts measured post-tariff as reported by those that actually, as opposed to theoretically, felt the impact (e.g. downstream manufacturing organizations).

“The ‘war’ on trade requires all of us to dig deeper and perhaps seek to learn what we don’t know.”

Nickel on the Rise

As MetalMiner’s Belinda Fuller explained, MetalMiner’s Stainless MMI surged 11.5% this month, largely on the back of rising nickel prices.

“LME nickel prices surged early in 2019 after a seven-month downward trend and gained momentum during the second half of January and into early February,” Fuller explained.

“Nickel hit a resistance point at around $13,000/mt when daily volume turned negative again. This price point is significant; once the price broke through this psychological price point last year, $13,000/mt became the support price until strong downward pressure hit prices in early September 2018.”

What’s Going on with Aluminum?

Typically, supply and demand are significant drivers in the price of a metal. However, as MetalMiner’s Stuart Burns explained, the aluminum price has not risen as one would expect given the global aluminum deficit.

As is often the case, what happens vis-à-vis the Chinese economy — and how ongoing U.S.-China trade talks progress in the coming weeks — will have a major impact on the aluminum price this year.

In short, keep an eye on China’s aluminum export levels.

“Positive demand growth and continued constrained supply suggest a lift in prices this year is in the cards. However, rising Chinese exports remain a worry,” Burns writes.

“If the domestic market is not absorbing this tonnage and the SHFE price remains depressed due to oversupply, then the deflationary impact of those exports is unlikely to simply go away.”