Powell And Metals. Manic Metals Report 06/13/2024

Fed Chair Jerome Powell single handedly smashed global metal markets after the Fed showed concerns about sticky inflation yet after a soft CPI and the PPI that most metals traders thought could be soft because of the drop in platinum aluminum copper could we be near the bottom?

The CPI saw an unchanged reading in the consumer price index last month followed by a 0.3% increase in April and it was the softest reading since July 2022.  Reuters said that the CPI has been trending lower since posting solid readings in February and March.
Yet even after we saw a very soft CPI the Fed said that it’s only seeing modest further progress towards its 2% inflation goal.

The proclamation that the Fed official see the medium interest rate at 5.1% at the end of 2024 took away the hopes of potential multiread layer rate cut going into the end of the year.
Yet will after a very soft PPI will the Fed reverse course and in their next meeting suggest that rate cuts are back in play.  The PPI fell 0.2% for the month, and that reversed a 0.5% increase in April and compared to the Dow Jones estimate for a 0.1% increase.
Metals traders are not surprised in the PPI price drop as they have seen a correction in aluminum copper platinum and platinum.
I still believe there will be a rate cut in November before the election and that is looking more likely after today’s producer price index.
It is 800 o’clock, do you know where your metals are?

Bloomberg News Reports that “A giant state-owned Chinese commodities trader is nursing losses after a shipment of copper from Russia worth nearly $20 million went missing, reigniting fears over fraud in the often-secretive market for buying and selling raw materials.
Wuchan Zhongda Group Co., which had sales of 580 billion yuan ($80 billion) in 2023, bought 2,000 tons of refined copper from a Russian smelter that should have been delivered last month. It never made it to port, according to people with knowledge of the incident.
Instead, the metal was listed as much cheaper granite and has likely ended up in Turkey, according to the records of the shipping line that handled the consignment, the people said, declining to be identified discussing a sensitive matter.”
Russia is one of the world’s biggest copper suppliers and China is the largest consumer. Western sanctions imposed on Russian commodities in the wake of the invasion of Ukraine are expanding commerce between the two nations, with Chinese buyers enjoying discounts and other favorable payment terms to keep trade flowing.

The risk is that advantageous conditions at a time of high metal prices could tempt Chinese traders into deals when the relationship with the supplier isn’t well established. Now, Chinese firms rattled by the most recent incident have started conducting internal checks on their own contracts with counterparties, according to the people.
Is climate change affecting the gold market?  Probably not but Bloomberg did report that Gold Fields Ltd. fell the most since February after saying the early onset of winter in Chile has curbed the ramp-up of its key expansion project, forcing the miner to cut its output guidance for this year.
The gold producer’s stock slumped as much as 8.6%, the biggest drop on Johannesburg’s 122-member All-Share index. Gold Fields trimmed its production guidance to a range of 2.2 million to 2.3 million ounces. Icy weather froze piping at the Salares Norte process plant, before it was restarted, Gold Fields said in a statement on Thursday. “Commissioning and ramp-up during the winter period are expected to continue to be challenging, creating uncertainty on production levels during the winter months,” it said.
Gold Fields started production at Salares Norte — a $1.2 billion open-pit mine in Chile that experienced delays caused by severe weather and labor shortages — in March. The project — about 4,000 meters (13,000 feet) above sea level in the Andes mountains — is the main driver of the company’s plan to increase output.’
So that white stuff in the mountains is snow?
The outlook for metals is looking very good this morning on the precious side because jobless claims hit a nine-month high and that’s going to reverse some of the negativity that we got from the Federal Reserve our expectations is we should start to build some momentum on the upside.

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