Commodities, Coal Prices, FED and Iron Ore
US oil imports: the EIA reported that US oil imports jumped to a four year high of c.9MMbbl/d during the week ended 28 October due to delayed cargoes arriving at the ports after the hurricane Matthew affected the shipments earlier in the month. Protests at Canadian pipelines has further added the US seaborne import requirement.
China cuts coal prices: China Coal Energy Group has cut the coal prices by CNY10/t yesterday on reports of potential easing in supply tightness. China’s state planner NDRC is also reported to be meeting with other miners today to discuss the coal price stability in upcoming winter months. Chinese efforts on coal price stability risks halting the recent Bull Run in coal prices.
Fed keeps policy rates on hold: Fed has kept its policy rates unchanged in its latest meeting with little in the policy statement to suggest that December hike is certain. Although the market discounts nearly 67% of odds for the December hike, the upcoming election and plenty of economic data to be released in next few weeks could significantly change the probabilities going forward. Lower Fed rates likely to keep supporting precious and base metals prices.
Vale iron ore output: At the LME week, Vale reported that it could curb 20-25m tonnes of higher cost iron ore production to improve margins. The global iron ore market is facing a big surplus amid rising supply from Australia and Brazil; and Vale’s comments likely to lower some of these fears.