Data-Driven Commodity Research, The Commodity Report

The Commodity Report

Data-Driven Commodity Research

A unique newsletter about commodities and macro analysis in a weekly format.

Commodities

<ul><li>Fundamentally speaking, it was nearly a perfect week for commodities as much major news aligned during the week after China eased some Covid restrictions, raising hopes of a demand recovery in the world’s second-biggest economy. </li><li>Almost all major commodities traded higher following China’s move to reduce the time that travelers and close contacts of infected people must spend in quarantine, a significant amendment to the Covid Zero policy.</li><li>China’s loosening of restrictions strengthened a rally that began on Wall Street, with risk assets rising after US inflation slowed.</li></ul>

Fundamentally speaking, it was nearly a perfect week for commodities as much major news aligned during the week after China eased some Covid restrictions, raising hopes of a demand recovery in the world’s second-biggest economy. Almost all major commodities traded higher following China’s move to reduce the time that travelers and close contacts of infected people must spend in quarantine, a significant amendment to the Covid Zero policy.China’s loosening of restrictions strengthened a rally that began on Wall Street, with risk assets rising after US inflation slowed.

<ul><li>Manufacturing Sentiment in the US continues to decline. US manufacturing neared stagnation in October as orders contracted for the fourth time in five months, while an index of prices paid fell to a more than two-year low.</li><li>As most commodity groups are heavily correlated with the ISM data, this will provide significant headwinds over the next six months or so, according to our leading indicators.</li><li>By now, there is quite a divergence in industrial production in general. We expect industrial production to crash over the next few months, which will continue to be a nasty factor for commodity demand.</li></ul>

Manufacturing Sentiment in the US continues to decline. US manufacturing neared stagnation in October as orders contracted for the fourth time in five months, while an index of prices paid fell to a more than two-year low.As most commodity groups are heavily correlated with the ISM data, this will provide significant headwinds over the next six months or so, according to our leading indicators.By now, there is quite a divergence in industrial production in general. We expect industrial production to crash over the next few months, which will continue to be a nasty factor for commodity demand.

SPAC Deep Dive, subSPAC

subSPAC

SPAC Deep Dive

Each week we’ll identify and break down for you SPACs that are capturing market share and making an impact.

Thematic (Sector/Industry)

<ul><li>Commodities have had a wild rally over the last two years, incentivising miners to go public amidst heightened investor enthusiasm.</li><li>Despite this, markets have slept through the announcement of Glencore’s CSA Copper Mine being spun off through a $1.1 billion SPAC merger with Metals Acquisition Corp.</li><li>The deal price implies a 4.5x multiple of 2022 EBITDA, which is a breath of fresh air in SPACland, where valuations have hovered at many multiples of sales that are three or four years out.</li></ul>

Commodities have had a wild rally over the last two years, incentivising miners to go public amidst heightened investor enthusiasm.Despite this, markets have slept through the announcement of Glencore’s CSA Copper Mine being spun off through a $1.1 billion SPAC merger with Metals Acquisition Corp.The deal price implies a 4.5x multiple of 2022 EBITDA, which is a breath of fresh air in SPACland, where valuations have hovered at many multiples of sales that are three or four years out.

Can CSA SPAC Its Way Through a Commodity Crash?

<ul><li>Respect the trend - inflation continues to trend down but also continues to surprise on the upside in terms of analysts’ expectations.</li><li>Getting inflation back into the target corridor will be a slow and painful process as inflation is broadly driven by the components of shelter, transportation services, medical services, and not only food and energy, which get the most headlines in the newspaper.</li><li>On the other hand, we're on the right track, as the YoY comparisons have declined since July.</li></ul>

Respect the trend - inflation continues to trend down but also continues to surprise on the upside in terms of analysts’ expectations.Getting inflation back into the target corridor will be a slow and painful process as inflation is broadly driven by the components of shelter, transportation services, medical services, and not only food and energy, which get the most headlines in the newspaper.On the other hand, we're on the right track, as the YoY comparisons have declined since July.

<ul><li>The benchmark, CRB Commodity Index, ended the week -0,5% lower EU CO2 Price to the moon The price of carbon in the EU’s emissions trading system hit a new all-time high on Friday.</li><li>The key reason for the rise was the surge in gas contracts for delivery next year.</li><li>That is making it more likely that increased burning of coal for power generation as an alternative to gas is more than a short-term blip to get the EU through a difficult winter.</li></ul>

The benchmark, CRB Commodity Index, ended the week -0,5% lower EU CO2 Price to the moon The price of carbon in the EU’s emissions trading system hit a new all-time high on Friday.The key reason for the rise was the surge in gas contracts for delivery next year.That is making it more likely that increased burning of coal for power generation as an alternative to gas is more than a short-term blip to get the EU through a difficult winter.

United States

Copper is a chemical element with symbol Cu (from Latin: cuprum) and atomic number 29. It is a soft, malleable and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a reddish-orange color. It is used as a conductor of heat and electricity, as a building material and as a constituent of various metal alloys, such as Sterling silver used in jewelry, cupronickel used to make marine hardware and coins and constantan used in strain gauges and thermocouples for temperature measurement.

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Copper (COPPER COMDTY)

The Commodity Report #77

Fundamentally speaking, it was nearly a perfect week for commodities as much major news aligned during the week after China eased some Covid...

The Commodity Report

The Commodity Report #76

As most commodity groups are heavily correlated with the ISM data, this will provide significant headwinds over the next six months or so,...

The Commodity Report

Can CSA SPAC Its Way Through a Commodity Crash?

Commodities have had a wild rally over the last two years, incentivising miners to go public amidst heightened investor enthusiasm.

subSPAC

The Commodity Report #73

Respect the trend - inflation continues to trend down but also continues to surprise on the upside in terms of analysts’ expectations.

The Commodity Report

The Commodity Report #65

The benchmark, CRB Commodity Index, ended the week -0,5% lower EU CO2 Price to the moon The price of carbon in the EU’s emissions trading system...

The Commodity Report

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