A quick update on the monthly rate of change for commodity prices that matter down under.

As you know, I look at spot prices to see what’s happening because the incremental/marginal tonne (versus offtake pricing at volume) is more instructive on trend. Also, to smooth out AUD/USD fluctuations as best as possible, I look at the SDR to smooth foreign exchange effects as much as possible. One day I might be using Bitcoin as the denominator, but that’s a story for another decade.

What’s the TL:DR?

Well, interestingly, pretty much all commodities took a hit in December other than for Bulk and Base metals.

Bulks (iron ore and the coal complex)

Bulk commodities (indexed) rose in December by 10%, making it the fastest monthly rate of change since March.

While it will still take time to claw back all of the decreases since April, it’s notable.

I wonder if it continues as China’s centralised CMRG gets down to business in 2023?

Base Metals (Nickel, Copper, Aluminium, Zinc, etc)

Bases were up 2% month on month.

But like Bulks, these metals have nowhere near recovered from the punishment they took since April and there’s still a lot of ground to cover to get back to their once lofty heights.

Remember a 50% fall requires a 100% rise to get back to square. That’s also a good bit of math to keep in mind if you’re sitting on 70% losses in your growth tech portfolio. Do the math!

Last month after reading the November commodities index print, I wrote:

In the short term we may see some higher pricing in iron ore and copper as the zero-COVID relaxation sentiment causes more bullish behaviour and support levels, but further out than that is just a guess.

I think we’ve seen that sentiment, but we’re still only guessing.

Meanwhile and as predicted, Lithium’s got the wobbles, but precious metals are shining (as a result of upcoming debasement from a central bank pause and potential pivot this year) after many months of consolidation. It may be a false dawn if Powell comes out with more hawkish speak (which he might) but it’s starting to shape up as a good bet. And how about Silver’s rally?

And that all probably means gold bugs and their brokers will soon be on the hustings rattling the tin for the next exploration program, drill campaign, mineral development and/or big (or small) deal.

And so the beat goes on in our little piece of paradise on the banks of the Swan River where we wait to the see full effect of the CMRG reveal itself in the numbers.

Welcome back to the market with a wish for a healthy and prosperous 2023 for you and your families, from yours truly.

Mike