What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

(Bloomberg) -- We live in interesting times. Just as investors weigh up the U.S.-China trade punch-up, markets need to adjust to a whole new front. U.S. sanctions against Russian companies and oligarchs are upending aluminum. The metal’s surging, while shares in United Co. Rusal are in the grinder. What should we expect this week? And what does it mean for Glencore Plc?

On top of that, there are two gatherings that’ll shape the big-picture agenda. In Asia, China’s leadership, including President Xi Jinping, will deliver their take from the Boao Forum for Asia. And in Peru, heads of state from across the Americas will gather in Lima for a summit that may provide a backdrop for a breakthrough on fraught Nafta talks between the U.S., Mexico and Canada.

Beyond that lot, trade tensions still feature prominently: the copper industry meets in Chile for Cesco week to assess the outlook; agricultural investors will pore over snapshots of supply and demand from the U.S. and Brazil; and the world’s oil heavyweights congregate in India just before OPEC and the International Energy Agency offer their latest assessments.

Davos, Without Snow

With the spotlight on China’s leadership as trade tensions spike, investors will track the tenor and substance of remarks coming out of this week’s Boao Forum for Asia in Hainan, the local equivalent of Davos. President Xi’s going, together with other senior officials and invitees including International Monetary Fund head Christine Lagarde. The fight with the U.S. carries implications for materials across the board, especially soy, metals and gold.

What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

Before the meeting, Foreign Minister Wang Yi signaled there’d be details on new reforms, including measures to further open the second-largest economy. After the talking’s done -- with Xi’s address due on Tuesday -- mainland trade data on Friday will give a snapshot of how commodity demand stacked up over the first quarter. Watch for the prints on oil, iron, steel, copper and soybeans.

Nafta Deal or No Deal?

A gathering of heads of state and business leaders in Lima, Peru, this week may be the stage for some good news on trade. The U.S. administration is said to be pushing for a preliminary Nafta deal to announce at the Summit of the Americas on Friday or Saturday. President Donald Trump has said that the exemption to steel and aluminum tariffs granted to Canada and Mexico will expire May 1 if he’s not satisfied with the Nafta talks.

What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

On Thursday, Barrick Gold Corp. president Kelvin Dushnisky and Freeport-McMoRan Inc. chief executive officer Richard Adkerson participate in a series of CEO panels. Investors, traders and analysts will be eager to learn how executives are navigating the U.S.-China trade friction and how they would assess impact on demand for metals.

Bear Baiting

Global trade tensions extend well beyond the U.S.-China standoff, with Washington’s robust new sanctions against Russian tycoons, companies and allies of President Vladimir Putin roiling markets. Push-back from the Kremlin will come: Russia’s Foreign Ministry is working on measures, ministry spokeswoman Maria Zakharova said on a state television channel.

What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

The fallout is hitting aluminum given the importance of United Co. Rusal, the world’s biggest producer outside China, and billionaire owner Oleg Deripaska. Rusal’s initial assessment is the sanctions may result in technical defaults, and it’s likely the moves will hurt the company’s business. Aluminum is rallying in London on Monday, extending Friday’s gains, while Rusal stock plunges. All that may pose a challenge for Glencore, one of Rusal’s top holders.

CESCO Meet

Over in Santiago, top mining executives, traders and investors will gather for the annual Cesco copper week, with talking points spanning the global trade brawl to labor tensions. The market is enduring something of an identity crisis, with its short-term outlook dimmed by large stockpiles and the U.S.-China trade showdown that threatens to undermine demand.

What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

Strikes, or the lack thereof, will also likely feature in conversations among the attendees. Prices climbed last year after a 44-day strike at BHP Billiton Ltd.’s Escondida mine in Chile disrupted supply, helping push the market into a deficit. While this year is poised to be the busiest on record for workers’ contract negotiations, there’s growing optimism that companies and unions could reach an agreement, avoiding disruptions.

WASDE and Conab

Soybeans have been a target of China’s planned retaliation against the U.S. tariffs, derailing the oilseed’s rally this year. Is the worst yet to come for American growers? The U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates, known as WASDE, may provide some clues. The data is due on Tuesday, the same day Brazil’s crop agency Conab releases its soybean and corn outlook. The U.S. and Brazil compete against each other in supplying grains and soybeans to the Asian nation.

What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

Traders will scrutinize both estimates for exports for clues on what to expect from the tensions between the U.S. and China. The brewing trade war also has roiled grain and livestock markets and it’s likely volatility will persist. A pork tariff issued by the Chinese government, and the threat of similar taxes on soybeans, have led to an uncertain view for American agricultural shipments, just as farmers gear up to plant the coming season’s crops.

Oil’s Biggest Guns

This week oil traders will watch out for reports from two of the industry’s most influential institutions -- OPEC and the International Energy Agency. The pair will publish monthly reports with their latest forecasts for supply and demand in 2018, which may be provide clues which way prices are headed.

What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

The snapshot from OPEC, which has been curbing supply to reduce a glut comes on Thursday, with the IEA assessment due the next day. Also in the focus this week, the market’s biggest guns including Saudi Arabia’s Energy Minister Khalid Al-Falih, OPEC Secretary-General Mohammed Barkindo and IEA Executive Director Fatih Birol will gather in New Delhi for International Energy Forum.

Bulls Versus Bears

Hedge funds have been increasing their net-short position on raw sugar and traders aren’t optimistic on the sweetener’s outlook either, as a global glut persists. Half of the analysts and traders surveyed by Bloomberg were bearish, the most since December.

What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy

Sentiment was also negative on soybeans, while traders and analysts were split on natural gas and gold. Terminal subscribers can see the survey stories here.

For the Diary

MONDAY, APRIL 9

  • Cesco Week copper conference in Santiago, through Friday, with speakers from producers including Anglo American Plc, Rio Tinto Group
  • Australia’s Energy and Resources quarterly update
  • John Bolton takes office as U.S. national security adviser
  • Bloomberg New Energy Finance hosts Future of Energy Summit in New York City. Executives from BP Plc, SunPower Corp., Southern Co., plus Bloomberg founder Mike Bloomberg, set to speak. Through Tuesday
  • Japan Atomic Industrial Forum Nuclear Power Conference in Tokyo, participants include Tokyo Electric Power Co. Through Tuesday
  • USDA data for grain-export inspections
  • LDC Gas conference in Atlanta, through Wednesday
  • The International Monetary Fund updates its World Economic Outlook
  • EARNINGS: Baoshan Iron & Steel Co., Williams Cos.

TUESDAY, APRIL 10

  • The 16th International Energy Forum in New Delhi, through Thursday. Speakers include Saudi Arabia’s Energy Minister Khalid Al-Falih, OPEC Secretary-General Mohammed Barkindo, Russia’s Energy Minister Alexander Novak, IEA Executive Director Fatih Birol
  • USDA’s World Agricultural Supply and Demand Estimates report
  • China’s Ministry of Agriculture’s China Agricultural Supply & Demand Estimates report
  • China National Grain and Oils Information Center monthly supply and demand report on soy and corn
  • France’s Agriculture Ministry gives estimates for 2018 crop areas
  • Malaysian Palm Oil Board data on March stockpiles, exports, production
  • Coaltrans China in Beijing, through Wednesday
  • Alrosa PJSC March sales
  • S&P Global Platts Global Power Markets Conference in Las Vegas, through Wednesday

WEDNESDAY, APRIL 11

  • LNG Asia Pacific Congress in Singapore, through Thursday
  • 19th China Oil Trading Conference 2018 in Shanghai, through Thursday. Speakers from Sinopec, National Development and Reform Commission
  • Eni SpA CEO Claudio Descalzi speaks at Atlantic Council, Washington
  • Federal Open Market Committee releases minutes of its March meeting
  • EIA crude oil inventory report
  • EARNINGS: Barry Callebaut AG

THURSDAY, APRIL 12

  • OPEC Monthly Oil Market Report
  • U.S. Energy Association holds annual policy forum.
  • USDA weekly figures for crop net-export sales
  • Updated La Nina forecast from U.S. Climate Prediction Center
  • EARNINGS: Tongling Nonferrous Metals Co.

FRIDAY, APRIL 13

  • Summit of the Americas, Lima. U.S. President Donald Trump plans to attend, and he’s pushing for U.S., Mexico and Canada to reach deal in principle on Nafta that can be announced. Through Saturday
  • China’s General Administration of Customs preliminary commodity & energy trade data for March, including crude, copper, iron ore, soybeans
  • IEA monthly Oil Market Report
  • ICE weekly commitments of traders report for Brent, gasoil
  • Baker Hughes weekly rig count report
  • Vale SA annual general meeting

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