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- Two days following China's decision to cut interest rates for the first time in two years, and a day after PBOC Governor Liu said the central bank will "open the monetary policy tool box wider, maintain stable overall money supply and avoid a collapse in credit" metals prices are soaring.
- For decades China has been the leading source of metals demand growth, and a booming housing market has been the leading source of metals demand within China; however, with home prices falling for four months straight and several housing developers teetering on the brink of default, global commodity markets have watched closely for any signs of inflection.
- The PBOC actions and comments, paired with relatively tight supply conditions and incremental medium-term demand from the energy transition have pushed many metals to new highs - nickel reaches a new high, up 5% today and 10% from ytd lows (OTCPK:NILSY), copper at all time highs is up 2% today and 10% from ytd lows (NYSE:FCX), metallurgic coal is up 1% today and 24% from ytd lows (NYSE:HCC), and even the hated iron ore is up 1% today and 15% from ytd lows (NYSE:VALE).
- Goldman has been on the front-foot, calling for a multi-year bull market in commodities, though the Bank's calls have focused less on China demand and more on the supply side of the equation, where already anemic capex in the sector was decimated by the pandemic.
- Global miners like BHP (NYSE:BHP) and Rio Tinto (NYSE:RIO) stand to benefit from a broad-based rally in metals prices, with both stocks up ~15% YTD; however, both stocks are down on a one-year trailing basis, both sport a ~10% dividend yield, and both suffer from Wall Street apathy.