Despite decreasing capacity utilization rates, China still continues to add new capacity. Chinese steel companies have an incentive to run the plants at higher capacities.
Currently, China dictates the global commodity markets. China’s aluminum consumption increased substantially at the turn of this century. Chinese demand grew 16% since 2000.
Two of the major raw materials for aluminum production are bauxite and electricity. If you look at the top aluminum exporters, they have at least one of these materials in abundance.
The aluminum smelting capacity decreased by more than 35% since 2000. Aluminum consumption in the US decreased ~25% during this period.
China is the biggest consumer. It consumes almost half of the aluminum that’s produced globally. However, this isn’t surprising. China is the biggest consumer of most industrial commodities.
The Gulf Cooperation Council (or GCC) accounts for ~8% of global aluminum production. The GCC is an economic alliance. It includes six countries in the Middle East.
Investors like aluminum. They can play the aluminum industry by trading aluminum on commodity exchanges. Investors can also investment in aluminum plays.
There’s visible pressure on gold prices in the short to medium term. Though physical demands from China and India are strong, that alone is probably not enough to alleviate the pressure from the strengthening U.S. dollar and lower crude oil prices.
Year-to-date, 1,814 tons of gold have been withdrawn through the SGE. This indicates a strong physical demand for gold in China.
Overall gold holdings in ETFs were 1,611 tons as of December 4, 2014, which is its lowest value in five years. Recent outflows suggest that investors might be moving into other risky assets such as equities.
Cheaper oil means lower inflation. This means gold should be affected negatively, as it’s usually considered a hedge against inflation.
Any inching upward of PCE means the Fed is inching closer to an interest rate hike. As long as the Fed doesn’t reach its target of 2% core PCE inflation, it will let the inflation rate run.
Improved U.S. jobs data have pulled forward market expectations for the Fed to start hiking interest rates. This information offers a look at the future direction of gold prices and ultimately gold-backed ETFs.
Consumer spending in the United States rose seasonally adjusted 0.2% month-over-month in October. Economists expect consumer spending to pick up as people start to spend their windfalls from falling oil prices.
The Thomson Reuters/University of Michigan’s final November 2014 reading on the overall index on consumer sentiment came in at 88.8, its highest reading on a final basis since July 2007.
It’s important to track the U.S. purchasing managers’ index (or PMI) while keeping an eye on the manufacturing index for other economies, usually the ones that impact the U.S. dollar the most.
The U.S. dollar reached fresh multi-year highs as a stronger-than-expected November U.S. jobs report was released by the U.S. Bureau of Economic Analysis (or BEA).
The vote is a blow to the Save Our Swiss Gold campaign that had the hopes of moving Switzerland back to a gold standard
Investors usually view gold as an inflation hedge. As a result, gold prices are influenced by several related factors.
Cliffs wants to be a US-based iron ore producer. Long-term contracts with large steel companies make the revenues more sustainable and less vulnerable to volatile seaborne iron ore prices.