I think that even without news making headlines... you could still easily take the rhodium price as a solid proxy for other things... as addressed earlier re the iron price. The key driver of rhodium is the same as that for platinum and palladium... its industrial use also being in catalytic converters... in small enough increments to make its uses relatively price insensitive.
The prognostication from Johnson Matthey re platinum production from South Africa might play a role in suppressing rhodium prices, if you think the faster pace of mining will help relieve supply shortages. But, rhodium has been in a significant supply deficit for the last three years... the problem only becoming more acute recently as prices spiked to the highs... so going back to the pre-pandemic pace of mining in the platinum mines... on a forecast basis... wouldn't seem likely to relieve the supply problem all by itself...
What that has to mean... is that demand is down enough that prices are impacted... as the future restoration of mining in South Africa can't make more rhodium appear, now, before that future ramp in mining happens...
And, that's consistent both with the iron story, and with other things... showing that auto production is likely not remotely close to keeping pace with what the news has been saying about the economic rebound in China... just as steel manufacturers expectations clearly ran WAY out ahead of real demand growth... so too that is true in autos ? Its a known that chip shortages continue to hobble autos... Teslas are said to be piling up outside the factories... waiting for critical parts.
Separately, hearing that deliveries that were expected "now" and into June... are probably not going to happen before September... if then... Corroboration coming in the form of reports that dealers have empty lots... no new pickup trucks... while prices of used trucks are spiking... so that you can sell your used truck, now, for more than the MSRP price of a new one...
Saw a bit from JPM on youtube tonight... vaguely handwaving that Covid resurgences are occurring around Southeast Asia...which are interfering with supply chains... Well known that India had such a spike... heard vaguely that might the case in Taiwan currently... but, also heard mention that Taiwan might be running into infrastructure limiitations that are hobbling resurgent growth... apparently an issue with power shortages.
The interconnected global economy... doesn't work when the various parts operate at differential speeds... and only intermittantly...
China was first in and first out of the Covid... the U.S. was second out... but that now results in the China and the U.S. "ready to go"... but unable to go... because of the combination of supply chain disruptions... and demand disruption... South Africa ramping up platinum production... will run into the same problem as China did with iron... that being able to produce it doesn't work to make the market require all you can produce... as having plenty of platinum doesn't resolve chip shortages... or resolve problems in the ports that have ships stacking up like cordwood... while container rates continue to spike... and issues with seafarers remain unresolved... imposing another systemic bottleneck.
There are a couple of bottom lines... first being that the forecasts for rapid synchronoous global economic recovery "now that the pandemic is over" are wrong for two reasons... because the pandemic isn't over... and because even if it were, that doesn't , and can't, restore the prior synchronization in the flow in goods (and services) necessary to enable the economy to function smoothly...
That also means... "transitory" really isn't and can't be as short term an issue as they'd like you to think...
It means global economic recovery is going to be MUCH slower to occur than expected... that as it occurs it will be restored initially at a lower level than expected... as supply chain disruptions will continue... and transprotation bottlenecks will continue... and will hobble the ability to restore prior function at baseline...
That also means that inflation will accelerate... in real terns, in non-transitory fashion... both as a function of the lack of ability to meet resurgent demand at baseline. first... but also as a byproduct of a massive overshoot in the "stimulus" provided... way too much $ created, way too soon... impacting both on the consumer side, with free money goosing demand and driving asset prices higher... and on the production side... the too easy money driving bubbles in investment and capacity growth...
But, at the same time... the implementation of the "green growth" mandates imposes parallel and interfering conflicts in needing, at the same time, not only an attempted restoration of "what we had that used to work"... but also the creation of a whole new set of supply chains and expanded capacity to meet the new requirements... The two projects compete with each other... disrupting the ability of either one to work... and thus imposing on the whole an extended timeline... requring a base case in a 3 to 5 year time horizon before "transitory" demand can be met by "real" supply that has yet to be created...
Copper and silver the most obvious... lithium, they say... the eggs for the new omlet that's been ordered... in spite of the various regulations outlawing chickens. Gold, too, not because of hot money fueling a boom in development of supply for future industrial use, but because of the financial risks being imposed... that are increasingly being realized already...
But, that picture and future focused timeline, also, depends on "everything going right"... when it should be clear enough already that the odds of everything going right are slim to none... given that they're not
"going right" right now... and no one is addressing that with solutions... rather than working hard to avoid noticing those things it is inconvenient to notice... just hoping it all works out by itself... along with a couple trillion more in spending to prod it along...
Most obvious among the risks... is that "everything going right" also appears it would depend on the wheels not coming off on the way there... while the odds of getting through the next three to five years without the wheels coming off... is looking like a bet with pretty long odds... given the financial system has been broken since 2008, and not only was not ever fixed...but has been made vastly worse over time...
The global markets are broken... and they are not going to fix themselves... Worse still, those working at "fixing it" now... don't understand what's broken, or why... and don't know what they're doing... and they're making it worse. Trade wars... a symptom of having broken the system... only accelerate the impulse in attempting to fix it by breaking it more... Currencies, and financial conflict... ?
The pandemic "going away" (but not really) is also not a path that has your problems evaporate like a mist on a hot day in the desert... while it has been used as an excuse to mask the problems... fostering the error in belief that the pandemic going away will be the cure for all that's wrong...
And, because of that series of errors... a huge wave of malinvestment has occurred... stimulus that can't possibly work being wasted... and bubbles being inflated bigger... all out of synch with reality...
And, the debt keeps growing... as the "recovery" keeps fading into the distance... where a financial crisis becomes increasingly unavoidable... the more the "booming economy" being depended on to dig out of it... appears less and less likely to happen... in the positive sense of a "boom" in the economy...
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