1. China gobbles up commodities
– China imported roughly 13 mb/d of oil in June, a record high.
– China also imported a record high 656,000 tons of copper last month. “This shows that China took advantage of the low copper prices in the spring (for a time copper was priced below $5,000) to buy up large quantities on the world market,” Commerzbank said in a note.
– But tensions between the U.S. and China are putting downward pressure on commodities. Copper prices fell 1.5 percent on Monday, although prices are still elevated.
– Also, the buying spree may have been temporary, as both crude oil and copper prices have increased.
– “The relatively high price level now and the high utilization of storage capacities in China make it unlikely that the buying spree will continue,” Commerzbank cautioned in a note.
2. Oil demand on the mend
– Global oil demand is “on the mend,” according to a note from Bank of America Merrill Lynch.
– But the recovery differs between developed markets and emerging markets. Most developed markets (outside of the U.S.) along with China are past their peak of Covid-19 cases. There, demand is rebounding quickly. But in many emerging markets, the virus is still spreading.
– Aviation is the one sector where demand destruction will be more long-lasting. Aviation only accounts for 7 percent of total oil demand, but the 80 percent decline in flights is a “big…