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Commodities Briefing - Category | Metals and Minerals more

Collapse in premiums hits aluminium trade

Posted on 02 September 2015 by VRS  |  Email |Print

While aluminium prices have declined to six-year lows, what has really hurt big trading houses such as Glencore and Noble Group is the sharp fall this year in what is known in industry speak as “premiums”.
This is the extra cost added on to the price that buyers pay to obtain the metal in a certain region, which normally includes insurance and delivery costs. It is the money you get paid on top of the London Metal Exchange price when you sell or trade physical aluminium………………………………………..Full Article: Source

Direct reduction iron ore pellet premiums down on weaker demand

Posted on 02 September 2015 by VRS  |  Email |Print

Direct reduction (DR) pellet premiums moved lower for September as participants looked to factor into contract pricing talks weaker overall pellet demand and DRI growth prospects in the Middle East for the current year. Estimated premiums for September cargoes fell to $39.50/dry mt, down $1.50/dmt from $41/dmt in August as a resumption in discussions starting after Ramadan and the summer break looked to finalize terms.
Previous provisional prices in the $40-41/dmt range gave way to downward pressure on supplier offers that had been in the mid $40s/dmt. Lower gas availability in Egypt and regional unrest in parts of the Middle East and North Africa coupled with competitive steel imports led by China and from the Commonwealth of Independent States trimmed potential growth………………………………………..Full Article: Source

Why gold mine output is not yet falling

Posted on 01 September 2015 by VRS  |  Email |Print

Logic suggests there should be a sharp reduction in mined gold output due to lower gold prices, but this has not been the case. The fall in the gold price over the past few years has generated numerous predictions that this would lead to a big drop in global gold production. Mining companies ought to close unprofitable mines, halt expansion plans, and put new projects on hold.
But this has not been the case. Global gold production has continued to rise and is predicted by mainstream gold analysts Metals Focus, GFMS, and the CPM Group, to continue to do so this year. Heading into 2016, it should stabilise before beginning to fall in 2017, failing a gold price recovery………………………………………..Full Article: Source

Iron ore eyes monthly gain, but soft China steel to weigh

Posted on 01 September 2015 by VRS  |  Email |Print

Spot iron ore prices are set to end August higher, supported by lean inventory at Chinese mills and a recovery in futures markets, although expectations of increased supply later in the year may cap upside potential. Inventory of imported iron ore at major Chinese ports fell to 80.45 million tonnes as of Aug. 28, the lowest since late June, according to data tracked by consultancy SteelHome.
“Lean iron ore inventory at mills and lower port inventory may prevent prices falling to the forecasts of the most bearish among the bears,” said Adrian Lunt, assistant vice president for commodities at the Singapore Exchange. Iron ore for immediate delivery to China’s Tianjin port jumped 4.1 percent to a one-week high of $55.50 a tonne on Friday, according to The Steel Index. ……………………………………….Full Article: Source

Base metals rebound on physical buying on lows

Posted on 01 September 2015 by VRS  |  Email |Print

Most base metals gained upto 5.7% on bargain hunting due to fresh support from weak sentiment in global equity markets. Renewed support from China prompted traders to book afresh amid expectations of a rebound in equity trade, which got global markets into panic due to consistent fall earlier last week.
Nickel let the entire basket base metals complex with its highest gain of 5.70% at $9,835 a tonne on the benchmark London Metal Exchange (LME). Zinc followed suit and gained 4.95% after steep fall on Monday. On Friday, zinc settled at $1,793 a tonne………………………………………..Full Article: Source

Copper slump continues amid waning Chinese demand

Posted on 31 August 2015 by VRS  |  Email |Print

Copper used to be considered one of the relatively bright spots in the recent downturn of commodity prices. But now it is becoming yet another victim of China’s slowing economy, and the future looks bleak. “There was always this belief that the deceleration in the Chinese manufacturing sector was going to not just stabilize, but there was this hope that we would see a modest reacceleration,” said John Mothersole, a research director with consultancy IHS, who specializes in metal price analysis and forecasting.
“Markets are coming to realize that those expectations were falsely held,” he said. Copper, like other commodities, has been on a decline since 2011. This year, the red metal is down 20 per cent………………………………………..Full Article: Source

HSBC trims metal price forecasts

Posted on 31 August 2015 by VRS  |  Email |Print

HSBC has lowered its silver and platinum group metals price forecasts for this year and next citing a recent drop in prices and weaker Chinese demand. “Even a modest Chinese slowdown has the capacity to drive prices of these metals lower, and we believe those concerns have led to the sharp price falls,” the bank said in a note.
China is a major importer of all three metals for use in the car, industrial and jewellery sectors. Silver prices had fallen to six-year lows, while palladium prices touched a five-year low on August 26. The broad-based commodity declines may be encouraging margin call liquidation and fresh selling in platinum group metals, HSBC said………………………………………..Full Article: Source

Rusal cites China aluminum semi exports as reason for global surplus

Posted on 28 August 2015 by VRS  |  Email |Print

Russian aluminum producer Rusal said Thursday in its second quarter results that the increase in exports of aluminum semi-finished products from China is the main reason behind a global surplus this year. “The main change to the supply environment resulted from the export of aluminum semis from China. Net exports of semis rose by 47% year on year in H1 2015,” the company said.
The producer noted that overcapacity in the Chinese market continued throughout Q1 with a record supply of 7.45 million mt, up 8.3% year on year. As a result, Rusal believes total aluminum stocks in China grew to 3 million mt in Q1, an increase of 1% year on year………………………………………..Full Article: Source

Base metals post best rally in two years on US economic expansion

Posted on 28 August 2015 by VRS  |  Email |Print

Investors who stayed bullish on industrial metals are finally being rewarded as renewed optimism for the demand outlook pushed prices to their biggest rally in more than two years.
In the US, economic growth last quarter exceeded all forecasts in a Bloomberg survey, while in China stocks rebounded to halt a five-day rout. The countries are the world’s biggest metals consumers. Zinc surged the most since June 2012, copper climbed more than 4 per cent and aluminum and nickel advanced………………………………………..Full Article: Source

Chinese Medicine not Impressing Dr Copper

Posted on 28 August 2015 by VRS  |  Email |Print

Dr. Copper apparently does not approve of the prescription ordered by the Chinese authorities to stem the slowdown in that nation, namely another 25 basis point interest rate reduction and a lowering of bank reserve requirements. The red metal cannot sustain any upside action for long before sellers emerge to whack it again.
No matter how one slices or dices it, this sector is signaling slowing growth due to a combination of excess supply and lagging demand. Remember, back during the hey-day of the commodity sector, prices soared leading to massive ramp ups in production. That new supply came onto the market at the same time that global growth began slowing. The combination was lethal for prices………………………………………..Full Article: Source

Palladium slide exaggerated, short-covering and bargain hunting likely

Posted on 26 August 2015 by VRS  |  Email |Print

Palladium’s recent price fall is exaggerated and there is now room for short-covering and bargain hunting, market participants said. The metal fell to a low of $530 this morning – its cheapest since September 2010 – and was last at $550/555 per ounce, down $16 on Monday’s close.
Palladium prices have fallen 15 percent since Friday’s opening level – it is the hardest hit of the precious metals in the global crash that was triggered by renewed fears about the slowing Chinese economy. “[But] the extent of the price slide is exaggerated – after all, demand will grow this year despite a slowdown in the automotive industry,” Commerzbank said in a note, attributing the fall in the metal’s price mainly to speculative selling………………………………………..Full Article: Source

Copper: Why Price Of The Metal Could Affect You

Posted on 26 August 2015 by VRS  |  Email |Print

Why Should I Care About Copper? It is used in everything from cars to electricity transmission, so its price performance is considered an accurate reflection of the health of the global economy. Hasn’t Copper’s Price Been Falling Like Everything Else? Yes. Lower demand from China, the world’s biggest consumer of base metals, has meant prices have fallen to their lowest levels since 2009.
High-grade copper has fallen nearly 20% so far this year, helping to push Bloomberg’s Commodity Index to its lowest in 16 years. Although the metal is now trading at around $2.30 per pound - down from its record $4.60 in early 2011, the price hasn’t proved as volatile as the other commodities………………………………………..Full Article: Source

EU Probing ‘Anticompetitive Behavior in Precious Metals Spot Trading’

Posted on 26 August 2015 by VRS  |  Email |Print

The European Union’s competition watchdog is investigating alleged “anticompetitive behavior in precious metals spot trading,” a spokesman said. The spokesman for the European Commission, Ricardo Cardoso, declined to give more details on the probe.
The Wall Street Journal reported in February that U.S. officials are probing at least 10 major banks for possible rigging of the precious metals market. The U.K. Financial Conduct Authority and German financial watchdog BaFin had previously reviewed the precious metals benchmarks, but closed their inquiries without finding evidence of wrongdoing, people familiar with those probes said at the time………………………………………..Full Article: Source

Outlook for base metal prices continues to grow cloudier: BMO

Posted on 26 August 2015 by VRS  |  Email |Print

Despite the second biggest price decline in the past 35 years, the outlook for base metals doesn’t look good, says a new report from BMO Capital Markets. “Although prices have tanked, we expect that markets will remain lacklustre or even test lower levels by the end of 2016, given strong headwinds blowing from multiple directions,” BMO said.
China and a strengthening U.S. dollar are the two biggest culprits weighing on base metals, leading to a 40-per-cent plunge in the CRB metal sub-index since the most recent peak. Only the price collapse of 2008 has been worse. BMO said there are plenty of signs that despite the pullback, the worst might not even be behind us………………………………………..Full Article: Source

Iron ore and oil plunge as China sharemarket rout hits commodities

Posted on 25 August 2015 by VRS  |  Email |Print

Iron ore’s period of relative price stability has come to an abrupt end as China fears rattle commodity markets. The price of iron ore at the Port of Qingdao slumped 5 per cent to $US53.28 per cent on Monday as a savage sell-off gripped Asian markets.
It’s the first significant fall in commodity’s price since early July, when it traded as low as $US44.59. Since then, iron ore has traded in a relatively narrow range compared to the volatility it has experienced through the year. Expectations remain for iron ore’s price to regain its downward march and Australian miners were hit hard overnight as selling swept through European markets………………………………………..Full Article: Source

Copper, Aluminum Close at Lowest Levels Since 2009

Posted on 25 August 2015 by VRS  |  Email |Print

Copper and aluminum futures closed at more-than-six-year lows in London on Monday, as a sharp decline in Chinese equities triggered a broad-based commodities rout over fears that the world’s biggest consumer of base metals is heading into a steeper-than-expected economic slowdown.
The London Metal Exchange’s three-month copper contract was down 2% at $4,953 a metric ton at the PM kerb close, having tumbled to its lowest level since 2009 earlier in trading at $4,855 a ton. It fell below the key $5,000 level for the fifth-straight session. Aluminum, meanwhile, closed down 1.7% at $1,521.50 a ton, after hitting a six-year low during trading at $1,506 a ton………………………………………..Full Article: Source

Metals feel China pain as rout spreads to other commodities

Posted on 25 August 2015 by VRS  |  Email |Print

Copper, aluminum, nickel and other commodities plunged to new lows on fears that China’s faltering economy will exacerbate a market awash in metal. The latest event to spook investors was the steep decline in Chinese stocks earlier on Monday. Copper and aluminum hit six-year lows. Nickel plunged 10 per cent. Zinc and lead dropped to five-year lows. Gold, usually a safe haven in times of turmoil, barely rose.
“All bad news is bad news and good news is no news. That’s the environment we are in,” said Jessica Fung, commodity strategist with BMO Nesbitt Burns………………………………………..Full Article: Source

Angry investors capture head of China metals exchange

Posted on 24 August 2015 by VRS  |  Email |Print

The head of a Chinese exchange that trades minor metals was captured by angry investors in a dawn raid and turned over to Shanghai police, as the investors attempted to force the authorities to investigate why their funds have been frozen.
Investors have been protesting for weeks after the Fanya Metals Exchange in July ceased making payments on financial investment products. The exchange, based in the southwestern city of Kunming, bought and stockpiled minor metals such as indium and bismuth, while also offering high interest, highly-liquid investment products from its offices in Shanghai and its financing branch in Kunming………………………………………..Full Article: Source

Uranium mines show new promise as minerals commodities sag

Posted on 21 August 2015 by VRS  |  Email |Print

No surprise in that, as the trashed values of BHP Billiton at one end of town and the horde of now less-than-a-penny penny dreadfuls at the other amply demonstrate. There are a couple of exceptions, though, with uranium the standout in terms of price performance.
Uranium has not exactly shot the lights out since Japan’s 2011 Fukushima disaster, after which the energy-starved nation’s fleet of nuclear power stations was shut down. However, last week saw a tentative restart to the Japanese fleet, with Kyushu Electric flicking the switch at its Sendai plant, notwithstanding concerns for some about a potential stirring of a nearby volcano………………………………………..Full Article: Source

Rout in commodities eats into miners’ dividends

Posted on 20 August 2015 by VRS  |  Email |Print

The rout in commodities isn’t only taking a toll on shares of mining companies, it is also driving dividends issued by miners sharply lower. Aggregate dividends from large precious metals miners are set to drop to $1.8 billion this year, more than 60% below the $4.9 billion in payments made in 2011, according to dividend forecasting data compiled by Markit that was released this week.
The reduction comes as prices for metals have been mauled, in part by worries that a slowdown in the Chinese economy will dampen demand for natural resources. The surprise devaluation of the yuan last week by Chinese officials spurred concerns the currency move will hurt imports of metals………………………………………..Full Article: Source

Fund managers offload commodity stocks amid fears of Chinese recession

Posted on 19 August 2015 by VRS  |  Email |Print

Miners were hit as copper priced edged back towards six-year lows, as renewed fears over China rattled fund managers. On the same day that copper prices dropped back towards six-year lows, weighing on the mining-heavy FTSE 100, a closely-watched survey of fund managers around the world showed investors have piled out of energy and commodities stocks amid renewed fears over China.
Two-thirds of the 202 investors polled by Bank of America Merrill Lynch earlier this month said a Chinese recession and an emerging markets debt crisis are the greatest risks to global markets………………………………………..Full Article: Source

Why Iron Ore Prices Are Set To Fall to US$40

Posted on 19 August 2015 by VRS  |  Email |Print

Goldman Sachs isn’t bullish on iron ore. The bank has maintained a negative outlook for the long-term future of prices for some time. And it’s not shifting its position on the troubled commodity. If you’re one of the big Aussie iron ore producers, now is the time to start worrying.
The influential bank predicts iron ore prices could fall a further 30% by 2017. It predicts an expanding market supply, in addition to declining Chinese steel production. In other words, prices are heading in one direction only — down. Of particular interest is Goldman’s take on steel production. Once Chinese steel production ‘peaks’, the bank says a sharp contraction will follow suit………………………………………..Full Article: Source

Glencore mulls future of platinum mine as commodity prices plunge

Posted on 19 August 2015 by VRS  |  Email |Print

Glencore considering shutting Eland platinum mine in South Africa as price of the precious metal continues to tumble. Mining and commodity trading giant Glencore in mulling shutting down its Eland platinum mine in South Africa because of the falling price of the previous metal.
The FTSE 100 company is already under pressure because of tumbling commodity prices and is expected to announce a huge drop in profits on Wednesday when it announces interim results. In a statement Glencore confirmed the move, saying “ongoing poor market conditions in the platinum sector and difficult operational conditions at the mine” had driven the process………………………………………..Full Article: Source

Copper Dips Below $5,000 for First Time Since Financial Crisis

Posted on 19 August 2015 by VRS  |  Email |Print

Copper futures fell below $5,000 a metric ton for the first time since the financial crisis, dropping under a key level in a market that has been hit hard by concerns over the Chinese economy and by uncertainty for a metal widely regarded as a barometer of global economic health.
Copper’s decline comes as all metal prices continue their steep falls from the boom peaks of 2011. As with other base metals, copper has suffered from the oversupply that followed the boom and from concern over future demand from China, which consumes about 45% of the metal………………………………………..Full Article: Source

Copper slides on China demand concerns and dollar strength

Posted on 18 August 2015 by VRS  |  Email |Print

Copper prices slid on Monday on prospects for slowing demand in top consumer China, reinforced by last week’s move to weaken the yuan, and a higher dollar. Benchmark copper on the London Metal Exchange was untraded at the close but was bid down 1 percent at $5,114 a tonne from $5,170 on Friday. The metal, used in power and construction, plunged to a six-year low of $5,062 last week.
China’s yuan posted its biggest weekly loss on record after the central bank’s surprise move to devalue its currency, seen as a bid to boost exports and growth. But the move was also taken as a sign that Chinese authorities are seriously concerned about an economic slowdown turning into a hard landing………………………………………..Full Article: Source

Goldman says iron ore to slump 30pc on supply, steel outlook

Posted on 18 August 2015 by VRS  |  Email |Print

Iron ore prices may tumble about 30 per cent over the next 18 months as supply expands while steel output falters, according to Goldman Sachs Group, which said the impact on the market from China’s devaluation was a sideshow. “Supply is likely to diverge further from demand,” analysts Christian Lelong and Amber Cai wrote in a report. “Contrary to market consensus, we believe that peak-steel production will be followed by a contraction” in China, they wrote, sticking with price forecasts for the next four quarters.
Iron ore rebounded in the past five weeks from the lowest level since at least 2009 as steel prices advanced in China and shipments from the top exporters, Australia and Brazil, lagged behind expectations. China’s government devalued the yuan last week, roiling commodities markets and spurring concern that import demand for dollar-denominated raw materials may drop………………………………………..Full Article: Source

Miners hit six-year lows on fresh commodity falls

Posted on 18 August 2015 by VRS  |  Email |Print

Mining shares hit six-year lows, with Glencore falling to its lowest-ever price of 150.5p, down 1.4% on the day and having lost nearly half its value in the space of just over three months. ‘Fresh from the sale of more Xstrata assets last week, Glencore shares were leading declines in the weak mining sector ahead of reporting quarterly earnings on Wednesday,’ said Jasper Lawler, market analyst at CMC Markets UK.
‘Shares have been cut in half in just three months but it’s hard to see a bottom while commodity prices keep falling. However, with expectations this low leading into earnings, there’s a chance Glencore shares could see a pop after it reports.’……………………………………….Full Article: Source

China continues to drive base metal prices, sentiment poor

Posted on 18 August 2015 by VRS  |  Email |Print

Base metals continued to react to news from China on Monday, with the majority of the complex drifting to the lower end of their ranges. “Slowing Chinese growth and demand prospects continue to weigh on industrial commodities with prices eating into cost curves for some raising potential to production cutbacks should prices sustain downwards path,” a trader said.
Production numbers out of China have added to downward; data released over the weekend showed that Chinese production of aluminium, copper and nickel rose in July, which will do little to improve sentiment. Aluminium increased 14.1 percent year-on-year to 2.72 million tonnes in July. This took year-to-date output to 18.33 million tonnes, up 12 percent year-on-year………………………………………..Full Article: Source

Goldman Sachs ends era in commodities with coal mine sale

Posted on 17 August 2015 by VRS  |  Email |Print

Goldman Sachs Group closed a near 35-year era of investments in commodity assets such as power plants and refineries with the sale of a Colombian coal mine. The disposal is the latest sign of how Wall Street banks are responding to pressure from US regulators and disappointing returns as raw materials prices plunged.
Goldman Sachs has invested in physical commodity assets since 1981, when it bought what was then a small trading house called J Aron. Over the years, the company has owned oil refineries in Rotterdam, power plants in Virginia and Colorado, and warehouses to store aluminium and copper around the world………………………………………..Full Article: Source

Yuan Drop Leads India to Mull Steel Anti-Dumping Duties

Posted on 17 August 2015 by VRS  |  Email |Print

India said it’s being forced to consider steel safeguard duties and more anti-dumping curbs as the yuan’s devaluation threatens to stoke surging Chinese shipments. A steel import-tax increase earlier this month may not be enough of a deterrence, Financial Services Secretary Hasmukh Adhia said. Adhia has seen the steel industry contribute to elevated bad debt in India, in part as producers struggle to compete with imports from nations such as China and Russia.
“The global lack of demand in steel is so strong that one isn’t sure how, even after this recent increase, it’s going to help,” Adhia said in an interview on Sunday in New Delhi. “We’ll have to think about other options, whether safeguard duty and anti-dumping duty can also be used.”……………………………………….Full Article: Source

Why tiny tin stands out in the commodities rout: Andy Home

Posted on 14 August 2015 by VRS  |  Email |Print

The commodities rout continues. China’s devaluation of its currency, or, officially, its “one-off move towards a market-oriented exchange rate” (delete according to preference), has sent industrial metal prices tumbling to fresh multi-year lows. Well, all except one. Step forward tiny tin.
On the London Metal Exchange (LME) three-month metal hit its six-year low of $13,365 per tonne on the last day of June, since when it has staged a modest recovery to a current $15,170. Tin is one of the least liquid contracts traded on the LME and often has a perverse tendency to decouple from the rest of the base metals complex before belatedly catching up with the broader trend………………………………………..Full Article: Source

Copper steadies as slower yuan decline calms market

Posted on 14 August 2015 by VRS  |  Email |Print

Copper steadied on Thursday above the previous session’s six-year low after China’s central bank said there was no basis for further yuan depreciation, dampening concerns that the country’s appetite for metals imports could wane.
Weighing on base metals, however, was a stronger dollar, which makes dollar-priced metals costlier for non-U.S. investors. Three-month copper on the London Metal Exchange gained as much as 1.2 percent to an intraday high of $5,253 a tonne. It failed to trade in closing open outcry activity and was last bid down 0.1 percent at $5,184.50………………………………………..Full Article: Source

Aluminum Nears Six-Year Low as China Supply Seen Adding to Glut

Posted on 14 August 2015 by VRS  |  Email |Print

Aluminum fell, approaching a six-year low, on concern that China’s yuan devaluation this week will make exports of the metal cheaper, adding to a global glut. China’s shipments in 2015 through July surged 28 percent from last year, to a record. The average cost to produce primary aluminum in the country dropped by $12 a metric ton, to $1,728, after China devalued its currency’s fix against the dollar by 1.9 percent, according to Harbor Intelligence in Austin, Texas.
Prices fell to the lowest since 2009 on Wednesday on prospects for slowing demand and increased shipments abroad from China, the world’s largest producer of the metal. Earlier this week, Goldman Sachs Group Inc. reduced its aluminum price forecasts by at least 21 percent from 2016 through 2018 because of a global surplus………………………………………..Full Article: Source

Why Aluminum Is a Big Headache for Top Commodity Traders

Posted on 14 August 2015 by VRS  |  Email |Print

When carmakers, can manufacturers or telecom companies need to buy metals such as copper and aluminum, they pay a premium to market prices set on the London Metal Exchange to reflect the cost of getting raw materials when and where they want them.
Those premiums, while a small percentage of the cost of metals, are vital for commodity traders, who buy from producers and sell to end users. In recent months those margins have plummted, threatening profits at traders including Glencore Plc and Noble Group Inc………………………………………..Full Article: Source

Base Metals Rebound as Some See Upside of Yuan Devaluation

Posted on 13 August 2015 by VRS  |  Email |Print

Base metals rebounded from multiyear lows earlier Wednesday to close higher here, as some investors bet that China’s devaluation of its currency would make its exports cheaper and thus boost its considerable consumption of metal.
Metals had been hammered earlier amid worries that the devaluation underscored the increasing fragility of Chinese economic growth while also making commodities more expensive for China, curbing its imports of them. Those losses began turning around midday here………………………………………..Full Article: Source

Nickel n’ Dime options…

Posted on 12 August 2015 by VRS  |  Email |Print

In last week’s issue we detailed the widening gold/silver ratio. You arrive at this measure simply by determining how many ounces of silver would be required to buy one ounce of gold at current spot prices. When the ratio is high, the usual consensus is that silver is favoured. The ratio is now approaching the upper end of its long-term range, driven by a surge in speculative short positions in derivative markets.
Over the past 12 months, the price of the benchmark silver-futures contract has pulled back by over a quarter, while investors have pulled the best part tof $5bn out of the iShares Silver Trust (the biggest physically- backed fund) since the start of the year………………………………………..Full Article: Source

Base Metals Continue To Struggle

Posted on 12 August 2015 by VRS  |  Email |Print

For many commodity traders there are few correlations as strong as that of base metals and global stock markets. As you can see from the chart of the Powershares DB Muli-Sector Commodity Trust MetalsFund (DBB), a common measure used to track metals such as aluminum, zinc and copper, you’ll see that the bears recently sent the price below the support of a key trendline.
Notice how the confined trading range has controlled the price of the ETF since late 2011. At this point, the recent break below the support level suggests that the momentum is likely to increase and that a sharp move lower could be in the cards. From a risk management perspective, bearish traders will likely look to protect their positions by placing a stop-loss order above the upper resistance level, which is trading near $14.33………………………………………..Full Article: Source

Morgan Stanley cuts 2015 metals price view; sees recovery by Q1 ‘16

Posted on 12 August 2015 by VRS  |  Email |Print

Morgan Stanley lowered its 2015 metals price forecasts, citing a “surprisingly” large fall in prices in July on China’s equity market selloff. The bank said its price forecast revision focuses only on the next two to three quarters. It expects the investor-led selloff to be replaced by seasonal expansion in metal trade during the first quarter of 2016, helping in a price recovery.
“We have not observed any clear shift in the fundamentals of the metal trades during this latest price fall,” Morgan Stanley wrote. An investor exodus is probably recognition that China’s materials-intensive growth cycle is maturing, the bank said………………………………………..Full Article: Source

Asia alumina prices rangebound; sentiment stays bearish

Posted on 12 August 2015 by VRS  |  Email |Print

The Platts Australian alumina daily assessment was steady Tuesday at $297/mt, unchanged from last Thursday, but down $3.50 on the week and down $18.50 from a month earlier. Platts did not publish alumina assessments on Friday and Monday due to a four-day weekend in Singapore for extended National Day celebrations.
Market sentiment remained bearish on Tuesday as aluminum prices stayed soft and demand for spot alumina lackluster, with buyers expecting prices to continue testing lower in the near term. A Chinese consumer/reseller quoted $315/mt CIF China basis for a 30,000 mt Western Australia cargo, first half September loading, but said Chinese buy ideas were mostly below $310/mt………………………………………..Full Article: Source

Iron ore prices may have hit their lows for 2015: Investec

Posted on 11 August 2015 by VRS  |  Email |Print

Iron ore price falls earlier this year may mark the lows for 2015 as supportive factors aid the market going forward until 2016, Investec bank said Monday. “Iron ore [prices] have proved remarkably resilient in recent months, despite a wall of supply that is coming on stream,” Investec said in a sector report led by analyst Hunter Hillcoat.
“Movements in freight costs, energy prices and exchange rates lead us to believe we may have seen the worst in iron ore headline prices.” At the same time, Investec said the mining sector was unlikely to recover anytime soon, especially as market signals from China appear to be deteriorating, on its outlook for metals and mining commodity prices………………………………………..Full Article: Source

Aluminium: Meltdown fears

Posted on 11 August 2015 by VRS  |  Email |Print

When the US government slapped anti-dumping tariffs on China Zhongwang Holdings four years ago, the world’s second-largest producer of aluminium products found solace in China’s booming domestic market.
The company now reports the highest margins of any aluminium producer in the world. But with that status — and major shifts in the market for the lightweight metal — has come fresh global scrutiny. A flood of aluminium pouring out of China and depressing world markets has focused attention on Zhongwang and other Chinese metals processors, whose success threatens to spur new trade tensions with the US………………………………………..Full Article: Source

Copper bears bet on further price decline as stockpiles rise

Posted on 11 August 2015 by VRS  |  Email |Print

Hedge funds are betting that the worst is yet to come for copper. Prices for the metal used in everything from homes to cars to appliances are stuck in the worst slump in more than two years. Stockpiles jumped 11 per cent in Shanghai last week. With China’s economy showing little signs of recovery, money managers are increasing wagers that copper will fall further, pushing their net-short position to the most bearish since April 2013, US government data show.
China accounts for about 40 per cent of global demand, and consumption is slowing at the same time that supplies are becoming more plentiful. Morgan Stanley predicts that while mine production was stagnant in 2014, output will rise almost 5 per cent this year and keep growing through 2018………………………………………..Full Article: Source

Gold Miners Just Aren’t That Special

Posted on 10 August 2015 by VRS  |  Email |Print

Beware gold bugs bearing cheap equities. Thanks to gold’s swift descent, mining stocks have been crushed in the past month. But bargain hunters should tread carefully. While faith in the metal may have dimmed, some vestiges of gold fever remain.
When gold was on the up, it was considered normal that mining stocks traded at a hefty premium to the net present value of their projected cash flows, as well as versus other diversified miners. But how that value was calculated also differed. Analysts and investors, particularly in the U.S. and Canada, routinely used a lower discount rate, of 5% or less, to value gold miners. ……………………………………….Full Article: Source

Aluminium Trend: Excess supply makes a deep dent

Posted on 10 August 2015 by VRS  |  Email |Print

The shiny world of metals that includes aluminium, copper and tin is facing a meltdown. The metal price boom — that peaked in 2008 — has been waning since the global financial crisis. From early this year, the price fall has been intensifying. Among the metals hit hard by the commodity price correction is aluminium. The price of the metal at the London Metal Exchange (LME), which hovered below $1,700 a tonne in early 2014, crossed $2,000 a tonne last August.
But it could not hold these levels for long. Since the start of 2015, LME prices have fallen by 12 per cent from $1,800 to below $1,600 a tonne. One reason for this is slackening of demand. Higher supply, especially from China, is also hurting. Besides, the changes in warehouse rules at the LME have helped reduce physical delivery delays………………………………………..Full Article: Source

Copper Bears Keep ‘Stranglehold’ on Market as Stockpiles Rise

Posted on 10 August 2015 by VRS  |  Email |Print

Hedge funds are betting that the worst is yet to come for copper. Prices for the metal used in everything from homes to cars to appliances are stuck in the worst slump in more than two years. Stockpiles jumped 11 percent in Shanghai last week. With China’s economy showing little signs of recovery, money managers are increasing wagers that copper will fall further, pushing their net-short position to the most bearish since April 2013, U.S. government data show.
China accounts for about 40 percent of global demand, and consumption is slowing at the same time that supplies are becoming more plentiful. Morgan Stanley predicts that while mine production was stagnant in 2014, output will rise almost 5 percent this year and keep growing through 2018………………………………………..Full Article: Source

Barrick making plans for $900 an ounce gold price

Posted on 06 August 2015 by VRS  |  Email |Print

Barrick Gold Corporation cuts its gold production forecast to between 6.1m – 6.4m ounces as it disposes of assets including 50% of its Zaldivar copper mine in Chile for $1 billion, the Cowal mine in Australia for $550 million in cash and $298 million for its Porgera mine to tackle its crippling debt-load of more than $13 billion.
The company announced additional disposals on Wednesday announcing that in the next few weeks, it will start a process to sell its Bald Mountain, Round Mountain, Spring Valley, Ruby Hill, Hilltop and Golden Sunlight assets in Nevada and Montana. Other notable features of the quarter and outlook include further cost and capex cuts and plans to weather a $900 an ounce gold price:……………………………………….Full Article: Source

5 Extraordinary Things That Will Shake Up Precious Metals

Posted on 05 August 2015 by VRS  |  Email |Print

These are extraordinary times for the precious metals markets. And not just because of the headline price action. Underlying developments in the supply-and-demand fundamentals for physical gold and silver are extraordinary in their own right.
If recent trends could be summed up in one word, it would be bifurcation. On one hand, the paper market (i.e., futures contracts) continues to be heavily pressured in a bearish direction by extraordinary levels of institutional short-selling. On the other, the physical market is heating up with robust investor buying and increasingly bullish long-term supply/demand prospects………………………………………..Full Article: Source

Gold drop on rates bet as palladium sinks to lowest since 2012

Posted on 05 August 2015 by VRS  |  Email |Print

Gold dropped for a second day as commodities slumped to a 13-year low and amid speculation the Federal Reserve will raise interest rates as early as September. Palladium traded at the lowest level since 2012.
Bullion for immediate delivery fell as much as 0.3 percent to $1,083.75 an ounce and was at $1,084.55 at 8:05 a.m. in Singapore, according to Bloomberg generic pricing. Prices have lost 8.4 percent this year. Gold tumbled to a five-year low in July as Fed Chair Janet Yellen said the central bank is on track for raising rates, curbing the appeal of bullion as it doesn’t pay interest like assets such as equities. ……………………………………….Full Article: Source

Platinum falls to six-year low on China concerns, but gold holds steady

Posted on 05 August 2015 by VRS  |  Email |Print

Platinum fell to a six-year low and palladium reached the lowest level since 2012 on speculation that supplies are ample amid slowing demand from China. Gold was little changed. BMW AG has cut production this year by 16,000 cars in China and may revise profitability goals amid slowing sales, the Munich-based manufacturer said Tuesday.
The country accounts for at least 23 percent of global demand for platinum and palladium, which are mainly used in catalytic converters that curb harmful auto emissions, Johnson Matthey estimates. Commodities have slumped as China’s economy expands at the slowest pace in 25 years, leading to gluts in metals, crops and energy. Platinum mine output is rebounding in top producer South Africa after a five-month strike last year………………………………………..Full Article: Source

China’s Aluminum Producers Stare Down Price Plunge

Posted on 05 August 2015 by VRS  |  Email |Print

Chinese aluminum producers aren’t curbing their output despite the metal’s slump to a six-year low, suggesting the price of one of the world’s most heavily-traded metals still has far to go before finding a floor. Metals producers normally usher in supply cutbacks when prices fall as hard as they have done for aluminum this year.
But with a host of new cost-efficient smelters now online in China, few there are blinking yet. That is bad news for the broader market as surging Chinese aluminum exports in recent months have been one of the biggest drivers of the metal’s price plunge. China accounts for about half of the world’s aluminum production………………………………………..Full Article: Source

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