Author Archives: Kyle Fitzsimmons

Macro photo of a piece of lead ore

The International Lead and Zinc Study Group released its initial lead findings for February, and found that in 2016, supply exceeded demand in the global market for the refined metal.

Furthermore, lead inventories reported by the London Metal Exchange, Shanghai Futures Exchange and consumers and producers during that same period of time increased, as well.

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The ILZSG report elaborated: “There was a sharp decrease in Australian lead mine output mainly as a consequence of the closure of the Century mine in 2015 and cutbacks in output at some Glencore operations. Production was also lower in India and Mexico. However, these reductions were partially balanced by a rise in China resulting in an overall global decline of 1.3%.”

However, world refined lead metal production actually increased 2.4% in 2016. This was mostly attributed to the Republic of Korea (South Korea) commissioning a new primary lead plant in 2015.

Lead Price Momentum on High in 2017

According to a recent piece from our own Raul de Frutos, after a strong run in 2016, lead prices pulled back to close the year. However, prices have since recovered and Raul predicts they will trade at $2,800 by the end of this year.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

“(Lead prices) are currently below $20 per metric ton, from $80 just three months ago. In this respect, lead is playing catch-up with its cousin zinc, in which the deficit for refined metal is more obvious. In 2017 investors will be closely monitoring China’s numbers. The slump in treatment charges and the fact that China must get serious about controlling industrial metals output to solve its pollution problem could result in lower lead refined output this year.”

How will lead and base metals fare this year? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

A lighted underground tunnel in a nickel mine

Nickel prices increased early in February with hedge funds and speculators hurrying to close bets against the metal with the Philippines moving ahead with regulations on its mining industry.

According to a recent report from the Financial Times, nickel’s climb was directly attributed to the closure of 21 mines along with the suspension of another six pits, including the nation’s largest gold mine.

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The Philippines is the world’s most significant source of unprocessed nickel ore, along with being a major supplier to China, the news source stated. A renewed emphasis on environmentalism led to Philippines’ President Rodrigo Duterte appointing a like-minded resource minister to investigate the nation’s mining industry.

“My issue here is not about mining, my issue here is about social justice,” Regina Lopez, natural resources secretary, said during a recent briefing. “Why is mining more important than people’s lives?”

Nickel Price Outlook for 2017

Lopez pointed at the mine closures, which account for nearly half of the nation’s nickel output.

“We are very pleased to see the Philippines taking this action while allowing proper mining companies which adhere to better environmental practice to continue,” analysts at SP Angel told the Financial Times, adding the whole nickel supply chain was an “environmental disaster”.

“The huge growth of ore exports into China for the production of nickel pig iron disrupted the nickel industry in recent years while causing massive environmental disruption in the mining areas and at the nickel pig-iron furnaces.”

How will nickel and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

 

Ezio Gutzemberg/Adobe Stock

The tin market in London remained tight last month and the underlying problem appears to be a lack of deliverable metal.

According to a recent Reuters report from Andy Home, a closer look at China reveals a significant supply of tin registered with the Shanghai Futures Exchange, but it previously was hiding behind the country’s 10% export duty.

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However, that doesn’t appear to be the case any longer as China evidently removed the barrier without notification, which could lead to serious consequences for the worldwide flow of tin and, more specifically, the London Metal Exchange market.

Home writes: “There is still a good deal of uncertainty as to what exactly may, or may not, have happened. But tin industry body ITRI has drawn attention to the fact that the tin export duty has not been referenced in China’s 2017 Exports Commodities Tax Rates table.”

Home adds the reason for China dropping the duty, a standard for nearly 10 years, can be attributed to the US-filed complaint last July to the World Trade Organization regarding their export duties on numerous metals and minerals, including tin.

Tin Price Update for February

Just last week our own Raul de Frutos wrote tin prices dropped 9% since the beginning of the year, reaching a 5-month low.

de Frutoes wrote: “There are two factors driving this decline:

  • Profit taking: Prices rallied near 70% in 2016 and prices need to digest those gains.
  • Speculation that China has removed it’s 10% export duty on refined tin exports.”

How will tin and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

SONY DSC

Copper prices have been on the rise and could continue their ascent if the world’s two biggest copper mines continue their strike.

According to a recent report from CNBC, copper futures contracts for March delivery grew by more than 1.5% this week following information that BHP Billiton is halting production at the world’s largest copper mine, Escondida, located in Chile.

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“It’s presenting the market with a bullish case for a little upside, Vivienne Lloyd, base metals analyst for Macquarie in London, told the news source.

Copper prices were already on the ascent, growing more than 30% last fall with the U.S. dollar weakening close to the election, combined with traders’ more optimistic views on China.

“Traders were already bullish into the strike, Dane Davis, commodities research analyst at Barclays, said. “People have watched the negotiations deteriorate.”

Copper Disruptions Bring Upside Potential

Our own Raul de Frutos wrote just this week on the factor the copper mine strikes will play in the metal’s recent bull run. He added:

“Base metals looked more bullish in January and strong Chinese data is no doubt driving that. China’s PMI was in growth territory for the seventh consecutive month.”

Raul concluded: “Copper prices might look expensive compared to what they were just three months ago. However, that rally might just be the beginning of a bigger move. Sentiment in the industrial metal complex remains quite bullish and there are factors currently playing out that could build the case for another rally in copper prices. Copper buyers should minimize their commodity price risk exposure accordingly.”

How will copper and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

China is a top producer of aluminum, and its ongoing battle against pollution could lead to production cuts and, subsequently, skyrocketing aluminum prices.

According to a recent report from Reuters, the aluminum price rally could also potentially be offset by the oversupply situation. Any kind of extreme market fluctuation would be dependent on the Chinese government following through on the shutdown of aluminum-rich provinces during the winter months.

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“When the government in the past tried to implement measures to control production it wasn’t very successful,” Edgardo Gelsomino, research director at consultancy Wood Mackenzie, said. “The only time production cuts really happened in China was when the economics of the smelters didn’t work.”

Aluminum Prices Begin Year on a Strong Note

Our own Raul de Frutos wrote recently on exactly how much US aluminum prices and premiums can rise in 2017. Well, they started off the year strong. “While robust demand has supported aluminum prices, investors’ eyes have recently turned to the supply side of the equation. In December, China’s share of global aluminum output was more than 56%. The giant producer’s share of supply is now facing some serious risks,” de Frutos wrote.

He concluded: “In addition to higher aluminum prices due to supply cuts, we could see higher aluminum premiums due to the ongoing trade tensions, just as we saw the spread between domestic and international steel prices widen.”

How will aluminum and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

plant for the production of iron and steel

Among President Donald Trump’s many campaign promises was one to utilize more U.S.-produced materials, including steel, and his actions thus far have reinforced those promises.

Last week, Trump signed executive orders expediting the approval and subsequent construction of the Keystone XL and Dakota Access pipelines. An important caveat to those orders included the use of domestic steel for the upgrade and repair for the new pipelines.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Wrote Leia Toovey for the Economic Calendar, “The U.S. steel sector has suffered in recent years as imported steel has gained market share at the expense of domestically produced steel. In 2016, domestic steel prices and producers recovered and part of that recovery was based on tariffs and duties that were implemented on Chinese producers who were found guilty of receiving unfair subsidies from their government.”

Global Steel Production on the Rise

It’s been a tough couple of years for the U.S. steel industry, but global steel production has also suffered significantly. In fact, of the top 10 countries producing steel, production increased in only three over that time, according to data from the World Steel Association.

Wrote our own Stuart Burns: “Supported by a sharp upturn in real estate investment, steel prices and steel production rose by 1.2% in China, reversing the previous year’s decline. China produced 808.4 million metric tons in 2016 and domestic demand continues to remain robust even as exports face protectionist headwinds.”

How will steel and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

nickel-ore-mine

mulderphoto / Adobe Stock

It’s been all quiet on the nickel front recently as the metal is essentially even as the Chinese Lunar New Year Holiday approaches.

According to a recent report from the Economic Calendar, nickel prices ended Tuesday slightly higher due to a lower U.S. dollar, which offset the slight decline nickel saw on Monday this week.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Wrote Leia Toovey for Economic Calendar: “Chinese businesses and markets will close on Jan. 27 and factories will remain closed for at least a week. With business activity at a standstill, demand for base metals from its top consumer will remain muted while there will also be fewer speculators placing their bets. With Chinese buyers absent, nickel is likely to garner the majority of its price momentum from the US dollar.”

Nickel Miners to Boost Exports?

Our own Stuart Burns recently wrote that Indonesian nickel miners might soon be allowed to export up to 5.2 million tons fo low-grade nickel ore a year. Burns wrote:

“The intent seems now to be to allow nickel miners to export providing they dedicate at least 30% of their smelter capacity to processing low-grade ore, defined as below 1.7% nickel. They can then export any excess capacity they have. That said, this move means that up to 70% of Indonesia’s nickel production capacity could potentially be put on the market, which would be equivalent to around 14% of global capacity.”

How will nickel and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

vvoe / Adobe Stock

The International Lead and Zinc Study Group released its initial 2017 report, which found the global market for refined zinc metal was in deficit over the first 11 months of last year with total reported inventories declining over the same time frame.

The ILZSG revealed a significant increase in Chinese output while the world’s zinc mine production fell overall by 1.2%.

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“Global refined zinc metal production over the first eleven months of 2016 was at the same level as the corresponding period of 2015 with increases in China and the Republic of Korea offset by reductions in Australia, India, Japan, Mexico and the United States,” the ILZSG report stated.

The rise in worldwide demand for refined zinc metal, to the tune of 3.5%, was mostly due to an 8.8% increase in Chinese apparent usage with European demand at the same level in 2015 and US demand falling 12.7%.

Also of note: Chinese imports of zinc contained in zinc concentrates represented a 42.3% decrease compared to the same time frame in 2015 with the Far East nation’s net imports of refined zinc metal growing 7.9%.

Zinc Benefits from Investor Interest

Our own Stuart Burns wrote last week that aluminum has benefited from renewed investor interest, particularly over the course of 2016, but that it hasn’t experienced the same jolt as zinc and copper have seen.

“Although net long positions have been trimmed back following some recent significant deliveries into LME warehouses, the consensus remains positive regarding prices for 2017,” Burns wrote.

How will zinc and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

Lead ore. Source: Adobe Stock.

The International Lead and Zinc Study Group released its initial report for 2017, which found world refined lead metal supply exceeded demand during the first 11 months of last year with total reported stock levels increasing during that same time frame.

The ILZSG report identified reduced output in China, India, Australia and the U.S. as contributing to the overall reduction in global lead mine production, to the tune of 7.5%, over the first 11 months of last year when compared to the same time frame in 2015.

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The ILZSG states: “World production of refined lead metal decreased by 1.2%. This was primarily due to a fall in Chinese production which more than balanced increases in Australia, Kazakhstan and the Republic of Korea (South Korea).”

Furthermore, the 9.1% reduction in Chinese demand was offset, in part, by a 9.5% rise in European usage.

“Chinese imports of lead contained in lead concentrates totaled 697,000 metric tons, a decline of 24.6% compared to the first eleven months of 2015,” concluded the ILZSG’s January report on lead.

Lead Buyers Saw Ample Opportunity to End 2016

Just last month, our own Raul de Frutos wrote about metal buyers finding good opportunities to time their purchases with prices pulling back following a bullish run. For lead in particular, de Frutos wrote:

“Zinc’s cousin, lead, is also retracing near an area where we should see investors coming in to support prices. If this year’s bull market is set to continue, which for now we continue to expect it to do so, lead buyers will find a good opportunity to time their purchases if prices rebound at these levels.”

How will lead and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

tin-ore

S_E/Adobe Stock

Last week, tin prices on the London Mercantile Exchange increased but the real story has been overall commodity pressure to begin 2017.

According to a recent report from the Economic Calendar, tin has ebbed and flowed in a narrow range to begin the year with last week’s upward move attributed to “a slight pullback in the value of the U.S. dollar.”

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Donald Levit wrote: “Tin experienced a positive performance in 2016 amid solid demand from China with idled domestic tin capacity resulting in the need for higher imports. However, concerns are that China will start to ramp up its idled capacity, and that will change the market.”

China’s manufacturing PMI registered higher than expected recently, adding to tin’s momentum. In November, China imported more tin ore and concentrates with refined tin imports falling off substantially, the news source stated.

How will tin and base metals fare in 2017? You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds: