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I get it, you are thinking of what you are going to get your family for Christmas. However, Santa is bringing you good opportunities to buy some metals. Don’t miss them.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Base metals entered a bull market earlier this year. The real driver of this bull market has been the stronger-than-expected Chinese demand. Markets underestimated Beijing’s determination not to disappoint on its growth numbers. Thanks to the country’s increase in infrastructure spending, industrial metal prices are getting a tailwind.

The metals rally particularly extended in November. However, prices don’t just move in a straight line. If they move up quickly, buyers are tempted to take their profits until markets digest those gains. This is normal price action and why we normally see prices moving in a zig-zag. In the second half of December, there’s already been some profit taking and as prices pull back, buyers can find good opportunities to time some purchases. Let’s take a few examples:

Copper

Copper prices could find support soon

Copper prices could find support soon. Source: MetalMiner analysis of Fastmartkets.com.

Almost no analyst was bullish on copper prior to this rally, but it seems that the market now sees the possibility of a market deficit next year as almost no supply is due to come on-stream while demand seems robust. Read more

Tin cans. Cans are used for packing all sorts of goods - conserved food, chemical products such as paint, etc

Tin cans. Cans are used for packing all sorts of goods – conserved food, chemical products such as paint, etc

Tin prices, along with nickel, weakened last week on the non-ferrous metals market due in part to reduced demand from alloy industries.

According to a report from the Business Standard, owners of metal stocks sold en masse from this lower demand, affecting both tin and nickel with copper prices also softening from a lack of demand.

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!

To begin December, our own Stuart Burns wrote of tin’s continued bull run even with an abundant supply.

Burns wrote: “(Tin) is also relatively well distributed: the five largest producing countries are China 35%, Russia 12%, Australia 8%, Indonesia 7% and Brazil 6%, according to Platts. These mines are not in unstable or war-torn regimes. Some mines in places such as Myanmar and the Democratic Republic of the Congo are less savory, sure, but as a percentage of the whole they are not mission critical to global ore supply.”

Risk with Tin

There is some inherent risk with tin since both supply and demand are not presently driving prices.

Burns concluded: “That doesn’t mean to say the price hasn’t got further to go. There is no shortage of liquidity in the Chinese investment market and speculators this year have pushed not just tin but copper and other metals to annual highs. Tin’s fundamentals aren’t bad by any means but the FT reports that nearly 30% of Chinese smelter capacity sits idle today, a warning sign that high prices may not be matched by downstream demand.”

How will tin and base metals fare for the remainder of 2016 and into 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:

Gold rises as a safe haven when investors fear a recession, inflation increases or the U.S. dollar plummets, making the precious metal cheaper for foreign investors.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Well, none of these things are happening right now. Indeed, quite the opposite is happening. Gold prices fell to their lowest level in nine months. What’s driving gold’s decline?

Gold prices hit a nine-month low

Gold prices hit a nine-month low. Source: MetalMiner analysis of @stockcharts.com data.

The Case For A Bull Stock Market

To be honest, I’ve been pretty skeptical of the U.S. stock market. Markets indexes have traded sideways for almost two years. Still, they have avoided a severe bear market. The day Donald Trump was elected, markets opened sharply lower as fear consumed traders. But stock markets love to do the unexpected and indexes are now back to trading in record territory.

S&P 500 surges following Trump victory

The S&P 500 surges following the Trump victory. Source: MetalMiner analysis of @stockcharts.com data.

Such action is a hint that equity trading desks and large funds aren’t finished buying stocks yet. The question is: will Donald Trump’s presidency for the next four years be just what the doctor prescribed to keep this aging bull stock market going, even after seven-plus years of gains behind its back? Could the rise in equities even accelerate? Read more

Black lead zinc ore closeup rocky textureThe International Lead and Zinc Study Group recently convened in Portugal to deliver its forecast for the coming year, and revealed that global demand for refined lead metal is expected to rise 2.8% this year and 1.3% in 2017.

The report continues: “In China, strong growth in vehicle production and sales have helped to balance declining demand for lead-acid batteries in the e-bike sector where sales of lithium-ion batteries are reported to be rising. It is anticipated that Chinese lead usage will rise by 2.5% in 2016 and 1.1% in 2017.”

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!

Furthermore, European usage of lead metal is expected to increase 5.3% this year after declining in 2015. This is due in part to positive performance from the automotive sector. It’s important to add that lead demand in Europe is expected to remain flat next year.

Pertaining to supply, global lead mine supply this year is forecast to be less than a half percent lower than in 2015 with a boost in China offset by other nations, including Australia, Mexico, India and the U.S. In the coming year, global lead output is expected to rise 3.3%.

Global Refined Lead Metal Balance

In closing, the ILZSG report states: “Having taken into account all of the information recently received from its Member Countries, the Group anticipates that in 2016, supply will exceed demand in the global refined lead metal market by 42,000 tonnes. In 2017, an even closer balance is predicted with current data indicating that the market will be in surplus by 23,000 tonnes.”

How will lead and base metals fare for the remainder of 2016 and into 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:

Just when life was getting good for Indian steelmakers, the price of coking coal goes up.

Free Download: The October 2016 MMI Report

The increasing price of global coking coal, a key ingredient in steelmaking, may squeeze Indian steelmakers’ profitability and deepen financial risks, according to a Fitch Ratings report. Prices had crossed the $190-a-metric-ton mark recently. The steel companies risk will also increase if the high prices persist while domestic steel demand growth remains low. Which essentially means that the increase in raw material costs for Indian steel producers may shrink their margins, if the rise is not passed on to consumers.

Coking Coal Imports

The bulk of India’s coking coal is imported to compensate for the lack of good quality coal from the country’s own mines. In addition to steel plants, the raw material used by coal-based power plants, cement plants, captive power plants, sponge iron plants, and almost all depend on importing non-coking coal.

Coke is imported mainly by pig-iron manufacturers and iron and steel sector consumers using mini-blast furnaces. India imported around 200 million mt of coal last financial year to top domestic production of 640 mmt.

Steel mills Molten iron smelting furnace production line

Steel mills in India are turning to new suppliers and reopened mines to provide coking coal with prices up. Source: AdobeStock/zjk.

So India, despite efforts by the government to reduce its dependence on foreign coking coal, has to import it from countries like Indonesia, South Africa, Russia and Australia. Coking coal prices in Australia have surged in the last few months, so what’s good news for that nation is bad news for India’s steel makers. Read more

 Lead pulls back following Q3 price rally. Source: MetalMiner analysis of fast markets.com data

Lead pulls back following a Q3 price rally. Source: MetalMiner analysis of Fastmarkets.com data.

Lead fell in October but the underlying trend looks strong. Let’s analyze why prices declined:

Strong Dollar In October

Dollar Index rises in October. Source: Metalminer analysis of stockcharts.com data

The U.S. dollar index rises in October. Source: Metalminer analysis of @Stockcharts.com data.

In October, the U.S. dollar index, which measures the greenback vs. a basket of major currencies, rose to its highest level in 9 months.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

A rising dollar has a negative impact on metal prices. Not only lead, but all base metals are feeling the downward pressure this month. Metals are priced in dollars and when the value of the dollar rises, it takes more of them to buy metals. Another reason is that when the value of the dollar rises, foreign buyers have less buying power, typically causing demand for metals to shrink.

Lead Needs To Consolidate Gains

Lead faces long-term resistance level

Lead faces long-term resistance level. Source: Fastmarkets.com.

Lead moved up sharply in Q3 and prices need to consolidate these gains. It is normal to see some profit-taking at these levels. Moreover, lead is at levels that prices couldn’t overcome last year. This is a level where it’s normal to see some selling pressure. Interestingly, its metal cousin zinc is doing the same thing.

What This Means For Metal Buyers

Lead prices are consolidating recent gains and a stronger dollar is weakening the bullish mood across base metals. Prices could continue to climb higher after this pause. Lead buyers should consider hedging some purchases.

Copper prices started the year on a bullish note, amid positive sentiment in the overall industrial metals complex and rising Chinese imports.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Unlike other base metals, we haven’t really seen a decline in copper supply. Therefore, copper investors can only keep an eye on copper’s demand. China consumes nearly 40% of global copper demand. China isn’t self-sufficient when it comes to its copper needs and is the largest importer of the red metal. Rising Chinese imports signals increasing demand for the metal.

Last week, China released its trade data. In September 2016, China imported 340,000 metric tons of unwrought copper and copper products, down 25% from last year. Moreover, this is the sixth consecutive month where imports fell on a monthly basis.

3M LME Copper falls on weak Chinese imports

Three-month London Metal Exchange copper falls on weak Chinese imports. Source: MetalMiner analysis of Fastmarkets.com data.

Prices fell sharply following the release of the weak numbers. Investors still lack any good reason to push prices much above $5,000/mt, a level that has proven to be a ceiling for copper this year. So, while we don’t see supply cuts and demand appears stagnant, the best copper producers can expect is for prices to remain rangebound.

 

Nickel prices got a boost on Tuesday after the Philippines announced plans to suspend 20 more mines.

3M Nickel price on the LME. Source: MetalMIner analysis of fastmarkets data

Three-month nickel price on the LME. We recommended hedging back in June. Source: MetalMIner analysis of fastmarkets data.

The country already suspended 10 mines during the third quarter. The Philippines is by far the largest nickel ore supplier to China since Indonesia imposed an export ban for unprocessed material back in 2014. Lower production is already showing up in the numbers. Philippine nickel production is down 24% for the first seven months of this year. This supply deficit will widen as more mines are suspended.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Combining the previously suspended mines with those in the new announcement, only one fourth of Philippines mines comply with the country’s environmental and mining laws. It’s estimated that this combination accounts for half of the Philippines’ nickel production last year.

What This Means For Metal Buyers

In our Monthly Outlook, we recommended in June buying nickel/stainless forward one-year out. The new shutdowns are likely to further tighten the global nickel market, which could provide another attractive entry point for nickel/stainless buyers to hedge/buy forward again. To catch these opportunities, buyers only need a good a plan.

Black lead zinc ore closeup rocky textureA recent report from the International Lead and Zinc Study Group found the global market for refined zinc was in deficit from January to July, with total reported inventories declining over the same time frame.

Global zinc mine production declined 6.1% during the same period, which mostly was due to substantial reductions in India, Australia, Ireland and Peru. Meanwhile, world refined zinc metal output fell 3.9% due to a significant drop off in Indian production and a decline in the U.S.

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!

The report stated: “A rise in global usage of refined zinc metal of 0.7% was driven mainly by an increase in Chinese apparent demand of 6% that more than balanced sharp declines in the United States and Taiwan (China). European usage increased by 1.9%.”

Last, Chinese zinc imports contained in zinc concentrates fell 34.5% while the Far East nation’s net imports of refined zinc metal climbed 96%.

Zinc on the Rise?

Our own Raul de Frutos recently wrote that a year ago today, zinc was anything but bullish.

“Global zinc markets were in surplus and prices were heading lower while sentiment in the mental complex was pretty bearish. But the picture quickly turned around earlier this year. For zinc buyers, the right time to hedge/buy forward was in April, when prices were still below $1,900 per metric ton, as we pointed out in our Monthly Outlook,” de Frutos wrote.

How will zinc and base metals fare for the remainder of 2016 and into 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:

No one has really been talking about lead this year. The metal, with relatively “boring fundamentals,” hasn’t really caught investors’ eye this year. Especially, when its metal cousin zinc is getting all the attention.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

However, if you are a lead buyer, don’t wait until this metal gains popularity, because it might be too late. Perhaps this metal hasn’t really made it to the front pages yet, but it’s worth paying attention to. Sometimes, a metal can rise significantly in price before the bullish story becomes clear.

3M LME lead hits 14-month high

Three-month London Metal Exchange lead hits a 14-month high. Source: MetalMiner analysis of FastMarkets.com data.

That’s what seems to be happening with lead. The metal hit a new 14-month high last week. It’s up over 20% since January. Read more