David Hargreaves on Metals and Minerals, week 42 2013

Metals and mineralsAlways room for a surprise. We have been conditioned over the past few months to accept that aluminium and nickel are in long term surplus whilst copper ton is moving towards that condition. This week – not that it may signify – copper stocks moved down 2.3% as the price nudged up almost 2%. Nickel strengthened but aluminium continued on its downward trajectory. Rio Tinto’s Q3 results, as we show in Majors, tell us what we already knew: that the big producers have no intention of cutting back to address the oversupply position. Dog bites dog. So unless demand improves prices will weaken further.

We show below the annual movement in the prices of major mineral commodities 2006-13 to date. Not only are the changes dramatic they tell us much about the mining roller coaster we have ridden in that seven year period.

Movement in commodity pricesLead, nickel, tin, zinc, oil and gold

WIM asks: Were these gyrations engineered by the actions of the conglomerates miners or where they victims of the market? We are considering asking for donations to a fund to sponsor the cost of trolling the beaches and bars of Grand Cayman, Acapulco, St. Moritz etc to track down the ex CEOs and get their views. Any takers?

Tin continues to fascinate. As with a string of other minerals (see Minors) it was allowed to become dominated by Indonesia which presently, in a growing position of importance in that metal, nickel and coal, is at odds with itself over policy. Its antics of late have shown RSA to be quite civilised. Like it stopped exports of non-refined metals without having enough smelter capacity of its own. So in September, tin exports were a mere 786t, down 88% on August. This is a c. 350,000tpa market and 40% of all exports emanate from Indonesia.

WIM says: We are not yet advocating panic buying of baked beans, but stranger things have happened.

Metals stocks in LME warehouses and prices

About David Hargreaves

David Hargreaves

David Hargreaves

David Hargreaves is a mining engineer with over forty years of senior experience in the industry. After qualifying in coal mining he worked in the iron ore mines of Quebec and Northwest Ontario before diversifying into other bulk minerals including bauxite. He was Head of Research for stockbrokers James Capel in London from 1974 to 1977 and voted Mining Analyst of the year on three successive occasions.

Since forming his own metals broking and research company in 1977, he has successfully promoted and been a director of several public companies. He currently writes “The Week in Mining”, an incisive review of world mining events, for stockbrokers WH Ireland. David’s research pays particular attention to steel via the iron ore and coal supply industries. He is a Chartered Mining Engineer, Fellow of the Geological Society and the Institute of Mining, Minerals and Materials, and a Member of the Royal Institution. His textbook, “The World Index of Resources and Population” accurately predicted the exponential rise in demand for steel industry products.

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