David Hargreaves on Exchange Traded Metals, week 35 2014

Curious state of affairs in the base metals this week. Warehouse stocks nosed up, zinc by almost 12%, tin too was up 9%, perhaps a reaction to Indonesia and its miners smoking the pipe of peace. Prices were hardly stirred, bar lead, with a 12% rise, but still below its level of late 2012. Only nickel and tin have passed their peaks of 18 months ago and only copper and aluminium are in a 15-month contango. Those who claim to know say this:

Zinc and Nickel. Scotiabank tells us prices will move “dramatically higher” with the blame, as usual, resting on an improving Chinese economy

Copper. Antofagasta, which knows things, has cut its world copper surplus forecast to only 150,000t this year, from a previous 400,000, before a balance in 2016. Peru is set to resume its №2 slot as a world copper producer by 2016.

Some of this is driven by China Minmetals purchase of Glencore’s Las Bambas operation, for $7bn. Optimistically Peru claims its production will hit 2.8Mt in 2016, up from 1.4Mt in 2013.

Aluminium does look to be getting into balance, thanks to supply cuts and growing demand from carmakers. Alcoa has permanently closed its Portovesme smelter in Italy, removing 150,000t/yr of 3.6Mt company total.

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About 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.