David Hargreaves on Exchange Traded Metals, week 17 2014

Hardly a whisper on warehouse stock levels, bar zinc nudging down. Cash prices, too, were muted, but nudging ahead. Forward prices, too, are showing only copper and aluminium as front-runners.

We see:

LME Metals, cash versus 15-month prices 25 April 2014

Aluminium +25%, Copper +8%, Lead -8%, Nickel<1%, Tin <1%, Zinc -6%

One man’s meat? Anglo American decided zinc was a bad thing a couple of years ago and decided to disengage.

Glencore thought it a good thing. It seems it still does. So it has, for an initial $10M, picked up the 27.3% stake in the Perkola project in Burkina Faso from Blackthorn Resources. Insiders say the deposit will need $3000/t zinc to make it pay, compared with a current $2000/t. Glencore is beginning to worry us a teensy-weensy bit. It has, it is reported, stumped up $90M of debt so far to the project. So now Blackthorn (BTR.AX A$0.17; Hi-Lo A$0.63-0.14) will turn to the Kitumba copper project in Zambia.

The IMF has weighed-in with a forecast for growth in the advanced economies, concluding it could be 3.6% this year and 3.9% next. Then it talks of which commodities which vary according to the study and tell us that the basics like iron ore and copper will drag as we advance, whilst zinc, aluminium and tin will surge on. Sounds sound.

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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.