Shanghai Copper Rises to 11-Week High as Stockpiles Drop

Copper in Shanghai climbed for a third day to a 11-week high as stockpiles tracked by exchanges in London, Shanghai and New York slumped. Aluminum rose to the highest in four weeks.

The contract for delivery in August on the Shanghai Futures Exchange added as much as 0.8 percent to 49,110 yuan ($7,875) a metric ton, the highest price since March 7, and was at 49,020 yuan by 9:54 a.m. local time. Futures advanced 1 percent last week, gaining for the second straight week.

Refined-copper inventories dropped to 283,645 tons last week, the lowest level since 2008, according to data from exchanges. SHFE-tracked reserves fell 4.5 percent to 92,652 tons, near the lowest since December 2011. Inventories available for removal from LME warehouses fell below 100,000 tons for the first time since 2008. Markets in the U.S. and U.K. are closed today for holidays.

“Copper was supported by strong spot premiums in Shanghai and London because of the falling inventories,” said Lian Zheng, an analyst at Xinhu Futures in Shanghai. “The momentum should continue unless China posts disappointing economic data again and concerns over China’s physical demand arise.”

Copper for immediate delivery on the LME settled at $93 a ton above the three-month contract on May 23, the widest since May 2012. Higher prices for earlier deliveries usually signal limited supplies. The metal for delivery in July on the Comex in New York rose 0.7 percent to $3.189 a pound.

In Shanghai, aluminum for delivery in August added 0.5 percent to 13,565 yuan a ton after touching 13,660 yuan, the highest since April 25. The global aluminum market will be in deficit this year by 1.3 million tons, leading producer United Co. Rusal said May 23.

Gold production in Australia, the world's second-biggest producer falls 7%

Gold production in Australia, the world's second-biggest producer after China, declined 7% due to bad weather in Q1 2014.

According to industry consultant Surbiton Associates output declined to 68 metric tonnes in the three months through March compared to Q4 last year, but is up 8% year on year.

Heavy rain in the Goldfields region of Western Australia in mid-February is to blame for the drop according to the Melbourne-based firm.

Full mining at top producer in the region Regis Resources' Garden Well mine may only resume in June after it was submerged.

The price of gold is up nearly 8% this year, but down sharply from 2014 highs struck in March to trade below $1,300 an ounce.

Source: USGS via Wikipedia

Goldman, JPMorgan Sued over Zinc Prices

A lawsuit filed on Friday alleges that Goldman Sachs Group Inc , JPMorgan Chase & Co , the London Metal Exchange and metal warehouse operators have conspired since 2010 to manipulate the price of zinc in the United States.

The lawsuit, filed in the Southern District of New York, also names as defendants the mining and commodities trading group Glencore Xstrata and its Pacorini Metals USA LLC unit. Metro International Trade Services, the metal warehousing of Goldman Sachs, is also named a defendant.

The lawsuit, which seeks class action status, echoes the allegations made in previously filed lawsuits over alleged manipulation of the aluminum market in the United States.

It claims the defendants used a variety of means to restrain trade in zinc, including by manipulating LME rules to ensure long queues for metals and shuttling zinc between warehouses for no reason other than to "cause and exacerbate anticompetitive effects."

Like aluminum, physical prices of zinc have soared in recent years due to the queues, causing extra costs to users, such as galvanizers.

London Metal Exchange warehouses in New Orleans hold 80 percent of the zinc in the exchange-registered stockpile. Pacorini operates most of the sheds in that port city.

JPMorgan and Glencore declined to comment on the lawsuit. A spokesman for Goldman Sachs said it intended to "vigorously contest the suit."

LME did not respond to a request for comment.

The lawsuit was filed by Duncan Galvanizing Corp of Everett, Massachusetts.

Duncan Galvanizing did not return a call and an email asking for comment.

The case is Duncan Galvanizing Corp v. The London Metal Exchange, et al, U.S. District Court, Southern District of New York, No. 14-03728.

Global Lead mine supply grew 5% over the previous year in Q1 '14: ILZSG

The International Lead and Zinc Study Group (ILZSG) has released the preliminary data for world lead supply and demand during the first quarter of 2014. The provisional data indicates that the lead mine supply has grown by almost 5% year-on-year during the initial three month period of the year.

According to ILZSG, the world demand for refined lead metal exceeded supply by 10kt during the first quarter of the year. The total reported stock levels declined by 18 kt during the same period.

The higher mine output from Australia, Mexico, Peru and the US contributed to the 5% year-on-year growth in global lead mine supply. On the other hand, the mine supply from Canada and Turkey declined during the quarter.

The global refined lead metal production declined by 1.7% during Q1 this year. This was primarily on account of lowered production from China and the US.

The global demand for refined lead metal declined by 2% during the quarter. The apparent usage of refined metal by China and the US fell by 2.5% and 6.7% respectively. However, the apparent usage in Europe and Japan rose by 1.4% and 1% respectively.

ILZSG statistics indicate that the lead mine supply during the first quarter of 2014 totalled 1,161,000 tonnes as against 1,106,000 tonnes in Q1 2013. The global refined lead metal production during Q1 ’14 totalled 2,621,000 tonnes as against 2,665,000 tonnes in Q1 2013. The apparent lead usage totalled 2,631,000 tonnes during Q1 ‘14, down from 2,686,000 tonnes in the corresponding quarter in 2013.

Growing Use of Aluminium in Auto Industry Concerns

Alexey Mordashov, OAO Severstal billionaire CEO said the increasing use of aluminium in cars is a worrying factor for the steel producers. The industries were now grappling with excess capacity. Mordashov, in Bloomberg Television interview at the St. Petersburg International Economic Forum on Thursday, said the usage of steel substitutes in auto industry had been evident for decades.

He said that the steel producers has already made responses for the challenges due to steel substitute materials and must continue so. Automobile industry has started using aluminium in cars as it reduce the weight and also curtail the carbon emissions to the atmosphere. It meets all environmental standards.

Automobile industry Ford Motor Co. (F) will launch its new aluminium bodied F-150 pickup this year. This would add more aluminium, i.e., more than 250,000 tons, regarding the U.S demand for aluminium, based on Bloomberg Industries Report. Mordashov said that his industry continued to tackle the excess capacity.

Severstal billionaire CEO said, “We see global steel demand increasing by 3.5 percent to 4 percent this year; however, the shutting of capacities is going slower”. He said the countries admitted to cut down the global production so as to save the industries itself, last year. But, there was nothing happening in that regard, he added.

Severstal is planning to consider options for its U.S assets. These include a blast furnace in Michigan, which was built by Henry Ford, which delivers steel for the companies from Ford to Chrysler Group LLC. Severstal CEO said they would consider either of two choices- to develop or to dispose for their Dearborn and Columbus, Mississippi plants.

Mordashov said the diminishing trust had been the worst result so far of U.S and European Union Sanctions against the Russian Government. The company has not experienced any pressure due to the Ukraine crisis, he said, as it is not a factor in the possible sale of American business. 

Image Source : DUPRESS.COM

World Aluminium Conference, Duty-paid aluminium premium breached $400 per tonne for the first time in its history this week.

Bauxite export restrictions might put upward pressure on aluminium pricing.

Scrap traders are familiar with resource nationalism when it takes the form of export bans and restrictions on scrap metal leaving a given country. Those in attendance at the 2014 CRU World Aluminium event may have been sympathetic to similar restrictions facing the mineral ores sector. 

Sola Adebiyi, a senior consultant with London-based CRU, provided an update on bauxite ore export restrictions affecting the global aluminum market. The bans may ultimately exert upward pressure on the price of aluminum, according to Adebiyi and her colleagues at CRU.

 

The bauxite ban with the greatest current and potential affect is Indonesia’s near-total export ban, which went into effect in January 2014. The aim of the ban, said Adebiyi, is to attract major new capital investments in smelting and refining to Indonesia and to create jobs in the country.

 

According to Adebiyi, in recent years from 70 percent to 80 percent of China’s imported bauxite has been shipped from Indonesia. The 80 percent figure in 2013 occurred in part because Chinese aluminum smelters imported stockpiles of Indonesian bauxite in late 2013 to prepare for the export ban. Adebiyi said those stockpiles are likely to reach their end in the third quarter of 2014 if Indonesia does not lift or alter the terms of its export ban.

 

Among the alternative sources of bauxite for Chinese smelters is India, but that nation has enacted a 10 percent tariff on bauxite. Chinese companies are likely to turn toward Australia, Guinea and even as far away as Jamaica for bauxite, although importing from each of those nations involves higher shipping costs.

 

Adebiyi’s CRU colleague Michael Insulán said buyers in China’s Shandong Province have already been paying $80 per metric ton for bauxite ore delivered from distant ports, some $20 to $30 per ton higher than buyers with more favorable shipping routes.

 

In another World Aluminium event session, CRU’s Colin Pratt said the bauxite export bans “probably won’t do the economies of these countries any good, but it could do the aluminium industry some good.” The bans and tariffs could help to balance the primary industry’s overcapacity situation and exert some upward pressure on the price of aluminium, which would be welcome news for scrap dealers as well.

 

The 2014 CRU World Aluminium event was at the JW Marriott in Hong Kong May 19-20.

 Duty-paid aluminium premium breached $400 per tonne for the first time in its history this week. 

May 23 Europe: 1,500 tonnes of duty-paid aluminium sold at $415 per tonne Europe: 3,000 tonnes of duty-unpaid aluminium sold at $340-345 per tonne May 22 Europe: Small lots of duty-paid aluminium sold at $415-420 per tonne Europe: Duty-unpaid aluminium busienss reported at $340 per tonne May 21 Japan: Spot MJP cif indicated at $380-390 per tonne Europe: 3,000 tonnes of duty-unpaid aluminium sold at $340 per tonne Europe: 500 tonnes of duty-paid aluminium sold at $415 per tonne

Global Trade Tumbles Most In 5 Years.

Do not look at this chart if you remain of the opinion that everything is fine in the world. For the 3rd time in the last 4 months, world trade volumes dropped. The 0.5% fall in March - it must have been weathery all over the world? - continues the biggest plunge in global trade since May 2009. As WSJ reports, exports from developing economies in Asia recorded the largest decline, a drop of 4.5%. Central and Eastern Europe was the only region to record a rise in exports as the decline in trade flows is consistent with other evidence that suggests the global economy got off to a weak start this year. So, $12 trillion of global money printing and world trade is unable to sustain growth...

The last 4 month shave seen the biggest tumble in world trade since the financial crisis...

As World Trade has decoupled from the money-printing mania of the central banks as transmission mechanisms everywhere are saturated and broken...

Must mean that the central planners just need to print more?

Charts: Bloomberg