ROUND-UP – FastMarkets most read stories from the week ending May 20

A round-up of FastMarkets’ top stories published during the week ending May 20:

Friday, May 20 

The Olin Brass integrated brass and copper mill in East Alton, Illinois, is running at reduced production due to an equipment failure impacting an intermediate segment of the plants’s production process.

Physical gold markets remained largely at a discount in a week where the dollar surged to a one-month high on hawkish comments from the Federal Reserve, which the market interpreted as foreshadowing higher interest rates.

Spot purchases for zinc and lead concentrates have slowed in May with treatment charges and refining charges (TC/RCs) steady during this month.

Premiums for 6063 aluminium extrusion billets across the world have been under pressure this month, with competitive offers reported particularly in Europe while a supply glut continues to bite.

Platinum Week in London was more upbeat than last year’s event, although it is yet to be seen if the rally in PGMs can be sustained.

The London Metal Exchange “anticipated” a further fall in aluminium stocks in listed warehouses this year after the introduction of queue-based rent capping (QBRC) and does not feel this will affect price discovery, it said.

Deliverable aluminium stocks on the Shanghai Futures Exchange continue to trend lower, with inventories falling 7.6 percent or 22,154 tonnes week-on-week to 271,033 tonnes as at May 20. 

René van der Kam has set up a new Singapore-based metals trading venture called Viant just three months after leaving his position as head of base metals at Gunvor.

Deliverable copper stocks at warehouses in the Shanghai Futures Exchange system fell 28,876 tonnes or 10.1 percent week-on-week to 257,334 tonnes as of May 20, according to data from the exchange.

Avanco Resources is aiming to increase copper production at its Antas copper mine to 15,000 tonnes per year by 2018, before lifting its total copper capacity to around 50,000 tonnes per year in 4-5 years’ time via the completion of its Pedra Branca copper project in Brazil.

The global nickel and tin market registered deficits, while the aluminium market registered a surplus in the first quarter of this year, according to latest data released by the World Bureau of Metal Statistics (WBMS).

The global copper, lead and zinc market remained in oversupply in the first quarter, but the surplus have shrank, WBMS said.

THURSDAY, MAY 19 

Base metals continued to range higher during late-Monday LME trading while further strength in crude oil and gold outweighed some soft US economic data, traders said.

The LME will introduce an electronic trader programme for all of its members’ clients from June 1, with a reduced fee structure as an incentive. 

The CME Group’s Aluminum MW US Transaction Premium (AUP) contract solidified just below 8.0 cents per pound last week when both volumes and open interest ticked higher.

UK-based minor metals trading firm Trident Traders Ltd is to close down and cease trading, with John Price, who founded the company, to retire from the business.

CME Group, one of the world’s biggest derivatives exchanges is expanding its base metals suite by introducing aluminum A380 alloy futures contracts on June 6, pending approvals.

Market participants have over the past few months anticipated more restarts of idled Chinese aluminium smelting capacity given the rebound in aluminium prices this year. But tight credit, rising production costs and increased market volatility are checking the pace of restarts.

The International Wrought Copper Council (IWCC) expects the global refined copper market to be broadly balanced in 2016 and 2017. 

China’s fixed asset investment in the nonferrous metal smelting and fabricating industry fell one percent year-on-year to 129.2 billion yuan ($20 billion) in January-April, according to data published by the country’s National Bureau of Statistics (NBS).

China’s production of electrolytic aluminium fell 1.2 percent year-on-year and 1.9 percent month-on-month to 2.57 million tonnes in April, according to NBS data.

WEDNESDAY, MAY 18 

Market participants expect the Shanghai Futures Exchange (SHFE) to expand its warehouse storage for nickel further even after it lifted capacity by 32,000 tonnes earlier this year.

The global refined lead and zinc markets were both oversupplied in the first three months of this year, posting respective surpluses of 29,000 tonnes and 42,000 tonnes, the International Lead and Zinc Study Group (ILZSG) said.

Recent shifts in the market for mined copper have led to a deficit of high-arsenic ‘complex’ material and a trend towards higher treatment and refining charges (TC/RCs) for concentrates, sources told FastMarkets.

Base metals, despite clawing back some early losses, generally traded at lower levels on the LME on Wednesday when a steadier dollar encouraged liquidation, traders said.

Zinc traders and producers in the US are tightly holding inventories in anticipation of higher prices later in the year.

The US copper premium has edged up to a one-and-a-half-year high, with a somewhat perplexing bout of scrap tightness forceing secondary metal brokers into the primary market.

The PGM’s fundamentals will remain robust this year despite depressed spot prices, Justin Froneman, senior vice president of Sibanye, said.

Partnerships between exchanges may be of benefit to gold trading in London, Matthew Chamberlain, head of business development at the LME, said during Platinum Week.

Ordinary income at Mitsui Kinzoku’s metals business was 5.7 billion yen ($52 million) in fiscal 2015, missing its target of 12 billion yen due to operational delays at the Caserones mine in Chile.

The International Aluminium Institute (IAI) has appointed Hilde Merete Aasheim, executive vice president of Hydro’s primary metal business, its new chair.

Royal Nickel Corp (RNC) may reduce nickel production while lifting gold output at the Beta Hunt nickel-gold mine in Western Australia given the strength in gold prices relative to nickel prices.

China Hongqiao Group has entered into a Memorandum of Understanding (MoU) to acquire a 28.18-percent stake in Shenzhen-listed Chinese aluminium plate, strip and foil Loften Environmental Technology Co

TUESDAY, MAY 17

Physical base metal markets premiums fell across Asia over the past week, with excess supply swamping stagnant demand. China is still wrestling with overcapacity as well as slower growth; it’s a similar story in other countries in the region.

Base metals were largely rangebound during Tuesday LME trading, with some stability seen from strength in other commodities.

These are strange times. The mood at the London Metal Exchange is defensive, a reflection of falling volumes there while business at the Shanghai Futures Exchange (SHFE) and on Comex grows.

The US Aluminum Association’s index of net new orders of aluminium mill products decreased 3.2 percent in April from the previous month.

Stocks of aluminium at Japan’s major ports (MJP) fell six percent in April to their lowest since September 2014 but remain at high levels, according to data from Marubeni Corp.

Mitsubishi Materials is forecasting an 11.6-percent decline in operating profit for its metals business to 21.4 billion yen ($195 million) for the current fiscal year ending March 2017, according to its annual results released on Tuesday.

More than 70 percent of global nickel production is loss-making at the first-quarter average spot price but only 17 percent of these operations are at risk of closure, Norilsk Nickel said.

Moody’s Investors Service has downgraded the issuer rating of China Minmetals Corp to Baa1 from A3, reflecting the weak state of earnings in the company’s metal and mining portfolio due to the decline in global base metal prices.

MONDAY, MAY 16

Base metals continued to range higher during late-Monday LME trading while further strength in crude oil and gold outweighed some soft US economic data, traders said.

The LME will introduce an electronic trader programme for all of its members’ clients from June 1, with a reduced fee structure as an incentive. 

The CME Group’s Aluminum MW US Transaction Premium (AUP) contract solidified just below 8.0 cents per pound last week when both volumes and open interest ticked higher.

UK-based minor metals trading firm Trident Traders Ltd is to close down and cease trading, with John Price, who founded the company, to retire from the business.

CME Group, one of the world’s biggest derivatives exchanges is expanding its base metals suite by introducing aluminum A380 alloy futures contracts on June 6, pending approvals.

Market participants have over the past few months anticipated more restarts of idled Chinese aluminium smelting capacity given the rebound in aluminium prices this year. But tight credit, rising production costs and increased market volatility are checking the pace of restarts.

The International Wrought Copper Council (IWCC) expects the global refined copper market to be broadly balanced in 2016 and 2017. 

China’s fixed asset investment in the nonferrous metal smelting and fabricating industry fell one percent year-on-year to 129.2 billion yuan ($20 billion) in January-April, according to data published by the country’s National Bureau of Statistics (NBS).

China’s production of electrolytic aluminium fell 1.2 percent year-on-year and 1.9 percent month-on-month to 2.57 million tonnes in April, according to NBS data.

 

Will Adams

About Will Adams

William Adams has been involved in the metals markets since 1982 – he has experience in many areas of the market from researching to trading and has worked in London, New York and Tokyo.