ROUND-UP – FastMarkets top stories from the week ending Sept 23

A round-up of the most read FastMarket stories from the week ending September 23. 

FRIDAY, SEPT 23 

Base metals on the London Metals Exchange ended the week with a whimper - some pre-weekend profit-taking zapped some strength out of the earlier rally.

Thomas Tumoscheit, a trader of non-ferrous metals at US commodity trader Gerald, has left the company, industry sources said on Friday.

Interest in base metal futures among investors is likely to remain low in the next year or so because their appeal has waned due to a slowdown in the Chinese economy, Bonnie Liu, CEO of GF Futures (Hong Kong) Co, said.

Large deliveries of lead are set to be made to listed LME warehouses in Europe and Asia sheds next week while large-scale warranting and rewarranting takes place in these regions – believed to be orchestrated by Trafigura.

China’s nickel ore and concentrate imports rose 11.2 percent year-on-year and 30.1 percent month-on-month to 4.28 million tonnes in August, according to latest data from Chinese customs.

Deliverable copper stocks at SHFE warehouses fell 5,549 tonnes or 4.1 percent from last Wednesday to 130,780 tonnes as of September 23, according to data from the exchange.

China’s import of refined zinc fell 25 percent year-on-year to 25,305 tonnes in August, according to latest data from the Chinese customs.

Hong Kong-listed Chinese aluminium extrude Xingfa Aluminium announced on Friday that its largest shareholder Guangxin Aluminium – owned by China’s Guangdong provincial government – and a few top shareholders have proposed privatising the firm.

THURSDAY, SEPT 22 

Base metals ended Thursday LME trading in positive territory - most hit multi-week highs today thanks to a weaker dollar after the US Federal Open Committee (FOMC) stood pat.

Chinese zinc smelters are increasingly turning towards North Korea as a source of concentrates supply rather than traditional overseas partners while treatment charges (TCs) in the international market remain soft, market observers claimed.

Several members of ICBC Standard Bank’s base metals team have left the company, including head of trading Mark Thompson, sources told Metal Bulletin.

Treatment charges (TCs) for zinc and lead concentrate have dropped below $100 per tonne for the first time in several years, as some smelters finally accepted lower terms for spot purchases in light of tightening supply.

Attendees at the FOW Trading conference here cast doubts on China’s ability to open up its commodities futures markets to overseas participants any time soon. 

Aluminium trader Stephen Upot has returned to the metals market after leaving Red Kite – he has set up his own trading firm, Converse Commodities Ltd, FastMarkets has learned.

Former Trafigura trader Ross Miles has joined HDP Trading in London this month to develop an aluminium trading book.

Physical copper and aluminium trader Vadim Linchevsky has joined Viant Commodities.

The share trading halts of Chinalco Mining Corp International (CMCI) and Chinese aluminium extruder, Xingfa Aluminium Holdings, on the Hong Kong stock exchange have extended into a week, sparking speculation that CMCI’s parent company Chinalco could be taking over Xingfa.

WEDNESDAY, SEPT 21 

South Korea’s emergence as a hub for financing aluminium and the subsequent influx of metal is weighing on the Southeast Asian market, with warrants now freely available and with zero premium over cash costs.

Chinese zinc smelters are increasingly turning towards North Korea as a source of concentrates supply rather than traditional overseas partners while treatment charges (TCs) in the international market remain soft, market observers claimed.

Aluminium prices will hover between $1,480 to $1,645 until the metal recovers in the second half of 2017 when reduced Chinese stimulus forces production cuts and rebalances the market, CRU noted at the ISRI Roundtable

United States aluminium premiums have inched up from a seven-year low but few are expecting a sharp rally because the region remains flush with imports.

The Federal Open Market Committee (FOMC) kept interest rates unchanged on Wednesday but the policy board did lay the groundwork for an increase in the coming months.

Base metals traded inconclusively on the LME on Wednesday, with investor hesitation evident ahead of the conclusion of the US monetary policy meeting later today, traders said.

All base metals were in deficit in January-July, with the copper market undersupplied by 151,000 tonnes, the World Bureau of Metal Statistics (WBMS) said.

Technical issues last week at a boiler at Sterlite’s Tuticorin copper smelter in southern India will affect around 15,000-20,000 tonnes of copper cathode production, a source close to the company claimed.

The stabilisation of the Chinese economy and reduced expectations of US interest-rate rises will support the non-ferrous metals market, the China Nonferrous Metals Industry Association (CNIA) said.

China’s export of aluminium fabricated products rose 25.1 percent year-on-year and 5.7 percent month-on-month to 370,000 tonnes in August, according to final trade data published by the country’s General Administration of Customs on Wednesday.

China’s import of unwrought copper and copper alloy rose 1.5 percent year-on-year but fell 3.2 percent month-on-month to 300,000 tonnes in August, according to final trade data released by the country’s General Administration of Customs on Wednesday.

TUESDAY, SEPT 20

Physical base metal markets remained largely sluggish this week despite a pick-up in spot activity and a rise in aluminium.

Base metals apart from aluminium finished Tuesday LME trading higher on improved sentiment, albeit in thin trading conditions.

Copper has managed to hold around one-month highs on the LME Tuesday despite expectations of further deliveries into listed sheds in Asia, suggesting increases have been priced in, Citi Bank said.

Macquarie has upgraded all of its base metal price forecasts apart from for copper, describing any meaningful upside in the metal as a “forgotten dream”.

A court in southern China has officially declared Guangxi Nonferrous Metals Group bankrupt, according to an official report. 

Southwire Company has bought United Copper Industries, which operates a 450,000 square foot mill and manufacturing plant in Denton, Texas. Terms of the deal were not disclosed.

South Korea’s Public Procurement Service (PPS) bought 2,000 tonnes of aluminium at premiums of $69-70.5 per tonne via a tender. 

CME Group’s aluminium MW US Transaction Premium (AUP) contract moved back above 6 cents per pound amid an uptick in third-quarter demand and a more favourable inventory financing environment.

The nickel market is expected to extend its current momentum into 2017 after production shortfalls and an uptick in global demand helped the metal to recover from a 13-year low, speakers said at the Institute of Scrap Recycling Industries (ISRI) roundtable here.

Aluminium drawing stock, bare wire and rod & bar net shipments by US and Canadian producers totaled 103.3 million pounds or 46,856 tonnes during August 2016, a rise of 6.8 percent year-on-year. 

Aluminium sheet and plate net shipments by US and Canadian producers totalled 760.1 million pounds or 345,000 tonnes during August 2016, a rise of 5.3 percent year-on-year.

Chinalco Yunnan Copper Resources (CYCR) is seeking additional funds of A$1.77 million ($1.3 million) because it expects “an opportunity” in the next few months.

MONDAY, SEPT 19 

Base metals apart from copper ended Monday LME trading in positive territory, with nickel in particular performing strongly into the close, climbing above $10,000 to a one-week high.

Comex copper drifted around the previous settlement amid a general market retreat ahead of Japanese and US monetary decisions.

Consumers in China are positive on domestic copper demand growth in the fourth quarter, with the local property market picking up pace and robust buying from state grid sectors due to China’s urbanisation process.

China’s refined zinc production fell 2.8 percent year-on-year to 517,000 tonnes in August, according to data published by the country’s National Bureau of Statistics on Monday.

Chinese refined copper metal output growth picked up in August, increasing 12.4 percent year-on-year to 743,000 tonnes, according to data published by the country’s National Bureau of Statistics on Monday. Production growth in July was at 9.6 percent year-on-year.

China recently announced a number of improved macroeconomic data which brought back some optimism in the copper market, but market participants remained cautious over the metal’s near-term price direction and demand.

Workers at Anglo American’s Los Bronces copper mine in Chile have ended a week-long strike after the company reached a wage agreement with two unions last Friday.

Copper contracts on the Shanghai Futures Exchange and the London Metal Exchange headed in different directions during Asian trading hours on Monday with short-covering lifting SHFE copper prices as Chinese investors return from Mid-Autumn festival holidays.

 

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.