ROUND-UP – The top FastMarkets stories from the week ending July 1

A round-up of the most read FastMarkets stories from the week ending July 1. 

FRIDAY, JULY 1 

All of the Pacorini Metals warehouses listed with the London Metal Exchange have changed their named to reflect the company’s new Access World branding, the exchange said in a notice to members.

Base metals on the London Metal Exchange (LME) rose on Friday on hopes that central banks in all regions will soon launch new stimulus measures to shore up liquidity and growth after the UK’s surprise vote to leave the EU.

JP Morgan has raised its price forecast for zinc the second half of 2016 – the metal continues to outperform its predictions, it said in its quarterly report.

Zinc contracts on the Shanghai Futures Exchange are showing signs of overheating after fund interest lifted the September contract to a fresh 13-month high on Friday.

Deliverable copper stocks at warehouses in the SHFE system rose 6,659 tonnes or 4.3 percent week-on-week to 161,894 tonnes as of July 1, according to data from the exchange. This is the first increase after seven consecutive weeks of decline.

Copper prices on the London Metal Exchange (LME) is expected to fluctuate around $4,600 per tonne on average in the third quarter with the trading range likely to be at $4,300-5,000 per tonne, according to market participants surveyed by FastMarkets.

China’s non-ferrous metals market may have bottomed out but outstanding problems like weak demand and unsustainable price increases is making it difficult for the domestic market to rebound, China’s Nonferrous Metals Industry Association (CNIA) said in a late-June report.

China’s year-on-year refined zinc production grew 2.1 percent in May, reversing the 2.5-percent decline in April, according to data published by China’s National Development & Reform Commission (NDRC) this week.

China’s year-on-year refined copper production growth slowed to 6.6 percent in May from 14.9 percent in April, according to data published by the NDRC. 

THURSDAY, JUNE 30 

Base metals continued to shake off the concerns and uncertainty surrounding the UK vote to leave the EU during Thursday LME trading, with most of the complex notching up multi-month highs, traders said.

Rio Tinto has transferred its 53.8-percent shareholding in Bougainville Copper Ltd (BCL) to an independent trustee, it said in a release today. 

Newmont has agreed to sell its Batu Hijau copper and gold mine via its interest in Indonesian subsidiary PT Newmont for up $1.3 billion to Indonesian bank-backed company PT Amman Mineral Internasional (PT AMI), the US miner said.

Jeremy Goldwyn, who spearheaded LME ring dealing member (RDM) Sucden Financial’s Asian market presence, has left the company and will be replaced by Lucy Wainman as head of sales (China).

Two large trading houses are widely believed to be involved in a tug of war of copper deliveries and cancellations in warehouses, generating uncertainty and affecting the near-term direction of the market.

WEDNESDAY, JUNE 29 

The London Metal Exchange (LME) reaffirmed on Wednesday that the UK Brexit referendum vote had no major impact on how the exchange functions.

Alcoa said as part of its split between an upstream and downstream business that it will issue $1 billion of new debt for the smelting business to ease the existing $8 billion debt burden on the remaining company, the company announced in an SEC filing Wednesday morning.

Financial incentives to deliver copper into London Metal Exchange-registered warehouses in Southeast Asia are falling, sources told FastMarkets this week, in line with the cash/threes spread returning to contango.

Metals ended Wednesday trading on the LME in positive territory, with many hitting multi-week highs while concerns surrounding global growth following UK’s vote to exit the EU subsided, traders said.

Base metals price are set to stall due to the UK’s recent unexpected decision to leave the EU, Citi Bank said, despite the mostly upward trajectory across most of the complex in the second quarter.

Norilsk Nickel has completed the closure of smelting and roasting operations at its Nickel Plant in the Russian city of Norilsk on environmental grounds.

Volatility levels for LME-traded options moved up in immediate trading after last Thursday’s UK EU referendum and have held close to those levels since then, although business and interest has not risen significantly, traders noted.

Dongying Fangyuan Nonferrous Metals and Donying Lufang Metals signed a $385 million structured syndicated loan with a group of 11 banks and Swiss trader Mercuria Energy Group during LME Asia Week in Hong Kong, sources told FastMarkets.

 TUESDAY, JUNE 28 

Base metals were in a more confident mood during Tuesday’s LME session, posting gains right across the complex – investors looked to move back towards risk-based assets, traders said.

Physical base metal markets were mixed in a week where equities and currencies took a hit from the UK’s shock decision to exit the European Union. Zinc and aluminium premiums fell in the US – formerly tight physical markets there are moving steadily into oversupply.

The LME has approved the resignation of a category 4 member Bank of London and The Middle East (BLME)

G.H. Financials (Hong Kong) Ltd has been approved for membership of the London Metal Exchange (LME) as a category 4 member, the exchange said on Tuesday.

Singapore Exchange (SGX) and the Baltic Exchange have agreed to extend the period of exclusive discussions about a cash offer for 100 percent of the Baltic Exchange share capital from June 30 to August 31, SGX said.

The Shanghai Futures Exchange aluminium backwardation is lasting longer than expected while the spot market supply remains tight – contrary to expectations that it could ease in June.

Independence Group has mined the first ore at its Nova project in Western Australia and is on track to commence production of nickel and copper concentrates in December, the company said in a filing to the Australia Stock Exchange on Tuesday.

MONDAY, JUNE 27

Base metals were largely rangebound during less-active Monday trading on the LME, with most settling lower – sentiment is turning cautious in the wake of the UK voting to leave the European Union (EU) last week, traders said.

The weakness in the US aluminium market extended into another week, with the nearby months of the CME Aluminum MW US Transaction Premium (AUP) contract dipping to seven cents per pound.

As Europe enters an unexpected period of uncertainty, due to the UK voting last week to leave the EU, prices of base metals are set to decline, Morgan Stanley said.

Talk that China’s State Reserve Bureau (SRB) is buying another 50,000 tonnes of copper this year has been met with scepticism, with market participants downplaying its effect even if the rumour proves true.

Sherritt International Corp has started a 14 day shutdown at the Ambatovy nickel/cobalt mine in Madagascar as it brings forward maintenance activity originally scheduled for August.

Initial deals for third-quarter aluminium ingot supply have been done at $90 per tonne for delivery to major Japanese ports (MJP) with one producer, sources close to the matter said. 

The base metals ended with strong gains on the SHFE during Asian trading hours on Monday – the most active SHFE copper contract closed two percent higher – surprising market participants who were expecting risky assets to dip after the Brexit vote on Friday.

Total profits among China’s non-ferrous metal smelters and fabricators rose 13.4 percent year-on-year to 53.05 billion yuan ($7.99 billion) in January-May, according to data published by the Chinese National Bureau of Statistics (NBS) on Monday.

Nyrstar NV has entered into a share purchase agreement to sell its El Toqui zinc-lead-gold mine in Chile to Australia’s Laguna Gold for $25 million in cash, the Belgium-based miner said on Monday.

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.