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Metals Industry News

LIVE FUTURES REPORT 18/05: SHFE base metals broadly higher; aluminium bucks trend on huge LME re-warranting

Base Metals Market - Fri, 05/18/2018 - 04:25
Base metals prices on the Shanghai Futures Exchange were largely higher during Asian morning trading on Friday May 18, with the exception of tin and aluminium - the latter easing after a huge re-warranting in London Metal Exchange warehouses in Malaysia.
Categories: Metals Industry News

LME ASIA WEEK 2018: ‘Incredibly long, but shallow, bull market for copper’ – Marex’ Wolf

Base Metals Market - Fri, 05/18/2018 - 03:59
The outlook for base metals is a positive one, with copper ready to push into a long period of bullishness, said Guy Wolf, Marex Spectron’s global head of market analytics.
Categories: Metals Industry News

LME WEEK ASIA 2018: ‘Incredibly long, but shallow, bull market for copper’ – Marex’ Wolf

Base Metals Market - Fri, 05/18/2018 - 03:59
The outlook for base metals is a positive one, with copper ready to push into a long period of bullishness, said Guy Wolf, Marex Spectron’s global head of market analytics.
Categories: Metals Industry News

LME WEEK ASIA 2018: ‘Incredibly long, but shallow, bull market for copper’ – Marex’s Wolf

Base Metals Market - Fri, 05/18/2018 - 03:59
The outlook for base metals is a positive one, with copper ready to push into a long period of bullishness, said Guy Wolf, Marex Spectron’s global head of market analytics.
Categories: Metals Industry News

LME ASIA WEEK 2018: ‘Incredibly long, but shallow, bull market for copper’ – Marex’ Wolf

Base Metals News - Fri, 05/18/2018 - 02:59

The outlook for base metals is a positive one, with copper ready to push into a long period of bullishness, said Guy Wolf, Marex Spectron’s global head of market analytics.

“Copper is one of the more interesting metals. On our [Marex’s] estimates we have seen some extreme speculative length, but more recently it is flat,” Wolf said at the LME Asia Week seminar in Hong Kong.

“Positioning being flat in copper at the moment is a positive thing: the bus moves faster when it is empty,” he said.

“I believe there is going to be a really long bull market – but a different bull market to a last one,” Wolf said.

He noted that last year’s market was down to the sheer force of growth from China which allowed a quicker but very strong bull market, “whereas this year we will see the bull market run for much longer”.

“It will never look that great and along the whole way people will say it is unsustainable so no-one will invest. But it will be a long, shallow, bull market,” Wolf said.

The London Metal Exchange three-month copper price closed at $6,862 per tonne on Thursday May 18. It hit a high of $7,218 per tonne on January 16 with the metal trading between $6,800 and $7,000 per tonne for most of the year.

Wolf expects metals prices to climb “way higher than anyone ever imagines” as metals reap the rewards of critical changing market factors.

“In my opinion one of the reasons why commodities were so unloved a few years ago was because in a world of no income a negative carry asset became unattractive,” he said.

“But that becomes less of a factor as income rates rise – we will see a flood of money as yields rise.”

For example in nickel, Wolf says the health of the market is very strong and is in a good position to push higher this year.

“I think the electric vehicle story is a red herring, the time frame it will actually impact the market is a long way away. But it is good for psychology,” he said.

“Self-perpetuation is not a bad thing and when you look at the transactional pattern behavior, there is still aggressively more buyers than sellers – it is relentless.”

Nickel prices surged hit their highest since December 2014 earlier this year at $15,875 per tonne when the metal rallied over 10% in a matter of minutes.

The LME three-month nickel price was most recently trading at $14,745 per tonne.

Wolf admits there is a current lull in zinc, with the original reasons for bullishness filtered out, but says the metal “still has a case”.

“The best time to bet on a bull market is when everyone doubts it,” he concluded.

The post LME ASIA WEEK 2018: ‘Incredibly long, but shallow, bull market for copper’ – Marex’ Wolf appeared first on FastMarkets.

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LIVE FUTURES REPORT 17/05: LME nickel price shows strength; aluminium price drops

Base Metals Market - Thu, 05/17/2018 - 18:27
Base metals on the London Metal Exchange ended mostly higher at the close of trading on Thursday May 17, with aluminium’s three-month price down 1% after a huge re-warranting of 138,650 tonnes at Port Klang this morning.
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Massive Malaysia rewarranting offers sliver of short-term bullishness for physical aluminium market

Base Metals Market - Thu, 05/17/2018 - 17:46
A large rewarranting of aluminium in Malaysia on Thursday May 17 stirred up slightly bullish sentiment in Europe’s physical aluminium market.
Categories: Metals Industry News

CME Group's expanding global reach is key factor in growth of market share

Base Metals Market - Thu, 05/17/2018 - 17:33
The CME Group's growing share of global trade in recent years has been driven by its increasingly global reach since its commercial push in base metals began in 2012, its global head of metals Young-Jin Chang told Metal Bulletin this week.
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LIVE FUTURES REPORT 17/05: Comex copper price inches higher; dollar rises

Base Metals Market - Thu, 05/17/2018 - 14:50
Comex copper prices inched higher in the US morning on Thursday May 17 despite the dollar index rising and general uncertain conditions in the geopolitical space.
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NORTH AMERICAN MORNING BRIEF 17/05: Major Malaysia ali rewarranting; LME Asia Week coverage

Base Metals Market - Thu, 05/17/2018 - 12:20
The latest metal markets news and price moves to start the North American day on Thursday May 17.
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LIVE FUTURES REPORT 17/05: LME aluminium price falls 1.3% after huge Malaysian rewarranting

Base Metals Market - Thu, 05/17/2018 - 12:03
Base metals on the London Metal Exchange were split into two camps during morning trading on Thursday May 17 after a large rewarranting of more than 138,000 tonnes of aluminium in Port Klang.
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FOCUS: Major Chinese copper smelter expansions to drive Q3 concentrate imports

Base Metals Market - Thu, 05/17/2018 - 11:44
New smelters and expansions at a suite of Chinese copper smelting companies will create fresh demand for concentrates from the third quarter of this year.
Categories: Metals Industry News

SHFE vs LME physical arbitrage 17/05: Copper, aluminium, zinc, nickel

Base Metals Market - Thu, 05/17/2018 - 11:14
The arbitrage for copper, aluminium, zinc and nickel imported into China on Thursday May 17*
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China Ali ingot ADC 12 export price hits record high on tight scrap raw materials; domestic market under pressure on ample stock

Base Metals Market - Thu, 05/17/2018 - 10:55
Chinese aluminium ingot ADC 12 export prices to main Japanese ports (MJP) hit a record high on Wednesday May 16, pushed up by a tight raw material market in China after the temporary one-month shutdown of the China Certification & Inspection Group’s (CCIC) North American office, which stopped all scrap imports to China immediately.
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FOCUS: Major Chinese copper smelter expansions to drive Q3 concentrate imports

Base Metals News - Thu, 05/17/2018 - 10:44

New smelters and expansions at a suite of Chinese copper smelting companies will create fresh demand for concentrates from the third quarter of this year.

Major smelters starting up in the coming months include Chalco’s Ningde smelter and Lingbao Jincheng Metallurgical, while Tongling’s Ausmelt project is due later this year.

Having been beset by a series of delays, Chinese copper smelting expansions are likely to ramp up next year.

Trial operations from next month should mark the start of a new wave of copper smelting and refining capacity in China, which should boost copper concentrate imports but could also cap growth in import demand for cathode and blister copper.

China’s copper concentrate imports at 4.67 million tonnes in the first quarter were up 8.37%, the highest figure ever for the first quarter of the year.

“[But] with additions over the past five years taking China to ~40% of global copper smelting output, and over 1 million tonnes of new capacity to be added of the rest of this year, this trend is posing new challenges in the copper market,” BMO Global Commodities Research head Colin Hamilton said in a note in April.

“With utilization rates heading below 85%, this tends to mean only one thing – depressed profitability,” he added.

Hamilton expects closures of outdated operations and a “one-in, one-out rule” governing new capacity in future, he also said.

“We have utilization rates falling below 80% in our numbers so, although this capacity is being added, it’s questionable whether it ends up being such a huge net addition if you see other capacity struggling to secure material,” David Wilson, a commodities strategist for trading house Freepoint Commodities, told Metal Bulletin by phone.

“Breakeven for the majority of Chinese smelting capacity would be spot TCs at $70 per tonne and sulfuric acid prices of 200 yuan ($31.40) per tonne,” he added. “Some of the less efficient capacity is going to get squeezed out one way or another by falling TCs or acid prices.”

Private copper smelters in southern China are the most at risk due to depressed regional sulfuric acid markets.

Annual concentrate treatment and refining charges (TC/RCs), fees paid to smelters for the costs of processing concentrate into metal, have declined consistently since 2015.

Annual benchmark copper TC/RCs settled at $82.25 per tonne/8.225 cents per lb for 2018 contracts, the lowest in five years. Meanwhile, the spot market last month slipped to its lowest since 2013 at $70/7 cents when traders bid down cargoes in expectation of a third-quarter deficit, based on demand from smelter expansions as well as potential mine supply disruptions.

RCs for 98-99% purity blister copper have risen sharply this year to $225-245 per tonne in the spot market, largely based on Chinese smelting capacity additions and a concurrent lack of refinery growth, market sources said.

“It’s very likely that we will see a lower copper concentrate TC/RCs in the second half year as smelters need to get well prepared for their expansion projects. If Glencore’s Pasar copper smelter and India-based Sterlite smelter recover operations in the second half year, no doubt it will depress TC/RC further by that time,” Xianfei Ji, a copper researcher at Guotai Junan Futures, said.

But continued delays to certain projects could defer at least some of this year’s demand boost until 2019.

“As the big project in Chifeng has been delayed to next year, and new projects to start up this year won’t reach full utilization, demand for copper concentrates is not as strong as market expected, so we don’t anticipate tight supply in raw materials in the second half of the year,” Citic Futures research director Yongqi Xu said.

June start date at Ningde
Chalco’s new smelter in Ningde, Fujian province, will begin trial operations at the end of June as planned, sources at the company said. Although construction of the project is complete, auxiliary furnaces are not yet ready, a market source said.

Full refined copper capacity, to be realized in two phases, will be 400,000 tonnes per year. Trail operation of the first phase will bring refined copper capacity of 200,000 tpy come online this year.

But the expected capacity utilization rate during trial operations will be 40-50% of this total, in line with standard industry practice, sources said.

Given anti-pollution controls in place at the plant, the company does not expect to fall foul of environment protection policy, sources added.

Yunnan Copper’s concentrates buying team will handle concentrates purchasing for the Ningde smelter, sources with knowledge of the matter said.

Trial ops to start at Lingbao, Tongling Jinchang smelter to start in H2
Meanwhile, Henan-based Lingbao City Jincheng Metallurgical Co Ltd will start trial production of a new 100,000-tpy refined copper smelter in the third quarter as planned, a company source said.

The company expects to consume 180,000 tonnes of copper concentrates during a July-September trail period, with 60% likely to consist of imported material.

After the trial, the smelter project will have a three-month adjustment period and will officially enter operation from the start of next year, the company source added.

“The major business of the company is gold smelting. The copper project aims to improve the purity of its smelted gold,” a market source said.

And Tongling Nonferrous Metals Group will start its new Jinchang smelter at an as-yet undecided date in the second half – a slight delay from its earlier plan for a second-quarter start-up.

The smelter will have full blister capacity of 200,000 tpy, of which 50% will supply the company’s affiliated refinery, a company source said, adding the project is still in the equipment installation phase.

Yunnan Copper’s Chifeng Project delayed
Not all projects are ramping up on-schedule, though – the expansion of Yunnan Copper’s Chifeng project in Inner Mongolia to 400,000 tpy from 130,000 tpy at present has been delayed until next year, sources with direct knowledge of the matter said.

“It was planned for this October but now the commencement date has been postponed to April 2019, a delay of six months or so,” one source said.

A source at Yunnan Copper confirmed that the smelter’s arrival will be delayed but declined to provide a date when it expects either trial or commercial production to start.

In the first phase of the project, Yunnan Copper will build and ramp up production at a 200,000-tpy smelter to complement existing operations. In the second phase, capacity at the new smelter will be expanded by 200,000 tpy, at which point the original smelter will be closed.

“We started stocking concentrates for projects from the second half of last year,” the source at Yunnan Copper said.

Other expansion projects to track
Henan-based Zhongyuan Gold Smelter started a new smelting project in January to raise its refined copper capacity to 350,000 tpy from 200,000 tpy, two market sources said.

Meanwhile, participants are closely watching other smelter expansions. These include projects at Yuguang Gold & Lead to raise refined capacity by 100,000 tpy, with trial operations starting as planned; and Qinghai Western Mining, to raise refined capacity by 100,000 tpy, where trial operations also started in the second quarter

Further forward, Shandong Humon Smelting will start trail operations in the third quarter on a project to increase refined capacity by 170,000 tpy; and Guangxi Southern Copper will raise refined capacity by 300,000 tpy, with trial operation set to start either in the fourth quarter or in 2019 – details have yet to be confirmed.

Citic Futures has lowered its anticipated smelting growth forecast in China to 700,000 tonnes for 2018 from earlier expectations of more than 1 million tonnes, Xu said.

“The growth rate in raw materials [supply] is slower than smelter capacity growth. Currently, it’s good enough for Chinese smelters to see TCs remaining above $70 per tonne this year compared with the current level of $75-78,” Citic’s Xu said. “[But] we expect a worse situation for smelters next year.”

Additional reporting by Julian Luk in Hong Kong

The post FOCUS: Major Chinese copper smelter expansions to drive Q3 concentrate imports appeared first on FastMarkets.

Categories: Metals Industry News

LME ASIA WEEK 2018: NEV story ‘not a red herring’, says Goldman Sachs

Base Metals Market - Thu, 05/17/2018 - 10:31
The new energy vehicle (NEV) story is not a “red herring” and nickel physical market participants need to lock in prices now , according to Robert Hawkes, executive director, Goldman Sachs International.
Categories: Metals Industry News

LME ASIA WEEK 2018: LME does not have revenue projections for OTC booking fees, CEO says

Base Metals Market - Thu, 05/17/2018 - 09:55
The London Metal Exchange does not have projections of how much revenue it might make every year from the introduction of the over-the counter (OTC) booking fees, the exchange’s chief executive officer (CEO) Matthew Chamberlain has said.
Categories: Metals Industry News

LME ASIA WEEK 2018: LME confident that warehouses fulfill role positively - CEO

Base Metals Market - Thu, 05/17/2018 - 08:40
The London Metal Exchange believes its warehousing system is robust and remains committed to working with members to make warehousing easier, according to the exchange’s chief executive officer (CEO).
Categories: Metals Industry News

LME ASIA WEEK 2018: LME confident that warehouses fulfill role positively – CEO

Base Metals News - Thu, 05/17/2018 - 07:40

The London Metal Exchange believes its warehousing system is robust and remains committed to working with members to make warehousing easier, according to the exchange’s chief executive officer (CEO).

“We are confident that our warehouses reflect the underlying elasticity of supply,” Matthew Chamberlain told delegates of the LME Asia Metals Seminar in Hong Kong on Thursday May 17.

“There is no target level for stocks. All we want is a network that reflects real-world buying and selling, and that the metal is there when we need it,” Chamberlain added.

The exchange came under fire following its warehousing reform – which saw the implementation of the Load-In/Load-Out policy in 2013 and queue-based rent capping rules in 2015.

Both fulfilled their duty of removing structural queues at LME warehouses, but in turn stocks at LME-listed warehouses have fallen significantly in recent years.

“Stocks peaked in 2012/13 but we took definitive action to solve problems with the warehouses which meant stocks fell as a result,” Chamberlain said.

“People were worried. They questioned: ‘Did we break our warehousing network?’ – but we, the LME, do not believe we did that,” he said.

Chamberlain noted that stocks at LME warehouses had begun to rebound in the first few months of this year – although have fallen in recent weeks due to recent developments, with aluminium stocks being sucked up to meet global demand.

“We continue to work extremely hard with our warehousing network and through our warehousing committee are always working to make things better,” Chamberlain added.

Pleased with Rusal reaction
Following the announcement on April 6 that US Department of the Treasury had sanctioned and frozen the assets of Oleg Deripaska and Russian aluminium producer UC Rusal, the LME reacted quickly by introducing a “conditional temporary suspension” on placing Rusal metal on-warrant in its warehouses.

The exchange stated that the suspension is in place unless “the metal owner can demonstrate to the satisfaction of the LME that it will not constitute a breach of the sanctions.” The suspension is still in effect – and remains so until further notice.

“Aluminium has certainly been complex, and the biggest danger with any sanction or tariff is uncertainty,” Chamberlain said.

“But the LME acted quickly and decisively and we are pleased to see the global industry followed by accepting LME warehouse-approved metal to be used in the industry,” he added.

The post LME ASIA WEEK 2018: LME confident that warehouses fulfill role positively – CEO appeared first on FastMarkets.

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