5 Yr Base Metal Charts (and LME Supplies)

[michael_selway]

Btw some historical charts of other commodities, see how they compare with base metals and each other etc.

1) CRUDE - http://futures.tradingcharts.com/chart/CO/M

http://www.eia.doe.gov/emeu/cabs/chron.html
http://www.lifeaftertheoilcrash.net
http://www.hubbertpeak.com/duncan/olduvai2000.htm
http://www.abc.net.au/catalyst/stories/s1515141.htm (short video)

2) GOLD - http://www.kitco.com/charts/historicalgold.html



3) SILVER - http://www.kitco.com/charts/historicalsilver.html



4) PLATINUM - http://www.kitco.com/charts/historicalplatinum.html

 

[michael_selway]

5) URANIUM - http://www.uxc.com/review/uxc_g_price.html

6) THERMAL COAL - http://www.globalcoal.com

7) SUGAR (ethanol) - http://www.nybot.com

8) ZINC - http://www.kitcometals.com/charts

 

[michael_selway]

from stockdoctor:

ZFX has attained the status of a Consistently healthy Star Stock following analysis of the company's latest interim results.

ZFX remains in a position of Strong financial health. With all ratios in Strong positions financial risk is manageable and the company is able to satisfy Golden Rule No 1.

Net operating profit before tax and significant items has risen markedly from $85.3 million in the previous corresponding period to $202.7 million. The result was driven by higher zinc prices and metal production. Return on Assets (ROA) has increased from 10.23% to 18.79% while pre abnormal Earnings per Share (EPS) has risen 164.57% to 46.30 cents. With strong growth in ROA and EPS the company is able to satisfy Golden Rule No 2.

The company last closed at $7.31 at a PE of 11.35 times, which when compared to the Materials sector average of 15.73 times, suggests the company is potentially undervalued at current prices. This is supported by the PEG of 0.07. With such a low valuation the company is able to satisfy Golden Rule No 3.

An interim dividend of 10 cents per share fully franked has been declared. This sees the company trading on a dividend yield of 1.92%, a modest yield by today's market standards. With a market capitalisation of $3,590 million ZFX easily satisfies Golden Rule No 6. With 22 day average daily dollars traded of $41.340 million liquidity is not an issue.

The outlook for the company remains positive with consensus analyst forecasts expecting ZFX to achieve full year EPS of 125.9 cents. This would see the company trading on a forecast PE ratio of 5.81 times and a PEG ratio of 0.07. The company's dividend is also expected to increase to 31.2 cents which would see the company trading on a forecast yield of 4.27%.

With a strong growth profile and an increasing yield, ZFX could possibly suit both growth and income seeking investors.

 

[michael_selway]

http://www.bloomberg.com/news/markets/commodities.html

Copper May Fall This Week as Blockade Lifted at Indonesia's Grasberg Mine
Feb. 27 (Bloomberg) -- Copper may fall this week after the Grasberg mine in Indonesia, the world's second biggest for copper, resumed operations following the end of a three-day blockade, easing concern about a shortage of the metal.

Six of 11 traders, analysts and investors polled by Bloomberg on Feb. 23-24 said copper will be little changed and four said it will drop. One forecast a gain.

Operations were stopped at Grasberg on Feb. 22 after villagers demanding to be allowed to sift through ore in the company's waste piles blocked a road leading to the site. The blockade was lifted at 6 p.m. Jakarta time Feb. 25, Freeport spokesman Siddharta Moersjid said in a telephone interview.

``Workers have returned and started the evening shift,'' Moersjid said. ``The blockade was opened voluntarily, and the protesters have given their demands to Freeport and the local administration. We will continue discussing their demands.''

Copper for delivery in three months on the London Metal Exchange rose 0.9 percent last week to $4,850 a metric ton. The metal has declined 2.5 percent since Feb. 7, when it traded at a record $5,100 a ton. Copper for May delivery on Comex gained 0.9 percent to $2.207 a pound.

Copper for May delivery on the Shanghai Futures Exchange declined 1 percent to close at 45,700 yuan ($5,682) a ton, the lowest level in four days. Chinese prices include 17 percent tax and a 2 percent duty.

Hedge-fund managers and other large speculators cut net long positions, or bets that prices will rise, on the Comex division of the New York Mercantile Exchange by 84 percent to 603 contracts in the week to Feb. 14, the lowest since May 2003, the U.S. Commodity Futures Trading Commission said Feb. 17.

Low Stockpiles

Any declines may be limited by concern global stockpiles are still low. Inventories of copper monitored by the LME, Comex and the Shanghai exchange dropped last week to 201,886 tons as of Feb. 24, equal to less than five days of global consumption.

The Grasberg mine produces about 4 percent of the world's copper. It's also the biggest gold mine. Production losses caused by two landslides at the mine in 2003 resulted in global output lagging demand that year and in 2004.

Smelters worldwide are ``well stocked'' with copper concentrate, Michaela Hessling, a spokeswoman in Hamburg at Norddeutsche Affinerie AG, Europe's largest copper refiner, said in an e-mail Feb. 23. Concentrate is a raw material shipped by miners to smelters.

More investment funds are putting money into commodity markets, Triland Metals Ltd., which trades on the LME floor, said in a report Feb. 24. Copper will top its record high this year, the company said.

`Stalemate'

As much as $200 billion of fund money is invested in commodities, of which $30 billion are in base metals, Citigroup Inc., the world's biggest financial-services company, said in a report dated Jan.25.

The six forecasts for little change in copper prices this week is the highest since Bloomberg began its weekly survey in May 2004.

``It's a stalemate,'' said Andrew Cole, an analyst at Metal Bulletin Research in London who was among those who predicted little changed. ``Funds' net longs are the lowest since mid-2003 but inventories are also very low.''

Beware those that produce alot of Copper:

BHP: Chile's state-owned Codelco is the world's largest copper producer. BHP Billiton became the world's second-largest copper producer after buying Australia's WMC Resources Ltd.

RIO: is the world's fourth-largest copper producer. Phoenix-based Phelps Dodge Corp, is the world's third-largest copper producer.

 

[michael_selway]

Omg Nickel LME stocks nearly all Gone! 30k+ supplies vanished in 1 day yesterday, any know why?

JBM - better watch out...

 

[rederob]

Omg Nickel LME stocks nearly all Gone! 30k+ supplies vanished in 1 day yesterday, any know why?

It's called an "error".
In fact LME inventories rose 174 tonnes overnight.
Kitco do not have a good record of always correcting their errors, so occasionally their metals charts are shoddy for a period.

 

[michael_selway]

It's called an "error".
In fact LME inventories rose 174 tonnes overnight.
Kitco do not have a good record of always correcting their errors, so occasionally their metals charts are shoddy for a period.

Yeah ic thx

Btw ZFX updated forecasts again, on Comsec

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 35.9 143.0 137.2 141.5
DPS 4.0 30.5 28.5 29.0

Was before

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 35.9 125.9 96.9 150.7
DPS 4.0 31.2 25.0 25.7

And before

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 35.9 92.8 132.3 126.7
DPS 4.0 27.2 30.0 31.9

 

[nizar]

http://www.aireview.com/index.php?act=view&catid=8&id=3667

 

[michael_selway]

http://www.aireview.com/index.php?act=view&catid=8&id=3667

New ZFX forecasts out on Commsec!

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 35.9 149.0 183.8 139.7
DPS 4.0 25.1 34.1 29.0

Funny how the below says sell?

ZINIFEX LIMITED
Overnight Price: $7.93</td>

Merrill Lynchrates the stock as Sell, High Risk
The broker suggests the stock is expensive at current levels and should be sold at prices above $6.00, as the current share price implies a zinc price that is not sustainable in its view. Following a review of its model the broker has lowered its dividend and earnings forecasts for the stock.

http://www.fnarena.com/index2.cfm?t...ewsID=CC7B38FA-3048-5296-A20D3EC0BADD294E#ZFX

 

[rederob]

MS
Zinc has a truckload of upside to its price.
It's good advice to ignore mainstream commentators.
I prefer KZL to ZFX, but still think ZFX will outperform many other metals producers this year.
I will be surprised if zinc does not hit $3000 by year's end, and actually think it will hit it by September: No other base metal has as strong a case for rising in price this year.

 

[nizar]

http://www.aireview.com/index.php?act=view&catid=8&id=3675

 

[michael_selway]

http://www.aireview.com/index.php?act=view&catid=8&id=3675

http://za.today.reuters.com/news/ne...3_RTRIDST_0_OZABS-MARKETS-METALS-20060317.XML

"Speculators send copper to record peak on LME

LONDON (Reuters) - Copper prices hit a new all-time high of $5,105 a tonne on the London Metal Exchange (LME) on Friday, clearing the early-February previous peak of $5,100 on renewed speculative buying, traders said.

Three months prices were quoted at $5,105/5,115 at 1625 GMT, up from Thursday's close of $4,930."

Hm i wonder how much is speculation? 10%?

 

[rederob]

"Speculators send copper to record peak on LME"

Hm i wonder how much is speculation? 10%?

MS
Not much point wondering about "speculation": It's also built into the price of most traded equities.
The issue is what you act on and why?
The ISCG reckon copper was in "balance" last year, but several key commodity followers reckon it was in deficit.
The ISCG has to rely on reported numbers, but other market followers interpolate merchant and consumer destocking - ie numbers that remain unreported.
Another way to test the picture is to look at prompt delivery prices, which have risen lately in Europe, suggesting metal is tight.
Although global output rose 4% last year, it was at least matched by demand.
The supply/demand equation for 2006 should tighten further in the second quarter, so it leaves us to review the picture in the second half.
What factors will then be at play?
That's speculation.

 

[nizar]

OH MY, LOOK AT ZINIFEX EARNINGS UPGRADE FROM MERRIL LYNCH AT THE BOTTOM OF THIS ARTICLE!!

Goldman Sachs JB Were Bows To Higher Metal Prices
March 02 2006 - Australasian Investment Review – (AIR)

Over the last two years, we have seen a battle rage between those analysts who subscribe to the "super-cycle" paradigm, otherwise known as the "stronger for longer" paradigm, and those who warn that history is littered with analysts who ignored the "fact" that markets always revert to their long term mean.

As time passed, numbers in the mean reversion school dwindled as more and more analysts bowed to reality and threw their models out the window. Metals prices, it seemed, were not going down.

Twelve months ago, GSJB Were analysts were among those arguing strongly on a stronger for longer theme, and duly shifted their metal price forecasts as a result. Nevertheless, Weres maintained an ultimate belief that within about two years prices would indeed revert towards the mean.

In January, the analysts were forced to upgrade shorter date prices to more closely reflect spot prices. Weres did not wish to be seen undervaluing Australian resource stocks, but maintained that prices a full two standard deviations above the mean were looking unsustainable. The analysts announced they would put prices under monthly review.

Suffice to say, the review is over. Weres’ forecasts now "embrace the notion of step-change". Having studied the situation extensively, the analysts cannot perceive of a supply surge that will suddenly take the market into surplus. Nor do they consider that current high prices will serve to undermine demand and rebalance the markets. They are now "increasingly confident" that higher commodity prices are with us for some time to come.

The analysts have used recently available data to reassess their demand/supply modelling, and rolled out longer dated forecasts to 2010. New price forecasts appear in the accompanying table, and Weres now suggests an order of preference for metals investment should be zinc number one, followed by nickel, then copper, aluminium and lead.

China’s predicted ongoing demand has been well documented. On the supply side, Weres can identify a number of issues that have limited the response of the mining industry to higher prices: a paucity of quality projects ready for development; infrastructure limitations; rising capital and operating costs; skills shortages; and long lead-times for equipment orders.

Weres still believes in a natural order, meaning that one day these bottlenecks will be overcome, and supply will arrive. However, the analysts’ "tenure of forecast" is only to 2010, and they can’t see it happening before then. China, and increasingly India, will ensure commodities prices remain demand-led.

Is there a risk to Weres’ newfound faith? Well, there’s always a risk. At this stage of the game, a risk would have to be a demand disruption of global consequence, as has occurred before in the form of two oil shocks, the fall of the Soviet Union, and the Asian crisis.

Such crises are never easy to predict, but Weres suggests a collapse of Middle East stability and a bird flu pandemic are two that spring to mind. On the supply side, well the industry is already working at 100% capacity just to meet demand. Any "shock" would likely only be on the downside.

As Weres’ analysts to date have been mean reversion disciples, they have not often changed their long term price forecasts. Indeed, when moved to raise them 12 months ago, it was the first time in ten years. At that point they also assumed ongoing "flat" prices in discounted terms, meaning longer dates fell on the appropriate discount.

Now they suggest prices will stay flat in nominal terms, out to 2011, applying a 2% inflation rate.

The accompanying chart suggests that in the past 36 years, commodities prices (as measured by the Goldman Sachs Commodities Index) have step-changed only once – during the first oil shock of the 1970s. The question now is: at what new level will the index settle at as a point of mean reversion?

On a metal-by-metal basis, Weres believes zinc still has the strongest fundamentals of all. Zinc concentrates are in acute deficit, treatment charges are at record lows, and some smelters are struggling to source feedstock. The analysts are finding it hard to identify sufficient mine projects that could be developed quickly enough to bring the market back to balance before 2008 at the earliest.


Nickel has jumped over aluminium and copper to be number two on the podium. Although continuing to forecast a modest surplus in nickel for 2006, Weres suggests beyond that the market is relying on supply projects that could take three years to reach design capacity. Hence nickel will likely return to deficit in 2008-10.

Copper should also remain in modest surplus for the time being, but again Weres has concerns about the development of sufficient new mine capacity that could prevent a return to deficit after 2008.

Aluminium is the odd one out, as although it is in deficit in 2006, increasing Chinese smelting capacity could well see the market balance by 2007, and move into surplus beyond. Will Chinese government attempts to curb aluminium exports work?

A significant policy change in the analysts’ long term metals forecasting unsurprisingly has significant repercussions for Australian resource stock valuations. Let’s start with everyone’s favourite twins – BHP Billiton (BHP) and Rio Tinto (RIO).

On the basis of general price increases (and assuming iron ore at a forecast 10% increase), Weres has now switched preference to the "cheaper" stock with the greatest metal leverage – BHP.

BHP’s greatest exposure is to copper and nickel, and Rio to copper, both of which Weres predicts will hit a trough before 2007 but then rise substantially thereafter. The accompanying table indicates the analysts’ updates to normalised profit after tax (NPAT) and earnings per share (EPS).

Most notable are the changes to dividends per share (DPS) for Rio as opposed to BHP. This reflects Weres’ assumption that BHP will undertake buybacks rather than lift dividends, but that Rio will undertake buybacks but continue to pay special dividends.

Looking now at other significant metals companies, Weres is forecasting earnings increases for Zinifex (ZFX) of 4%, 40%, and 62% in 2006-08, and a present valuation increase of 39%. Weres rates Zinifex as Outperform.

Equivalent increases occur for Oxiana (OXR): 14%, 47%, 54%, 32% (upgrade to Outperform); Minara (MRE): 7%, 114%, 36%, 30% (Marketperform); Jubilee Mines (JBM): 4%, 16%, 102%, 21% (Marketperform); and Kagara Zinc (KZL): 1%, 32%, 56%, 29% (Outperform).

The unexciting changes include Alumina (AWC): 0%, 9%, 1%, 11% (downgrade to Marketperform) and Iluka (ILU): 0%, 0%, 0%, 1% (Underperform).

Stop press: Merrill Lynch metals analysts have just released a report in which they, too, have made significant upgrades to metals prices. Merrills suggests, however, that while supply/demand fundamentals continue to look strong, there is at least some evidence of inventory-build in copper, nickel, lead and aluminium over the past months. Only zinc inventories have significantly declined.

But despite inventory changes, Merrills believes the market is principally being driven by extensive investment fund buying.

The analysts have made metal price increases across the board, with copper up 21% in 2006 and 21% in 2007. Similar changes have been made to zinc (54%, 72%), and nickel (7%, 15%). Aluminium has been lifted 5% in 2006, and Merrills’ thermal coal prices have been raised from US$43/t to US$48/t in the 2006 Japanese financial year, and from US$40/t to US$48/t in the 2007.

Once again, the flow through of metal price increases is significant for those Australian companies leveraged to such prices. Thus Merrill’s earnings forecasts for BHP have increased by 7% in FY06, 9% in FY07 and 13% in FY08.

Similar increases have been applied to Rio Tinto (8%, 8%, 5%), Zinifex (50%, 222%, 268%), Oxiana (55%, 72%, 73%), and Minara (19%, 20%, 15%). Alumina remains the odd one out again with 2%, -1% and 0%.

 

[michael_selway]

Nizar yeah i noticed

http://www.fin24.co.za/articles/mar...Nav=ns&lvl2=markets&ArticleID=1518-21_1900264

Zinc prices hit record peak
17/03/2006 16:46 PM

London - Zinc prices hit a record peak in Europe on Friday and copper rallied over two percent to close in on last month's record high as buyers returned to the market.

Three month zinc futures on the London Metal Exchange (LME) rallied to a new all-time peak of $2,455 a tonne early on Friday, up 3.4% from Thursday's close at $2,375. By midday it was $2,451.50.

Prices have jumped over 25% since the start of the year as investors have switched attention from other metals to zinc.

"The trend is undeniably upwards on the grounds that we're expecting a very sizeable deficit again this year. Last year was about 430,000 tonnes and we're expecting something around half million mark again this year," Gerard Burg, minerals and energy economist at the National Australia Bank in Melbourne, said.

UBS analyst Robin Bhar said: "LME stocks have fallen to just over 300,00 tonnes, a decline of 280,000 from a year ago, as consumers take metal from LME warehouses to meet strong demand."

He added that pressure on stocks would likely increase further in the second quarter, usually the period of peak demand.

Other metals markets were also higher.

Spot silver hit $10.40 an ounce, beating the previous 22-year peak of $10.37 set on Wednesday and gold was quoted at $555.50/556.25, unchanged from levels.

Copper rose to $5,035 in midsession trading from Thursday's close of $4,930, nearing February's record $5,100.

The market had searched hard for direction this week, with copper underpinned by stubborn resistance below $5,000.

"There has been a lot of time and money invested in getting copper back to these levels after it broke down over the last couple of weeks," another trader said.

"There is bound to be some selling on rallies, but the market will be supported, and next week, it has the potential to hit $5,100," another dealer said.

New York copper was also strong, rallying to a a fresh record high of $2.3150/lb.

The strength in commodities prices helped lift the FTSE 100 share index above 6,000 points for the first time since March 2001.

But fundamentals in copper, used widely in electronics and construction, were less positive.

A report by the International Copper Study Group showed that in 2005 the copper market was in surplus by 2,000 tonnes versus a deficit in 2004 of 887,000 tonnes.

"The data shows mine utilisation was up to an amazing 98% in December and that means we could have sharply higher supplies of concentrate," Nick Moore, global head of commodities at ABN AMRO, said.

"Refined output utilisation was also much firmer towards the end of the year and that suggests we will see more copper," he said.

He added: "The real shocker was the estimated balance. Since October we have had three consecutive months of surplus."

The market balance was in surplus by 20,000 tonnes in October, rising to 185,000 in December, ICSG data showed.

Moore estimated the cumulative copper surplus over the next four years would be around 2 million tonnes.

 

[nizar]

http://quote.bloomberg.com/apps/news?pid=10000080&sid=aZV_mhg4UmOk

Zinc Advances to a Record in London After Stockpiles Decline
March 21 (Bloomberg) -- Zinc rose to a record in London as a decline in stockpiles signaled strengthening demand from China, the largest consumer of the steel-galvanizing metal.

Inventory tracked by the London Metal Exchange fell 2,400 tons, or 0.8 percent, to 302,700 tons, the exchange said in a report today, equal to less than 11 days of global consumption. Stockpiles have dropped 48 percent in the past year.

``All is still down to China's demand and supply constraints,'' Juan Pablo Orjuela, a London-based analyst at Koch Metals Trading Ltd., a member of the LME, said today by telephone. ``There's good physical demand for zinc and users have to turn to LME stockpiles.''

Zinc for delivery in three months on the LME rose as much as $20, or 0.8 percent, to $2,490 a metric ton, beating the previous all-time high reached on March 17 by $5. The contract traded at $2,480 a ton as of 10:33 a.m. local time.

China became a net importer of zinc for the first time in 2005 as its booming economy stoked demand for steel needed for buildings, cars and appliances. The country imported 620,816 tons last year, equal to about 6 percent of world demand, as steel production jumped 25 percent. Demand for zinc will outpace supply by 210,000 metric tons this year, according to Deutsche Bank AG.
``The zinc market is going to become as tight as copper,'' Stephen Briggs, an analyst at Societe Generale in London who has followed metals for 25 years, said in a phone interview yesterday. ``Every speculator is buying zinc now.''
Kagara Shutdown

Kagara Zinc Ltd., an Australian producer supplying metal to Korea Zinc Co., shut its smelter in northern Australia after Cyclone Larry left the plant without power. The smelter may be shut for a week, Joe Treacy, the company's executive director, said today by phone from Queensland.

The plant, which processes over 100,000 tons of zinc concentrate a year, wasn't damaged.

Copper for delivery in three months climbed $40, or 0.8 percent, to $5,145 a ton today. Among other metals for delivery in three months on the LME, aluminum rose $18, or 0.7 percent, to $2,506 a ton. Nickel gained $5 to $14,800 and tin lost $25 to $7,925. Lead increased $6 to $1,180 a ton.

 

[nizar]

http://www.bloomberg.com/news/markets/commodities.html

Copper, Zinc Prices Rise to Records in London as Global Inventories Fall
March 27 (Bloomberg) -- Copper and zinc prices rose to records in London on speculation that metals demand, driven by worldwide economic growth, will reduce inventories and trigger supply shortfalls. Gold and silver also climbed.

Global growth will expand this year by more than the 4.3 percent rate the International Monetary Fund projected in September, IMF Managing Director Rodrigo de Rato said March 15. Copper stockpiles tracked by exchanges in London, New York and Shanghai slumped 7.7 percent last week to a seven-week low, data showed. Zinc inventories dropped to the lowest since July 2001.

``People are positive on the demand side of these metals as the global economy grows,'' said Jon Bergtheil, head of global metals strategy at JP Morgan Securities Ltd. in London. ``Falling inventories also help.''

Copper for delivery in three months rose $60, or 1.1 percent, to $5,310 a metric ton ($2.4082 a pound) at 7:05 p.m. on the LME after reaching a record $5,332. Prices have more than tripled in the past three years.

On the Comex division of the New York Mercantile Exchange, copper futures for May delivery rose 3.55 cents, or 1.5 percent, to $2.43 a pound after reaching $2.438, the highest ever. A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.

Zinc for delivery in three months rose $44, or 1.7 percent, to $2,624 a ton on the LME after reaching a record $2,630.30. Before today, prices had surged 93 percent in the past 12 months.

Zinc stockpiles tracked by the LME fell 1,000 tons, or 0.3 percent, to 295,825 tons today. Copper inventories dropped 850 tons, or 0.7 percent, to 123,850 tons.

Gold prices rose the highest in three weeks, and silver extended a rally to a 22-year high as the metal approached $11 an ounce.

Newmont

Newmont Mining Corp. said last week copper production at the Batu Hijau mine in Indonesia will be lower than the company expected this year because of unstable earth conditions.

Copper users, such as pipemakers and power-cable manufacturers, already face a production shortfall this year, some analysts said. The deficit will be 207,000 tons, London-based consulting company Bloomsbury Minerals Economics Ltd. said last month. The metal has been in a shortage since 2002, the company said.

Hedge-fund managers and other large speculators increased their net-long positions, or bets prices will rise, in Comex copper futures to 3,010 contracts in the week ended March 21, U.S. Commodity Futures Trading Commission data showed on March 24. Net- long positions more than tripled from a week ago.

Citigroup Forecast

Citigroup Inc., the largest U.S. bank, raised its 2006 price forecasts for copper, nickel and aluminum because of global economic expansion and supply shortages. Copper will average $1.85 a pound, or $4,079 a ton, 16 percent higher than the bank's previous forecast, John Hill, Citigroup's San Francisco-based analyst, said in a report today.

``Given the current economic and operating environment, it is difficult to see how metals supplies will be meaningfully replenished,'' Hill said.

Citigroup also raised its nickel forecast by 8.3 percent to $6.23 a pound, and aluminum by 1 percent to $1.023 a pound.

Imports of copper and its alloys into China, the world's largest consumer of the metal, plunged 50 percent in February, China's Customs General Administration said today. The drop marked the fifth straight month of declines.

Imports of the metal in the two months ended February dropped 43 percent to 132,308 tons.

High Costs

Chinese traders have been reluctant to import copper because prices for the metal in Shanghai have been below the cost of bringing the metal into the country, analysts including Calyon Global Trading's Maqsood Ahmed said. In addition to the London copper price, Chinese users have to pay a 17 percent value-added tax, 2 percent import tax, premiums and freight charges.

Gold futures for April delivery rose $6.30, or 1.1 percent, to $566.80 an ounce on the Comex after reaching $568.60, the highest since March 6. A close at that price would mark the highest since March 6. Silver for May rose 14.5 cents, or 1.4 percent, to $10.88 an ounce after reaching $10.94.

Aluminum inventory dropped 3.2 percent last month from January, the London-based International Aluminium Institute said today.

Stockpiles declined to 3.16 million metric tons in February from 3.27 million tons in January, the institute said today in a report. Inventory was 3.17 million tons in February 2005.

On the LME, aluminum prices rose $16, or 0.6 percent, to $2,555 a ton. Nickel gained $75, or 0.5 percent, to $15,275. Tin climbed $75, or 0.9 percent, to $8,300. Lead gained $2, or 0.2 percent, to $1,250.

 

[michael_selway]

London Metal Exchange Warehouse Stocks(Mar 30)
Metal Tonnes in Storage Change from
previous day
Aluminum 780,325 +150
Copper 121,300 -75
Nickel 32,826 +222
Lead 88,250 0
Zinc 286,750 -3675

Hm Zinc is heading to 0 in LME supplies before end of year 2006, anyone disagree?

thx

MS

 

[rederob]

MS
Most LME zinc is stored at New Orleans.
This warehouse had hardly been touched until the hurricanes hit last year, and most of the metal leaving it has gone to be "cleaned" - so will be returned.
As a result, we get ambiguous data on the New Orleans metal flows because we cannot tell how much is truly leaving for consumption rather than cleaning.
Nevertheless, as zinc inventories are drawn down, as the assuredly will be over the course of this year, incredible pressure will be placed on prices.
At this point we will see zinc coming out of the woodwork, as it were, so opportunists can milk the strong backwardations that will be in play.
I doubt we will hit "zero", but it's not impossible.
More likely we will see what has occurred in the nickel market: Where inventories went to a few thousand tonnes, and high prices have kept the warehouses busy on each way trade ever since. The other impact was to draw most inventory to warehouses so that producers no longer had any metal sloshing around. As a result, nickel prices have remained comparatively high when one looks at historical inventory versus price levels.
A simpler way of saying this is that producers have lost the ability to "manipulate" the market because they simply don't have any spare metal available.

 

[michael_selway]

MS
Most LME zinc is stored at New Orleans.
This warehouse had hardly been touched until the hurricanes hit last year, and most of the metal leaving it has gone to be "cleaned" - so will be returned.
As a result, we get ambiguous data on the New Orleans metal flows because we cannot tell how much is truly leaving for consumption rather than cleaning.
Nevertheless, as zinc inventories are drawn down, as the assuredly will be over the course of this year, incredible pressure will be placed on prices.
At this point we will see zinc coming out of the woodwork, as it were, so opportunists can milk the strong backwardations that will be in play.
I doubt we will hit "zero", but it's not impossible.
More likely we will see what has occurred in the nickel market: Where inventories went to a few thousand tonnes, and high prices have kept the warehouses busy on each way trade ever since. The other impact was to draw most inventory to warehouses so that producers no longer had any metal sloshing around. As a result, nickel prices have remained comparatively high when one looks at historical inventory versus price levels.
A simpler way of saying this is that producers have lost the ability to "manipulate" the market because they simply don't have any spare metal available.

quite true

http://www.theglobeandmail.com/servlet/story/LAC.20060331.RZINC31/TPStory/Business

Supply concerns boost zinc
WENDY STUECK

MINING REPORTER

VANCOUVER -- Even as prices for copper, nickel and precious metals began to climb in 2001, zinc was the laggard, living up to its reputation as the latecomer to any commodities party.

But beginning in late 2004, prices for zinc -- used primarily to rust-proof iron and steel -- began to climb, reflecting dwindling stockpiles and increasing global demand.

Over the past six months, that trend accelerated. Zinc yesterday rose $55 (U.S.) or 2.1 per cent to $2,668 a ton on the London Metal Exchange, continuing a streak that has seen prices climb by 40 per cent this year.

"You have a very compelling story here where the visible inventories, the ones that traders and people in the business can see, are going down almost every day," said Patricia Mohr, vice-president of Scotia Economics.

Those skimpy inventories, combined with expected demand growth of about 4.5 per cent this year, point to continued strong zinc prices in coming months, Ms. Mohr said. "On a more fundamental basis, what this indicates is that there hasn't been any significant mine development in the past decade."

Supplies are so constrained that even small disruptions are having an apparent impact on prices, TD Newcrest analysts Greg Barnes and Cliff Hale-Sanders said in a March 27 report. A cyclone that hit northern Australia last week and forced the closing of a zinc plant, knocking about 1,000 tonnes of zinc metal out of the supply loop, was seemingly enough to excite the zinc market, they wrote.

Market participants are also watching Xstrata PLC's progress at its McArthur river mine in Australia, where the Swiss company has applied to convert what is now an underground operation into an open pit, the report said.

"If the government of Australia's Northern Territory does not allow the project to proceed, the zinc market could move from being very tight to almost impossibly tight over the next several years," the analysts wrote.

With rising prices, zinc producers are dusting off old projects. Vancouver-based Teck Cominco Ltd., the world's biggest zinc producer, and Toronto-based Falconbridge Ltd. are looking at Lennard Shelf, an Australian mine that's been mothballed since 2003.

Some have already made the decision. Winnipeg-based HudBay Minerals Inc. is in the process of reopening the Balmat zinc mine, mothballed since 2001, in New York state this year.

HudBay chief executive officer Peter Jones yesterday said his company's projections indicate zinc inventories could possibly hit zero some time in the fall. "There is a very solid underpinning for zinc prices right now," he said.