5 Yr Base Metal Charts (and LME Supplies)

[michael_selway]

http://www.shfe.com.cn/estatements/secondpage.jsp?subjectpid=905&subjectid=9053&startpage=1

Shanghai Futures Exchange Warehouse Stocks Weekly
Date:Mar.31,2006

 

[nizar]

Basically aluminium supplies up, copper down...

No zinc ?

 

[michael_selway]

Basically aluminium supplies up, copper down...

No zinc ?

yeah no zinc, i think same with Nymex (comex), only copper and aluminium basemetals.

So now we can track the 3 major warehouses for basemetals

http://www.kitcometals.com/charts/lmewarehouse.html
http://www.kitcometals.com/charts/nymexwarehouse.html
http://www.shfe.com.cn/estatements/secondpage.jsp?subjectpid=905&subjectid=9053&startpage=1

yeach copper supplies still goign down as a whole, but aluminium is going up

Thermal Coal

 

[michael_selway]

London Metal Exchange Warehouse Stocks(Apr 03)
Metal Tonnes in Storage Change from
previous day
Aluminum 775,900 -3325
Copper 120,675 -1250
Nickel 32,100 -468
Lead 89,750 +125
Zinc 280,600 -4500

New York Futures Market Warehouse Stocks
Metal Tons in Storage Change from
previous day
Aluminum 193,728 -519
Copper 20,667 -14618

Amazing fall in supply!

 

[professor_frink]

just been reading a couple of articles on the commodities bull over the weekend-
They're trying to flog off their newsletter, but they are still fairly interesting articles, especially the second one, which goes into the technicals of the big base metals



http://www.zealllc.com/2006/21bull.htm

http://www.zealllc.com/2006/basetech.htm

 

[michael_selway]

just been reading a couple of articles on the commodities bull over the weekend-
They're trying to flog off their newsletter, but they are still fairly interesting articles, especially the second one, which goes into the technicals of the big base metals



http://www.zealllc.com/2006/21bull.htm

http://www.zealllc.com/2006/basetech.htm

Credit Suisse rates the stock (ZFX) as Upgrade to Outperform

Following a quarterly mark to market of earnings, the analysts point out that PE’s in the global metals and mining sector have been pushed to near single digits. As a result, they have lifted their recommendation on the stock to Outperform and their target by $5.95 to $11.62. <== Nearly Double, crazy stuff!

Target price is $11.62
Current Price is $9.84

 

[professor_frink]

Credit Suisse rates the stock (ZFX) as Upgrade to Outperform

As a result, they have lifted their recommendation on the stock to Outperform and their target by $5.95 to $11.62.

Target price is $11.62
Current Price is $9.84

that's a fairly hefty upgrade!
At the rate it's going though, it'll probably hit that by the end of the month

 

[nizar]

Credit Suisse also predicts that supply of zinc will be in deficit this year by 466,000tonnes...

Rally Not Over'

Bullish metals forecasts are prompting investors such as pension funds and hedge funds to place more money in funds that track commodity indexes.

``There are no signs that funds have lost appetite,'' said Angus MacMillan, a metals analyst at Bache Financial Ltd. in London. ``As long as you have a list of problems, funds will keep piling in.''

``The three-year rally in the metals is not over,'' said Credit Suisse analysts led by David Gagliano in New York.

``The trend over the next 10 to 15 years should be bullish for commodities,'' Daniel R. DiMicco, chief executive officer of U.S. steel producer Nucor Corp., said in an interview from Nucor's headquarters in Charlotte, North Carolina today. ``There will be ups and downs during that period, but the downs won't be as severe as they have been in the prior 20 years.''

Zinc rose $93.50 to $2,781 a ton. Earlier, it gained as much as $114, or 4.2 percent, to $2,801.50 on a ton on the LME.

Zinc inventory has dropped 30 percent this year to 276,325 tons. Credit Suisse forecasts demand for the metal, which is used to galvanize steel, will exceed production this year by 466,000 tons.
http://quote.bloomberg.com/apps/news...4qg&refer=home

 

[rederob]

Zinc inventory has dropped 30 percent this year to 276,325 tons. Credit Suisse forecasts demand for the metal, which is used to galvanize steel, will exceed production this year by 466,000 tons.
http://quote.bloomberg.com/apps/news...4qg&refer=home

Given that there is only about 150,000 tonnes available (the other 125,000 tonnes is "cancelled") then zinc consumers will be in dire straits if Credit Suisse are right.
A not so so obvious trend has been a recent decline in LME drawdowns from locations excluding New Orleans, suggesting consumers have tapered off buying activities as prices climb higher.
This is a common feature of tight markets and tends to bring on a price retrace, allowing dip-buying for the canny consumers who know full well prices will keep rallying into the foreseeable future.
I think it possible for zinc to reach $4000 per tonne by year's end - another 35% from here, but the price inelasticty of zinc will allow such an increase without great impact on final product prices.

 

[nizar]

Given that there is only about 150,000 tonnes available (the other 125,000 tonnes is "cancelled") then zinc consumers will be in dire straits if Credit Suisse are right.
A not so so obvious trend has been a recent decline in LME drawdowns from locations excluding New Orleans, suggesting consumers have tapered off buying activities as prices climb higher.
This is a common feature of tight markets and tends to bring on a price retrace, allowing dip-buying for the canny consumers who know full well prices will keep rallying into the foreseeable future.
I think it possible for zinc to reach $4000 per tonne by year's end - another 35% from here, but the price inelasticty of zinc will allow such an increase without great impact on final product prices.

Great post rederob.... ur last point (in bold) sounds familiar, and has been made by other commentators.... (see below)

Thats the beauty of zinc

Zinc is my favorite base metal because it will be in supply deficit for the next three years, has few substitutes and in most applications, higher prices do not diminish demand. For example a car uses about $17 worth of zinc. If zinc tripled in price, it would mean only a 2/10th of 1% percentage increase to a $20,000 car. However, the impact on a zinc mine of a few pennies per pound is substantial.

http://www.kitco.com/ind/Gerbino/mar172006.html

 

[michael_selway]

Great post rederob.... ur last point (in bold) sounds familiar, and has been made by other commentators.... (see below)

Thats the beauty of zinc

Zinc is my favorite base metal because it will be in supply deficit for the next three years, has few substitutes and in most applications, higher prices do not diminish demand. For example a car uses about $17 worth of zinc. If zinc tripled in price, it would mean only a 2/10th of 1% percentage increase to a $20,000 car. However, the impact on a zinc mine of a few pennies per pound is substantial.

http://www.kitco.com/ind/Gerbino/mar172006.html

Absolutely spot on!

Btw Rederob, what do u mean by "cancelled" below?

"Given that there is only about 150,000 tonnes available (the other 125,000 tonnes is "cancelled") then zinc consumers will be in dire straits if Credit Suisse are right."

thx

MS

 

[rederob]

Btw Rederob, what do u mean by "cancelled" below?

MS
Metals delivered to LME warehouses is usually held "on warrant".
When metal is purchased, the warrant is cancelled and the metal becomes available for delivery.
By following the ratio of cancelled to all metal held is a useful indicator of the trend - or metal's fundamentals.
Here's the latest LME data from last night:

 

[dutchie]

G'day all

Does anyone know the code(s) for the price of oil charts to compare with a stock chart (say WPL) using Yahoo Finance.

I would also like to know what the codes are to show a chart on Yahoo Finance for the prices of:

Gold; Zinc; Copper; Uranium; Coal and Aluminium.

(Are there any ASX codes for these prices??).

Cheers

Dutchie

 

[bvbfan]

Does anyone know the code(s) for the price of oil charts...

I would also like to know what the codes are to show a chart on Yahoo Finance for the prices of:

Gold; Zinc; Copper; Uranium; Coal and Aluminium.

No such luck, Yahoo only has gold and silver they used to have platinum and palladium
try XAUUSD=X for gold , XAGUSD=X for silver
XPT - pt
XPD - pd

can also use AUD instead of USD

 

[michael_selway]

MS
Metals delivered to LME warehouses is usually held "on warrant".
When metal is purchased, the warrant is cancelled and the metal becomes available for delivery.
By following the ratio of cancelled to all metal held is a useful indicator of the trend - or metal's fundamentals.
Here's the latest LME data from last night:

Thx Red

Amazing so basically from the pic, 116300 are already "sold" waiting to be "shipped" out?

Also may I ask where u got the info above from (link)? Can you also post one for Copper

Thx

MS

 

[rederob]

MS said, "Amazing so basically from the pic, 116300 are already "sold" waiting to be "shipped" out?"

Yes, it's just a matter of time, but typical daily outflows have averaged over 3000tonnes in recent weeks.

MS asked, "Also may I ask where u got the info above from (link)? Can you also post one for Copper?"

Yes, but copper is boring, so I added nickel.
If the nickel trend keeps up then steel prices will also rally much higher.
And yes to the source; it's from one of the many subscription services that are available.
Unfortunately the LME once made timely and detailed data available for free.
Nowadays there is a cost to staying a step ahead: You will see the above data reflected in Kitco Metals on Monday.

 

[michael_selway]

MS said, "Amazing so basically from the pic, 116300 are already "sold" waiting to be "shipped" out?"

Yes, it's just a matter of time, but typical daily outflows have averaged over 3000tonnes in recent weeks.

MS asked, "Also may I ask where u got the info above from (link)? Can you also post one for Copper?"

Yes, but copper is boring, so I added nickel.
If the nickel trend keeps up then steel prices will also rally much higher.
And yes to the source; it's from one of the many subscription services that are available.
Unfortunately the LME once made timely and detailed data available for free.
Nowadays there is a cost to staying a step ahead: You will see the above data reflected in Kitco Metals on Monday.

Thanks again read, ok I see

Hey can you also post Aluminium, Lead, Tin, just want to see the current "cancelled" for them

Btw when u say copper is "boring"what do u mean exactly?

thx

MS

 

[rederob]

MS
I said copper was boring because the only action for it is in Asia, via China's SRB movements to Korean or Singaporean warehouses - likely in anticipation of delivery to parties that it tried to outwit last year when they went a wee bit too short and got caught.
There is no copper to speak of it Europe, a bit in USA and the rest pretty much spoken for in Asian warehouses: That's why the copper price keeps winding higher, and why the savvy funds are not frightened to pour more money into this particular commodity.
I think it's safe to say that copper will now easily reach $6000/tonne this year, and could add another 10% more before year's end.
While plant upgrades are in the pipeline, not a lot of new capacity will be brought on line in 2006.
Although 2007 will see the fruits of expansion plans put in train a few years ago, the question is whether increased output will take the market from deficit to balance, then oversupply.

Below is an Aluminium chart from LME (I don't have one for tin):

 

[michael_selway]

Credit Suisse rates the stock (ZFX) as Upgrade to Outperform

Following a quarterly mark to market of earnings, the analysts point out that PE’s in the global metals and mining sector have been pushed to near single digits. As a result, they have lifted their recommendation on the stock to Outperform and their target by $5.95 to $11.62. <== Nearly Double, crazy stuff!

Target price is $11.62
Current Price is $9.84

ABN Amro rates the stock as
Buy - Initiation of Coverage

The broker has initiated coverage with a Buy rating, as in its view the stock will benefit from ongoing upgrades to zinc price forecasts given it is very leveraged to the price of the underlying commodity, which is being driven higher by inflows from investment funds. While taking a positive view the broker points out there appears limited growth in the company and its operating cashflow levels are quite high, leaving it at risk of any downturn in the zinc price. As a result, the broker suggests while in the next few months the stock should continue to perform it may then pay to look at switching into either another zinc play or a more diversified alternative. Valuation is $6.24 but rises to more than $10.00 based on current spot zinc prices.

Target price is $11.48
Current Price is $9.80

thx

MS

 

[michael_selway]

MS
I said copper was boring because the only action for it is in Asia, via China's SRB movements to Korean or Singaporean warehouses - likely in anticipation of delivery to parties that it tried to outwit last year when they went a wee bit too short and got caught.
There is no copper to speak of it Europe, a bit in USA and the rest pretty much spoken for in Asian warehouses: That's why the copper price keeps winding higher, and why the savvy funds are not frightened to pour more money into this particular commodity.
I think it's safe to say that copper will now easily reach $6000/tonne this year, and could add another 10% more before year's end.
While plant upgrades are in the pipeline, not a lot of new capacity will be brought on line in 2006.
Although 2007 will see the fruits of expansion plans put in train a few years ago, the question is whether increased output will take the market from deficit to balance, then oversupply.

Below is an Aluminium chart from LME (I don't have one for tin):

Hi yeah, oversupply in copper and aluminium soon imo (sometime in 2006), might mean danger for those who produce and sell them.

Btw have u got a "pic" liek the above for Lead?

thx

MS