5 Yr Base Metal Charts (and LME Supplies)

[michael_selway]

London Metal Exchange Warehouse Stocks(Apr 13)
Metal Tonnes in Storage Change from previous day

Aluminum 749,900 +2625
Copper 111,650 -100
Nickel 28,686 -42
Lead 92,775 -75
Zinc 273,225 +8600

New York Futures Market Warehouse Stocks
Metal Tons in Storage Change from previous day

Aluminum 194,642 -1256
Copper 17,920 -199

Hm first surplus day ive seen for zinc and quite a bit too!

"Stockpiles monitored by the LME rose 8,600 tons, or 3.3 percent, to 273,225 tons, the largest gain since June 2005. "



anyone knwo why?

thx

MS

 

[rederob]

MS
Most zinc inventory is held at New Orleans.
New Orleans stocks were flood damaged and most inflow and outflow in zinc in recent months has been due to the metal going to be cleaned, and then returned in good repair for sale.

As overall the quantity of cancelled zinc warrants is still very high, drawdowns will resume apace near term.

 

[michael_selway]

MS
Most zinc inventory is held at New Orleans.
New Orleans stocks were flood damaged and most inflow and outflow in zinc in recent months has been due to the metal going to be cleaned, and then returned in good repair for sale.

As overall the quantity of cancelled zinc warrants is still very high, drawdowns will resume apace near term.

Thanks dude

Good article below

http://www.thehindubusinessline.com/2006/04/19/stories/2006041900271400.htm

Copper prices could rule firm for 3 more years
G. Chandrashekhar

Low inventory, supply disruptions & rising demand behind buoyancy

--------------------------------------------------------------------------------
Breaking the ceiling
Despite rising prices, copper supplies may not arrive quickly enough.
Market moving towards deficit for the current year.
Zinc prices have actually reacted earlier than many expected
--------------------------------------------------------------------------------

Mumbai, April 18

Copper market is expected to continue to witness strong prices for at least three more years, thanks to extremely low inventory, supply disruptions helping to maintain tightness and continuing robust demand.

A large number of supply disruptions due to strikes, mine production problems, equipment delays and lower ore grades are cited as factors for the bullish view on prices. As a result, the refined market could swing into deficit in the current year.

Despite rising prices, supplies may not arrive quickly enough to contain price spikes. However, a sharp slowdown in global economic growth and concomitant slowdown in copper demand growth can potentially lead the market into a state of surplus. There is no sign as yet of that happening, though.

Macquarie forecast

Analysts at Macquarie Research Commodities have revised their price forecast upward for 2006, 2007 and 2008, even as the market had smashed through their previous forecast made early February. Their calculations suggest that market stocks are unlikely to return to reasonably comfortable levels before 2010.

Currently, market stocks of copper cover 2.3 weeks of world consumption which could rise gradually over the next three years and reach 4.4 weeks of consumption by 2010.

Looking at projected refined production (17.825 million tonnes) and consumption (17.965 mt) numbers, the market is moving into deficit in the current year, analysts asserted.

As a result Macquarie Research has revised its forecast average copper prices for 2006 up to $5,590 a tonne (from earlier $4,850).

Demand-supply

In 2007, demand/supply balance may move into a small surplus (1.23 lakh tonnes), a quantity that does not suggest much downward pressure on prices. Should production disruptions persist or worsen, the situation could change. Therefore, the forecast price for 2007 is revised to $5,208/tonne, up from $3,527, analysts said.

Zinc prices

In the current year, zinc prices have actually reacted earlier than many expected. For the past six months or so, prices have been above the levels suggested by price/inventory relationship.

Refined zinc supply-demand balance suggests that the market could in a state of deficit of over 3.5 lakh tonnes, with total supply forecast at 10.737 mt and total consumption at 11.095 mt in 2006. Deficit for the year is higher than that of last year's 2.87 lakh tonnes. As the market is looking ahead to the tightness which is looming for later part of the year, prices have been rather firm. "We continue to expect virtually all of the LME zinc stocks to be run down by the end of the year, and the zinc market to be displaying all the signs of a shortage market, including prices moving to record highs," commented a Macquarie analyst.

LME cash price

The expert forecast that LME cash price for zinc during 2006 could well move above $1.40 per pound equivalent to $3,086 per tonne in the second half of the year.

In 2007, the deficit is seen substantially smaller but stocks would have reached one of the recent low levels, creating conditions for greater price rise.

 

[michael_selway]

London Metal Exchange Warehouse Stocks(Apr 19)
Metal Tonnes in Storage Change from
previous day
Aluminum 749,600 +1275
Copper 119,050 +7750
Nickel 28,596 +378
Lead 94,675 +475
Zinc 270,300 -1475
Charts

New York Futures Market Warehouse Stocks
Metal Tons in Storage Change from
previous day
Aluminum 196,141 +2529
Copper 17,832 -108

Hm copper LME supplies gained alot today, any ideas why?

thx

MS

 

[michael_selway]

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=B48BE0E8-3048-5296-A2324440671D302C

What If Every Day Was Sunny And Spot Prices Stayed High Forever? (just for discussion - nothing more)
FN Arena News - April 20 2006

Long term commodity prices are determined as the average real price of that commodity over as much time as is deemed appropriate – maybe decades. In forecasting prices out to several years (and then discounting values to arrive at stock valuations) an analyst will always assume a reversion to the mean – that is, the further out you go the closer the price for any commodity will be to the long term average price.

The same is true for required currency assumptions.

The twenty-first century has brought about a challenge to the traditional way of thinking, and of measuring. The China effect has brought about talk of a "super cycle", or "stronger for longer" or a "secular change in prices". However you label it, it's all about shifting away from the long term curve into higher territory on a new long term basis. A step-jump.

Japan had the same effect post-war, but post-war did not see the same level and sophistication of stock analysis we have today. Many of today's asset pricing models were developed and refined in the sixties and seventies. So suffice to say, China has upset the apple cart (or maybe shaken all the sleepy apples off the tree).

Over the past couple of years, the concept of a super cycle has been a source of debate amongst resource analysts. One by one those analysts, if they weren't already major bulls, have capitulated. How can they denounce the super cycle concept when commodity prices keep hitting levels not even the most bullish were expecting?

With monotonous regularity, resource analysts have all but apologised to their clients and shifted up commodity price assumptions in the wake of spot price movements. Most no longer attempt to "predict" nearer term prices, but rather let spot prices lead the way. Not to do so has proven otherwise fatal, and analysts don't want to be the one calling a stock a sell just before it doubles in price.

The hard nuts, and maybe the old hands, are still preaching caution on a longer term basis. It is not hard to believe that the heat must eventually filter out of the commodities market, and that these current heady numbers will prove a necessary but unusual aberration some time down the track. Some time – but still prices keep going up.

The weight of demand – not just from the likes of China, India and co, but from investors who have never bought straight commodities before in their lives –continues to outstrip tardy supply developments. There is no real end in sight. Analysts have their views on maybe two, three or five years before things start to catch up. Some also throw in a little warning about overblown prices that could come a-crashing down with some violence, but crashes are never easy to pick.

Suffice to say, it will be something unforseen, rather than foreseen, that might trigger such an event.

Analysts are also careful to point out increasing costs in the resource industry, but such developments take a back seat when margins are astronomical. There is clearly some element of feedback loop in costs – for example, the cost of a new truck used in mining will be inflated by higher component and raw material costs, as will the cost of fuel. Could this be the sleeping trigger?

Meanwhile, analysts can only use spot prices as the overriding factor. On the release of Oxiana's (OXR) production report, UBS noted that the Golden Grove project had hit its straps just at the right time to deliver more zinc at ridiculous prices. Costs have increased too, but what the hey, don't forget Oxiana is unhedged.

Credit Suisse analysts have had to wrestle with their demons over Oxiana as well. In June last year they downgraded the leveraged miner directly from Outperform to Underperform. At the time, the share price was less than $1.00. Today it is more than $3.00.

In a report this morning, Credit Suisse has joined the capitulation team. This is what they said:

"Our concerns about costs, project delays, capex blowouts, grade and production outlook at various [sic] of OXR's assets are immaterial when compared to the leverage offered by OXR to booming commodity prices. We find it untenable to maintain a focus on long-term value at conservative commodity prices, when markets are quite clearly indicating this is not important. This applies both in terms of commodity prices themselves and OXR's equity valuation. We still have reservations over long-term valuation if and when commodity prices moderate, but we are shifting our focus for valuation to present year earnings, on high, but lower-than-spot commodity prices."

The analysts lifted their recommendation on Oxiana back from Underperform to Outperform, and took their latest target price from $2.00 to $3.65.

In the same daily report that featured Oxiana, Credit Suisse also proposed a somewhat flawed, but nevertheless interesting exercise (by the analysts'own admittance). Fresh from frustration over mining company valuations the analysts have said okay – what if today's spot prices become the long term average?

What if indeed. Under this scenario (and as CS notes, making absolutely no adjustment for likely increased costs) Alumina (AWC) would fall to a 2008 price/earnings of 6.3x from 18.6x.

Its net present value would rise from $6.50 to $25.76 – an increase of 296%. Want some more?

All major miners' PEs would fall to single digit numbers, if they weren't already. NPV increases include BHP Billiton (BHP) from $17.58 to $43.95 (150%), Portman Mining (PMM) from $8.05 to $11.48 (43%), Rio Tinto (RIO) from $63.01 to $97.73 (55%), and Zinifex (ZFX) from $6.88 to $25.96 (277%).

These are NPV numbers, without applicable premiums. While CS ascribes an NPV of $17.58 to BHP it is currently trading at around $31.25. The analysts' target price today is $35.79.

Imagine where resource stock prices could really be!

But this is just an exercise, and a fanciful one at that. If anything it smacks of Credit Suisse analysts saying "C'mon, if you wanna get silly, let's get really silly!" They are quick to point out that the concept of extrapolating commodity prices into perpetuity (the "long term") is just not correct.

Long term prices are not fleeting numbers.

So once again all we can say is: how long can this gone on? No one can rightly say.

 

[michael_selway]

LME Official Opening Stock in tonnes

Date ALUMINIUM ALLOY ALUMINIUM COPPER LEAD NICKEL TIN ZINC NASAAC

20 Apr 2006 32720 745675 118425 94650 28416 14070 269150 123760

Live Warrants 31920 696200 108625 94025 26934 9365 168475 123180

Cancelled Warrants 800 49475 9800 625 1482 4705 100675 580

 

[michael_selway]

London Metal Exchange Warehouse Stocks(Apr 25)
Metal Tonnes in Storage Change from
previous day
Aluminum 744,350 +1500
Copper 117,450 0
Nickel 27,948 -144
Lead 96,450 +2025
Zinc 266,175 +1150

New York Futures Market Warehouse Stocks
Metal Tons in Storage Change from
previous day
Aluminum 196,906 +5754
Copper 17,479 0

Zinc Inventory went up again...hm not sure why

thx

MS

 

[Strw23]

Great day for the XMJ so far.

Scott

 

[rederob]

MS, regarding your question:

Zinc Inventory went up again...hm not sure why

New Orleans has metal going off to be cleaned - moving off warrant.
When its saleable, it gets returned - on warrant.
Most of LME's global zinc supply remains at the New Orleans warehouse.
No need to be alarmed - trust me!

 

[michael_selway]

MS, regarding your question:

New Orleans has metal going off to be cleaned - moving off warrant.
When its saleable, it gets returned - on warrant.
Most of LME's global zinc supply remains at the New Orleans warehouse.
No need to be alarmed - trust me!

Hi thanks, how much was added/on warrant "in" today from New Orleans

Also how much more do u suspect will be returning to New Orleans (basically how much total was taken out to be "cleaned" and how much has returned thus far)

thx

MS