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Zinc the metal for 2006

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Here's an odd thought... Mines operate 7 days a week (well, maybe not BMO but most do...) yet the metal markets are only open Mon-Fri. So does that mean Friday's spot prices are the accepted price for the weekend (and therefore carry more significance than Mon-Thurs clsoing prices)? Or have I missed something here???
 
Kipp said:
Here's an odd thought... Mines operate 7 days a week (well, maybe not BMO but most do...) yet the metal markets are only open Mon-Fri. So does that mean Friday's spot prices are the accepted price for the weekend (and therefore carry more significance than Mon-Thurs clsoing prices)? Or have I missed something here???
Click to expand...
Kipp
Not quite sure of your point, but will try a reply.
Metals producers have 3 major options/choices to sell their metal.
Most will deliver into long term "offtake" contracts. Often these contracts will use LME benchmarked average prices, but not always.
Secondly, some metal may be delivered into "hedge" contracts. That is, the company has entered the market to forward sell an agreed quantity of metal at a set price. In the present bull market most of these hedge contracts have a negative mark to market value - that is, they involve selling metal at a lesser price than the prevailing price.
Unhedged producers that sell some or all (tho can't believe anyone would be selling all) their metal into the spot market have the advantage of being exposed to rising prices. Their disadvantage would be when the market turned sour and their profits reduced commensurately.
Producers will opten mix and match some of these options in order to "balance" their market risk. For example, recently a gold miner (Croesus) has been unable to satisfy its hedge commitments and is presently under administration because it does not have the finances to buy its way out of its bind. Croesus had the double problem of poor forward prices in a rising market, and inability to meet contracted quantities for delivery.
This may not answer your question, Kipp, so you might want to use the above info to rephrase it.
 
1001 [Dow Jones] Oxiana (OXR.AU), Kagara (KZL.AU) likely to outperform fellow miners, broader market after LME copper, zinc prices rallied 2-3% overnight on supportive supply side newsflow, weaker USD; with metal traders, analysts waiting for confirmation of upside breakout, suggesting further gains. Zinc pure-play Zinifex (ZFX.AU), gold miners Newcrest (NCM.AU), Lihir (LHG.AU) also set to gain on higher overnight metal prices. (JAD)
 
rederob said:
Kipp
Not quite sure of your point, but will try a reply.
Metals producers have 3 major options/choices to sell their metal.
Most will deliver into long term "offtake" contracts. Often these contracts will use LME benchmarked average prices, but not always.
Secondly, some metal may be delivered into "hedge" contracts. That is, the company has entered the market to forward sell an agreed quantity of metal at a set price. In the present bull market most of these hedge contracts have a negative mark to market value - that is, they involve selling metal at a lesser price than the prevailing price.
Unhedged producers that sell some or all (tho can't believe anyone would be selling all) their metal into the spot market have the advantage of being exposed to rising prices. Their disadvantage would be when the market turned sour and their profits reduced commensurately.
Producers will opten mix and match some of these options in order to "balance" their market risk. For example, recently a gold miner (Croesus) has been unable to satisfy its hedge commitments and is presently under administration because it does not have the finances to buy its way out of its bind. Croesus had the double problem of poor forward prices in a rising market, and inability to meet contracted quantities for delivery.
This may not answer your question, Kipp, so you might want to use the above info to rephrase it.
Click to expand...

Thanks for the reply Rob. Yes, I am aware of choice of selling unhedged vs. hedged. No worries, that is not my quesiton here.
If a producer is selling metals at LME prices, what prices would be received for metal sold over the weekend? Or is the answer the fairly obvious one, that NO metal is traded over the weekend but rather stockpiled till the LME markets open Monday (though mines/smelters are in production).

My question is just one of academic interest, not of any great importance.
 
Kipp
You have arrived at the correct answer: LME is not open over the weekend.
However, trading is not confined only to what is produced: And what is produced is not necessarily sent to spot for sale - it also accommodates hedges or long term contracts.
In other words, a producer may not be able to sell any of its product to spot because it is already commited, ie "sold".
Therefore, when metals prices go into "backwardation" (spot prices higher than future prices), produces ramp output to sell excess production into spot in order to take advantage.
 
Kipp said:
Thanks for the reply Rob. Yes, I am aware of choice of selling unhedged vs. hedged. No worries, that is not my quesiton here.
If a producer is selling metals at LME prices, what prices would be received for metal sold over the weekend? Or is the answer the fairly obvious one, that NO metal is traded over the weekend but rather stockpiled till the LME markets open Monday (though mines/smelters are in production).

My question is just one of academic interest, not of any great importance.
Click to expand...

The LME contracts are also for delivery within 3 months- so when a supplier enters a contract he doesn't need the truck parked out the back. So I would think mining, delivery and supply would all occur 7 days a week, just the paperwork kept to weekdays.
 
YOUNG_TRADER said:
Would appreciate a post of LME Stock levels please :)
Click to expand...

lmexg4.jpg


Supplies went up a bit for zinc, but copper oh my!

thx

MS
 
hi.
Hmmm i was just wondering why there is no inventory out for copper? its being incresing every since. and today another 1000+
thxs
 
tour said:
hi.
Hmmm i was just wondering why there is no inventory out for copper? its being incresing every since. and today another 1000+
thxs
Click to expand...

Dude yeah 2000+ "in" for copper yesterday

lmenr5.jpg


thx

MS
 
YOUNG_TRADER said:
This is strange, while there was a large sized add in halting the total zinc stock level just above 200kt's, the On Warrant Figure has dropped down to 145kt's from 155kt's last week,



LME Warehouse Stocks 17 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 202700 3550 1425 2125 145075 57625
Click to expand...
Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations. "On warrant" sitting steady today 16th Aug at 145K.
Is supply catching up with demand? MS are you still expecting LME to be out of stock by Sept-Oct?
 
Kipp said:
Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations. "On warrant" sitting steady today 16th Aug at 145K.
Is supply catching up with demand? MS are you still expecting LME to be out of stock by Sept-Oct?
Click to expand...

Hi Not Sep-Oct, by the end of the year or next

thx

MS
 
Kipp said:
Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations. "On warrant" sitting steady today 16th Aug at 145K.
Is supply catching up with demand? MS are you still expecting LME to be out of stock by Sept-Oct?
Click to expand...
Kipp
Based on trend I expect a minimum of 120 trading days before we see zinc around 10,000 tonnes at LME.
What will happen when we get below 50,000 tonnes is that the rate of decline slows as prices increase, and this equation prevents a drying up of inventory as it makes more sense to deliver any surplus metal to LME spot than hold on site.
In any event, investors that do not have a major zinc producer in their portfolio will miss out on some good returns in the next 12 monhts.
 
rederob said:
Kipp
Based on trend I expect a minimum of 120 trading days before we see zinc around 10,000 tonnes at LME.
What will happen when we get below 50,000 tonnes is that the rate of decline slows as prices increase, and this equation prevents a drying up of inventory as it makes more sense to deliver any surplus metal to LME spot than hold on site.
In any event, investors that do not have a major zinc producer in their portfolio will miss out on some good returns in the next 12 monhts.
Click to expand...

Hey Rob- could you please post your nice LME sheet to see where the Zinc supplies are at? I'm keen to see if it has breached 140K yet or if the declines are just cancelled stock getting shipped out.

Though I find it hard to doubt your bullish opinion on Zinc after you called the Nickel shots so well. Screaming towards $15/lb tonight.... can Zinc do the same?
Thanks.
K
 
LME Warehouse Stocks 21 Aug 2006
Close In Out +/- On Warrant Cancelled
Copper 122950 1675 525 +1150 112350 10600
Aluminium 683775 2000 3375 -1375 628425 55350
Nickel 5826 306 636 -330 1200 4626
Zinc 180850 0 2100 -2100 151100 29750
Lead 81300 0 900 -900 75950 5350
Tin 10995 0 45 -45 10330 665
Al. Alloy 70200 3900 300 +3600 69220 980
NASAAC 121580 320 320 0 117700 3880
174


There you go Kipper ;) http://www.basemetals.com/
 
Kipp
The above link is effectively to 2-day-old data, so latest data shows that Zinc actually declined in headline terms by 625 tonnes last night, and open tonnage sits smack on 145k tonnes.
Great news was over 6,500 tonnes of cancellations yesterday, so withdrawals should remain robust for at least the next fortnight.
 
Kipp said:
Hey Rob- could you please post your nice LME sheet to see where the Zinc supplies are at? I'm keen to see if it has breached 140K yet or if the declines are just cancelled stock getting shipped out.

Though I find it hard to doubt your bullish opinion on Zinc after you called the Nickel shots so well. Screaming towards $15/lb tonight.... can Zinc do the same?
Thanks.
K
Click to expand...

Hi Kipp as YT/red has said, can see breakdown below

lmeuk0.jpg


However heres todays date just out

lmetb6.jpg


You can see the 'ins" come in very often and in relatively big amounts, so a price fall coudl happen any time, when the "fake buying" or cancellation stops?

lmeyi1.jpg


ZInc 145k atm, on warrant

thx

MS
 
MS
You keep mentioning "fake buying" of metals.
I have seen nothing to indicate it exists on LME having followed it for about 5 years now.
Can you please provide some examples.
 

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