Massive 8.2 Quake Hits Near Chile Coast, Tsunami Warning Issued; Residents Evacuating

At shortly after 1945 ET,  a massive 8.2 (revised up from 8.0) earthquake hit close to the coast of Chile:

• *MAGNITUDE 8.0 QUAKE HITS OFF COAST OF CHILE, USGS REPORTS
• *CHILE QUAKE MAGNITUDE REVISED UP FROM 8.0 TO 8.2 BY USGS
• *FLASH: TSUNAMI WARNING ISSUED AFTER MAGNITUDE 8.0 QUAKE HITS OFF
• *QUAKE CUTS ELECTRICITY SUPPLY TO MUCH OF ARICA, CHILE: TVN

The BBC reports the quake was shallow (which means it felt more powerful) and the tsunami wave's arrival is imminent. 

Copper prices was jumping on the news as the region is an active mining area.

Following reassurances:

• *TECK SAYS QUEBRADA BLANCA COPPER MINE UNAFFECTED BY QUAKE
• *PAN PACIFIC SAYS NO DAMAGE AT CASERONES COPPER MINE AFTER QUAKE

For some context of how big this is...

Chinalco forced to halt Peru’s copper project over ongoing pollution

Chinalco Mining Corporation, a subsidiary of China-own Chinalco, said Monday it had to partially halt its activities at the Toromocho copper project in Peru, as the country’s environmental watchdog ordered it Friday to do so (in Spanish) because of environmental concerns.

After inspections carried out from March 16 to March 20, the agency concluded that Chinalco has been dumping waste in the Huacrococha and Huascacocha lakes.

The environmental regulator posted a video showing a yellow-coloured liquid flowing into the mentioned waterways, which presented a higher than allowed level of contaminants at the time of the assessments.

Toromocho, in central Peru, is set to become one of the largest copper and molybdenum plants in the world. It began initial production in December last year and is scheduled to reach full production in the third quarter of 2014.

Peru is the world's second biggest copper producer. Chinalco has been developing the US$3.4 billion Toromocho since 2008.

The how and when of Chinese stimulus

The world's second largest economy is slowing down and dragging all resource-based economies down with it.

China's leaders want to move the country from an investment-led economy to one based on consumption.

But the rebalancing is proving difficult and signs of a slowdown are not hard to find.

Consensus forecast for 2014 growth in China is 7.4%, just below the official target rate set by the government (a number widely believed to be massaged so as to produce the required level).

GDP expansion at 7.4% would be the slowest in 24 years.

Something that's causing alarm among resource companies reliant on Chinese demand.

China watchers are now waiting with bated breath for the government to inject cash to rev up the economy again.

Just like the $640 billion (4 trillion yuan) package delivered in 2008-2009 that made China the only major economy to continue growing strongly through the financial crisis.

That's not going to happen says Capital Economics.

The independent research house parsed Premier Li Keqiang's speech delivered to a meeting of provincial leaders last week.

He spoke of "targeted measures", mentioned "last year's successful experience in fighting the economic slowdown" and cautioned on shifting macroeconomic policies" which may be effective in the short term but is not necessarily beneficial for the future":

The key contrast here is not just with the stimulus of 2008/09 but also with the mini-stimulus of 2012. Two years ago, as after the global financial crisis, government support took the form of across-the-board credit loosening. Policymakers took a different, more discriminating, approach in the spring and summer of last year when, as now, many were worrying about a hard landing.

Support came in the form of speeded up project approvals and budgetary spending. Credit growth slowed. This provides a model for what to expect over the months ahead. We are likely to see some new infrastructure projects given the go-ahead, work on ongoing projects accelerated, some restrictions loosened – notably on property purchases – and faster disbursement of some budgeted funds.

In any event, when looking at China in absolute terms the slowdown does not seem so alarming anymore.

Growth in 2014 would indeed be the slowest since 1990 – in the mid-Nineties Chinese growth rates peaked at an eye-watering 30%.

But mainland China is tacking onto its economy some $700 billion this year.

That's equal to the size of its entire economy in 1994.

And as big as the Swiss economy and the equivalent GDP of two South Africas and four New Zealands.

Gold price slides to 7-week low as hedge funds drop 1.8m ounces

Softness in the price of gold continued on Monday bringing the retreat in the metal from its 2014 highs to more than $90 an ounce as speculators cut bullish positions and gold-backed ETF investors scale back holdings.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery in late afternoon dealings traded at $1,284.50 an ounce, down nearly $10 or 0.8% from Friday's close and at the day's low.

The yellow metal has taken a hammering over the past two weeks of trading – gold is down from a 2014 high above $1,380 reached a fortnight ago to levels last seen February 11.

Gold is still up 7% since the start of the year, but the positive momentum seems to be grinding to a halt.

Speculators in gold futures and options reversed course last week with large investors cutting back on long positions – bets that the price will go up – in the week to March 25 according to theCommodity Futures Trading Commission.

On a net basis hedge funds now hold 120,042 lots or 12 million ounces in net longs. That compares to 13.8 million ounces the previous week which was the most bullish positioning taken in more than a year.

Last week also saw a second week of reductions of holdings in exchange traded funds backed by physical gold.

Latest data show in the week to 28 March global gold ETF holdings declined by 0.4 tonnes taking total bullion allocated to investors down to 1,765.8 tonnes.

Bullion held in gold ETFs are still on track for a net gain of more than 30 tonnes during the first quarter, however.

Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012, but last year saw net redemptions of 800 tonnes.

Best And Worst Performers In March And Q1

Best and worst performing assets in Q1

And just the month of March

Alcoa to cut capacity at two aluminum smelters in Brazil

* To cut 147,000 metric tons of capacity at Brazil smelters
* Aluminum prices rise 1.5 pct to $1,763.25/ton on LME

(Reuters) - Alcoa Inc , the biggest U.S. aluminum producer, said it would cut 147,000 metric tons of capacity at two smelters in Brazil to stem a growing global surplus that has depressed prices and made a large number of plants un-competitive.

Benchmark aluminum prices rose about 1.5 percent to a session-high of $1,763.25 per ton on the London Metal Exchange on Friday, after Alcoa's announcement.

Since October, Prices have remained under $1,800, close to or below the cost of production at a large number of plants.

Many companies, including the world's biggest aluminum producer Rusal and rival Rio Tinto Ltd , have shut plants, but big smelters in China, the world’s largest producer, show no sign of cutting output.

China accounts for about 30 million of the world's 50 million tonne annual output.

"Aluminum prices can only go up if we see cuts in production and capacity on a large scale," said Daniel Briesemann, an analyst at Commerzbank.

"As long as some cuts are being outweighed by opening of new capacities in places such as the Middle East and other countries where power is cheap, then that doesn't make a difference to the entire market," he said.

The price of aluminum - used in the aerospace, construction and automotive sectors - has fallen about 37 percent since May 2011, when it touched a high of $2,800 per tonne.

Alcoa expects to cut its smelting capacity by about 800,000 metric tons, or 21 percent, once it completes all announced curtailments and closures, including those at Sao Luis and Pocos de Caldas smelters in Brazil. 

Alcoa said last month it would close its 50-year-old Point Henry smelter and two rolling mills in Australia. 

While the company has been the most aggressive in cutting older capacity that is less efficient, it is also focusing on commissioning its massive new Ma’aden smelter in Saudi Arabia.

The smelter will have a capacity of 740,000 tonnes per year and will be one of the lowest-cost plants in the world.

The company said capacity cuts in Brazil, where power costs have gone up, are expected to be complete by the end of May.

Alcoa said it expected to take after-tax restructuring charges of $40 million to $50 million, or 4-5 cents per share, in the first quarter ending March 31 due to the capacity cuts.

The company's shares were little changed at $12.54 in early trading on the New York Stock Exchange.

China, Germany to build Yuan or RMB Trading center

Beijing and Berlin agreed to launch an offshore yuan trading centre on Friday as President Xi Jinping visited Germany on the third leg of his European tour.

The central banks from both countries - the Bundesbank and the People's Bank of China - signed a Memorandum of Understanding in Berlin to allow the clearing and settlement of yuan trades in Frankfurt.

The centre, in Germany's financial capital, will be the first of its kind in the eurozone.

It forms part of a series of deals the two countries signed on Friday, which sources say could be worth billions of euros. China will also set up a consulate in Duesseldorf.

The trading centre will be a "great facilitator for both China-Germany trade and China-EU trade", said Meng Hong, an expert on Germany at Renmin University of China.

Maggie Zhao, a senior associate at the law firm Clifford Chance in London, said the agreement demonstrates a commitment by both governments to work together on yuan internationalization.

"It shows that the Chinese government is keen to support the yuan's internationalization, and that the German government is keen to support its financial services industry to get more involved in the yuan internationalization process," Zhao said.

In his meeting with German Chancellor Angela Merkel, Xi said deepening bilateral relations between the two countries will be beneficial to Europe and the world.

He said the next five to 10 years will be a key period for mutual growth.

The two countries will also set up a new dialogue mechanism on diplomacy and security, he said.

Merkel thanked China for its support and trust in the euro during the eurozone crisis and vowed to strengthen yuan cooperation with Beijing.

It is the first State visit to Germany by a Chinese president for eight years. During the two-day visit, leaders of both countries will map out the direction for bilateral relations in the next five to 10 years.

After arriving in Berlin on Friday morning, Xi said cooperation between China and Germany has been fruitful since the countries established diplomatic relations more than 40 years ago.

Both nations now share broader common interests and new cooperation opportunities, he said.

Germany is China's biggest trade and technology partner in the European Union. Bilateral trade volume reached $161.6 billion in 2013, 580 times that of 1972 when the two countries established diplomatic relations.

Claudia Schmucker, head of the Globalization and World Economy Program at the German Council on Foreign Relations, said Germany and China are very much reform-oriented.

"Therefore, I believe that the Germany-China economic and trade relationship will continue to increase and deepen in the upcoming years," Schmucker said. "Germany has always played a pivotal role in the EU-China relationship and this will continue."

German Ambassador to China Michael Clauss said, "We have growing German investment into China and we also wish to have more Chinese investment into Germany. "

He said Chinese investment in German companies is very welcome, including medium-sized and small companies. "Germany has profited from this a lot in past decades, so it really is a win-win situation," the ambassador said.

On Saturday, Xi will visit North Rhine-Westphalia to await the arrival of a train loaded with IT products on a 16-day journey from Chongqing.