Global zinc market in 255 kt deficit during Jan-Nov '14: ILZSG

The latest statistics published by the International Lead and Zinc Study Group (ILZSG) indicates that global refined zinc market was in deficit of 255,000 tons during the initial eleven-month period in 2014. The total reported zinc inventories declined by 326,000 tons during the same period.

The zinc mine output reported declines in Australia, Canada, India, Ireland and Namibia. However, the fall in output was covered with the increased mine output from other countries including China, Mexico, Peru, Sweden and the United Sates. Overall, the zinc mine output grew by 1.9% during the initial eleven months of 2014, in comparison with the previous year.

The refined zinc metal production during the eleven-month period totaled 12.296 million tons, 4.16% higher when compared with the 11.805 million tons output during corresponding eleven-month period in 2013. The rise in refined zinc metal output was mainly due to increased output from China.

The global demand for refined zinc metal increased by 5.4% to 12.551 million tons during the initial eleven-month period in 2014. The Chinese apparent usage increased by 10.5%. The US reported a demand rise of 3.9%. On the other hand, apparent consumption in the Europe region declined by 1.6%.

The global mine production during the month of Nov ’14 alone totaled 1.213 million tons. The refined zinc metal output during the month totaled 1.207 million tons. The global demand for the metal totaled 1.190 million tons during the month.

Copper expects to run short

This metal which is economically sensitive declined by 14 percent, by the end of last year, has forced the crowd to jump on the downward action. The Futures contracts are anticipating on the further falls for the metal at multiple month highs on the London Metal Exchange, has seen that the similar contracts hike by 180 percent, since the beginning of the month December, stated the Financial Times

The decline of the commodity will hike by the expected decline in the Chinese Economy, which accounts for 45 percent of the global demand and there is also a forecast of the increase in the supplies in the mine this year and also in the year that follows.

The estimates of Wall Street show that, the increase in supply might be off the base. The mining giant Glencore PLC, also agreed with the estimation. The company is the biggest supplier of copper in the world.

The company also stated that, forecast of surplus in the year 2015 will be very small, based on the past surplus, and the chances are less that, the decline will move further outward. The company also added that, it wouldn’t be surprised to see a deficit in the year 2015.

LME Changes Select Tick Sizes

Is Aluminum The Next Commodity To Crash?

Remember that when it comes to industrial metals, two of the most notorious banks in the US, Goldman and JPM as well as the world's biggest commodity trader Glencore, tried to corner the market and became a supply-controlling syndicate a la De Beers, controlling how much metal hits the market - most notably aluminum - and creating an artificial scarcity in the process. We covered this first in 2011, but few people noticed even if the data was staring everyone in the face.

They failed, when this story became mainstream two years later following an article in the NYT which led to numerous congressional hearings, lawsuits, guilty pleas, and so on, in the process crushing the big banks' scheme to corner physical commodities. As a consequence, most banks have spun off are in the process of selling their physical commodity divisions.

However, one thing did not change: aluminum was still largely locked up in warehouse inventory, with little if anything of the underlying product, i.e., supply, hitting the market (and market price).

And as the charts below show, while copper has plunged in recent weeks, aluminum has been surprisingly stable, even though like copper aluminum is one of the key metals behind Commodity Financing Deals.

That is about to change, because according to a source at Metal Bulletin the aluminum trickle (at first, then flood) out of warehouses and into the market, is about to be unleashed.

Does this mean that the one industrial commodity which so far was spared carnage is about to be "coppered"? And if so, how many hedge funds and prop desks who have aluminum-collateralized loans will have to struggle even more to pretend they can keep pushing that margin call into voicemail forever. We expect to find out shortly.

China’s GDP Release to Trigger Further Copper Price Falls?

Market focus has shifted to the China Q4 GDP figure due for release next week, which is expected to slow significantly.

Bloomberg predicts that China’s growth will slow to 7.2% in the final quarter of 2014. Will copper prices present a renewed decline on poor data from China?

“Copper prices are likely to slide should the GDP data turn out poor, but the impact will be limited as the result is somewhat within market expectation,” an analyst from Shanghai CIFCO told SMM.

Analyst from Jinrui Futures also reckons that copper market may not be significant affected even if the economic indicator proves weak, as market prediction is for the economy to slow. “The bad data might have been priced in,” the analyst explains. 

Tight Supply to Bolster China Physical Lead Prices, SMM Says

Tightening supply of both primary and secondary lead is likely to bolster physical lead prices in China, says Zhu Rongrong, an analyst with Shanghai Metals Market.

Low secondary lead prices largely squeezed margins for smelters, leaving even unlicensed smelters unprofitable. This has resulted in massive stoppages in late 2014, especially at those unlicensed companies.

Furthermore, Anhui’s Huaxin Lead Industry Group has shut down smelters in its old factory zone due to a failure to meet environmental protection requirements.

Swiss shocker lights fire under gold price

Gold on Thursday shot higher after Switzerland's central bank scrapped efforts to keep the franc from appreciating sending shockwaves through financial markets already in turmoil as a result of a stock market plunge, the oil price slide and the collapse in copper this week.

In later morning trade on the Comex division of the New York Mercantile Exchange gold for February delivery soared to a high of $1,267.20 an ounce, up $32.70 or 2.5% from Wednesday's close. Volumes were nearly double recent trading session with 23.7 million ounces changing hands by lunchtime.

Gold is now trading at its highest since September 5 and has jumped more than 7% jump so far this year. Gold has gained more than $120 from its near four-year low hit early November.

Even a sage like Faber may have been surprised that his prediction would pan out so swiftly

After the announcement by the Swiss National Bank ended the currency cap the franc jumped 16% against the euro and more than 30% against the dollar as traders tried to figure out the impact on global financial markets.

The SNB also entered further unchartered territory by cutting the interest rate on certain bank deposit account balances to -0.75% – that's minus three-quarters of a percent.

Marc Faber, economist, investment guru and Wall Street stalwart, came out on Tuesday this week as the year's biggest gold bull, saying a collapse in confidence in the world's central banks could see gold rallying 30% this year.

Even a sage like Faber aka Dr, Doom (his investment newsletter is called the Gloom Boom Doom Report) may have been surprised that his prediction would pan out so swiftly:

“My belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”