Global aluminum output dropped in February: IAI

The most recent statistics released by the International Aluminum Institute (IAI) indicates that the global aluminum output during the month of February this year, excluding China, dropped when compared with the prior month. However, upon comparison with the same month a year ago, the Feb ’15 output has improved considerably.

As per IAI data, the total aluminum production during February this year totaled 1.911 million mt, down by almost 9% when compared with the revised output figure of 2.104 million mt in January. The output during Feb ’15 was higher by nearly 2% when compared with the output of 1.868 million mt in February last year.

The cumulative aluminum output during the initial two months of the year totaled 4.015 million mt, slightly higher when compared with the output of 3.919 million mt during the corresponding two-month period in 2014.

The average daily aluminum output during the month of February this year was higher month-on-month and year-on-year. The daily output, excluding China, averaged at 68,300 mt per day, higher by 400 mt per day when compared with the average daily output of 67,900 mt per dat during January this year. The average daily output climbed higher by 1,600 mt per day when compared with 66,700 mt reported during February last year.

Founded in 1972, IAI currently represents over 60% of global bauxite, alumina and aluminium production. The Institute works closely with the national and regional aluminium associations. IAI has companies engaged in the production of bauxite, alumina, aluminium, the recycling of aluminium, or fabrication of aluminium or as joint venture partners in such as its members.

Blockade lifted, normal operations resume at Freeport Grasberg mine

According to latest newspaper reports, the five-day unofficial blockade of access road at the Grasberg mine in Indonesia has been lifted. The company spokeswoman stated that normal operations have resumed at the mine effective this Friday.

The he unofficial strike by workers at the Grasberg, Papua, Indonesia mine run by Freeport had lasted for five days, halting copper production works at the world’s second largest copper mine in the world. The strike action was initiated by a group of employees, who held a demonstration on Monday blocking the access road at MP 72. This was the only access to the Grasberg mine, underground mining areas and processing facilities.

According to union spokesman, the strike was not backed by them. They further stated that the cause of the strike was unknown. Meantime, the company spokeswoman had clarified that the company was willing to attend to the concerns of the striking employees and had expressed the hope that copper production at the facility was not affected.

Reports indicate that as many as hundred workers were involved in the strike action, demanding bonuses as an incentive for not taking part in a work stoppage last year. The workers agreed to stop the blockade upon request by union officials. The company is yet to reach an agreement with the workers on their demand.

Freeport-McMoRan Copper & Gold Inc., (FMCG) is one of the world's largest producers of copper and gold. Its headquarters are located in the Freeport-McMoRan Center in downtown Phoenix, Arizona. Freeport is the largest publicly traded copper and molybdenum producer in the world. It mines and mills ores containing copper, gold, molybdenum and silver.

The Grasberg Mine is the second largest copper mine in the world and is located in the province of Papua in Indonesia near Puncak Jaya, the highest mountain in Papua.

Copper up, FCX down as workers halt production at Grasberg

The copper price recovered from a one-month low on Wednesday to gain 3 percent on Thursday, as the metal markets reacted to a dovish Fed statement and news out of Indonesia that production has stopped at the Grasberg copper and gold mine.

Workers blocked an access road to Grasberg – the world's second largest copper mine by capacity – for the fourth day, Thursday, leading to speculation that the shutdown will have a material affect on prices, The Australian reported. A statement by the US Federal Reserve the same day signalling that the central bank is less likely to raise interest rates than expected, was also supportive of copper.

Three-month copper on the London Metal Exchanged leapt 3.2 percent to close at $US 5,850 a tonne, the biggest one-day percentage gain since February 3 and well above Wednesday's one-month low of $US5,621.50, the Australian said.

Bloomberg reported that the blockade was not organized by the union, but about 50 workers from seven tribes in Papua who are seeking promotion for not participating in a labor dispute last year. Output was suspended starting Monday but shipments from old stockpiles continue, according to a union spokesman quoted by Bloomberg.

Nevertheless, Freeport-McMoRan Copper & Gold’s (NYSE:FCX) investors saw the labor dispute as good reason to dump the stock. Trading on heavier-than-normal volumes, FCX slipped 5.32 percent to $17.26 a share on Thursday in New York, just under a dollar above the 52-week low of $16.43.

Work stoppages at Grasberg are fairly common. Last October open-pit operations were suspended as protesters demanded management review safety conditions following an accident involving a truck that killed four workers. The previous year workers set a tent on a mine access road following a landslide in Big Gossan that killed 28 employees.

Gold Spikes On Sudden $1.2 Billion Bid

For no good reason aside from the algos had their fun to the downside and crude ran its stops, precious metals' futures have suddenly exploded higher on heavy volume... The surge in gold saw approximately $1.2 billion notional traded...

WTI Plunges To $42 Handle On Massive API Inventory Build

For what appears to be the 10th week in a row, API reports a massive 10.5 million barrels (far bigger than the 3.1 million barrel expectation) and a 3 million barrel build at Cushing. If this holds for DOE data tomorrow (and worryingly API has tended to underestimate the build in recent weeks) it will be the biggest weekly build since 2001. WTI has plunged on this news hitting $42.60 on the April contract.

If API data is accurate (and it has tended to underestimate the inventory build in recent weeks) then this will be the biggest build since 2001...

The US is running out of room to store its oil: Greenspan

Oil production has not eased despite low prices and America's major storage facility is running out of room, said former Federal Reserve Chairman Alan Greenspan on Bloomberg TV on Friday.

Greenspan expected supply to ease but noted that data shows domestic crude production continues to rise:

If you look at the data, our major domestic facility for storage is in Cushing, OK, which is a delivery point for West Texas Intermediate crude contracts. We're probably at the point now where at the current rate of fill we are going to run out of room in Cushing by next month. The question then is where does the crude go? Everyone's forecast was . . . prices collapse and a sharp curtailment of shale oil production. That has not happened. The weekly figures produced by the [energy administration], through March 6, showed a continued rise in domestic crude production, and it's got no place to go because we can't legally export the way we could with most products.

Essentially, we are bottling up a huge amount of crude oil in the United States so if the West Texas Intermediate is running $10 a barrel under Brent Crude, which is the global price. That means we are creating great abnormalities in the system and unless we find a way to get out of this dilemma, prices will continue to ease because there is no place for that oil to go.

Greenspan said the large price differences between WTI and Brent will result in a volatile spot price for oil.

Hat tip, Business Insider

These are the most bullish gold price charts you'll see today

Amid a fresh sell-off on US equity markets (third down week in a row) and another crude oil rout (down 9.6% for the week), gold managed a small gain on Friday with April futures finding a thin cushion against the crucial $1,150 an ounce level.

Gold's resilience is all the more remarkable since it's been into the teeth of a rabid dollar. Gold historically has inverse relationship to the value of the USD and on Friday the greenback jumped back above the 100-mark against the world's major currencies to the highest since early 2003.

That compares to a record low of 71.6 in April of 2008 and a record high of 164.72 in February 1985 when the price of gold bottomed at $284.25 an ounce. The first chart from a new research note by Julian Jessop, Head of Commodities Research Capital Economics, shows just how big a gap has opened up between the dollar and the gold price.

While the two do diverge from time to time (look at the pattern at the height of the global financial crisis) all things being equal you could expect gold to be trading closer to $400 an ounce at the moment. That supplies plenty of upside for gold once the dollar retreats from its lofty heights, which eventually it will.

An even closer negative correlation exists between the gold price and US inflation-adjusted interest rates (Treasury Inflation Protected Securities or TIPS).

Some analysts go so far as to say that the correlation is so strong that the gold price can be used as a predictor of interest rates, serving as an early warning system of both the direction and magnitude of the move in rates.

The underlying reason for the relationship is that as US yields rise – as is widely expected – the opportunity costs of holding gold increases because the metal is not income producing. The expectations of higher rates in the US is also a major factor behind the surging dollar.

Taking chart number two at face value, the eventual return of US real yields to more normal levels of around 2% would be consistent with the gold price falling back below $1,000 per ounce. But real yields have remained stubbornly low and the second chart would suggest gold should be scaling $1,400 right now.

A level which Capital Economics predicts we'll reach by the end of the year.