Saturday, December 20, 2014

What are the factors behind sharp rise in LME Nickel inventories?

What are the factors behind sharp rise in LME Nickel inventories?
Inventories in the LME nickel have kept growing, climbing above 400,000 tons recently. 

The launch of a probe into financial irregularities at China’s Port of Qingdao in June brought nickel inventories at Asia-registered LME warehouses up 94,000 tonnes during June-November, 3-fold higher than the growth of 29,000 tons during January-May, according to SMM data.

Hence, the impact from Qingdao’s metal fraud is believed to be one of major reasons behind high LME nickel inventories, prompting a shift from China’s bonded zones to LME Asian warehouses.

Nickel inventories also grew at LME European warehouses, meanwhile. From June to November, stocks added 27,000 tonnes, compared with a drop of 5,000 tonnes from January to May.

This suggests that waning global consumption, resulting from concurrent economic weakness, is also blamed for continuous increases in LME nickel inventories. 

Friday, December 19, 2014

INFOGRAPHIC: what's ahead in 2015 – a survey of Wall Street's top analysts


What's Ahead in 2015: A Survey of Wall Street's Top Analysts

The folks on Wall Street remain optimistic that the party will keep on going. Hopefully nobody takes away the punch bowl.

Ten of the top analysts from the mainstays of Wall Street made predictions to Barron’s in an annual December survey. Their expectations for 2015? The S&P 500 will continue to soar (+10% was the mean prediction), the American economy will continue to gain traction (+3.0% GDP growth), and the top performing sectors will be Technology and Financials.

The worst performing sector will be Utilities, which has been the best performing sector of 2014 so far.

While we were not surprised that top analysts chose their own sector (Financials) as a top performer, we were surprised that not a single analyst expects a pullback in 2015. In the same sense, the vast range of GDP expectation variability is between the bounds of 2.8% and 3.5% growth.
Keep the Kool-Aid flowing, and drink it all up before it sits out in the sun too long.

For the full survey, check out Barron’s article here on it.

Rising production data a last straw for Lead

Rising production data a last straw for Lead
Lead market experienced sharp declines, with the February-lead on Shanghai Futures Exchange losing 7.74% yesterday and down by its daily limit at the open today.

What’s behind the collapse in lead prices?

“The increasing output data should be the last straw for lead prices,” an analyst from Shanghai CIFCO Futures told SMM in a recent interview.

“Lead prices have been falling this month, and the report that China’s refined lead climbed to a five-month high of 381,941 tons stoked fears for a severe glut in the market, resulting in a slump in prices,” the analyst explained.

Analyst from Ruida Futures also pointed out that noticeable rises in both lead concentrate and refined lead production in November definitely added to a drag on prices which had already been pressured by waning consumption and weak macroeconomic conditions.

Thursday, December 18, 2014

Novelis declared as the supplier of aluminum to new Jaguar XE

Novelis declared as the supplier of aluminum to new Jaguar XE
Jaguar XE, was recently launched in Europe, and will arrive in North America in the year 2016. The company stated that, the new Jaguar XE, is the first launched in the mid size segment, to preview an aluminum based intensive body structure.
The designs of the car are featured by the Novelis Advanz 6000 series alloys, which had been developed by the company, especially for automotive skin sheet and also the structural appliances of vehicles. The construction of new Jaguar XE, makes the car, highly strong and also considerably light weight, which contributes to the fuel efficiency of the vehicle, and also reduces the emission of the vehicle.
The Vice President as well as the General Manager of the Novelis Europe Automotives, Pierre Labat, declared that the company had selected to supply aluminum sheets for the recently launched Jaguar XE, in order to make the vehicle more novel and also light weight.
He also stated that, the launch of XE, once again regains the leadership of Jaguar Land Rover. In both the design as well as in the production of high volume aluminum vehicles. He added that, this could be stated as an important milestone for the company in body engineering as well as to redefine the standers in its class of vehicles

Antamina workers return to labor

Antamina workers return to labor
The strike, which was initiated by the union workers working in the mine, demanding for better working conditions and also greater wage. Just like the previous strike, which lasted for about 2 weeks, the second strike with the same demands was also declared illegal by the authorities of the mine.
The first strike by the union workers was inaugurated on November 11th and the strike lasted till November 30th. The authorities of the mine, during the strike stated that the operations at the mine is not affected by the strike. But the union workers kept on insisting that, the mine has been highly affected by the strike. They claimed that the output has affected almost 60 percent reduction due to the strike.
From the total number of workers at the Antamina copper mine, about 1,630 workers are the members of the union. The authorities of the mine, produced the media with a letter, which they claim is to be from the head of union workers. The letter claims that, the workers are ending the strike and will soon return to work.
The stakeholders of the company are, Glencore Xstrata, Mitsubishi Corp, and also BHP Billiton. The BHP Billiton, holds the  major stake of the Peru based copper and zinc mine, followed by Glencore Xstrata, and then Mitsubishi Corp. 

Zinc demand to outcast supply by the end of 2014, says ILZSG

Zinc demand to outcast supply by the end of 2014, says ILZSG
According to the estimation released by the group, the demand for zinc would rise about to 13.65 metric tonnes, which is a 5.1 percent increase compared to the present situation, and will be followed by an additional increase in demand of 14.05 million metric tonnes, which is another 2.08 percent increase.
The anticipated increase in demand is expected from China as the production of galvanized sheet  in the country, is reported to have risen to a large extend. According to the reports from the International Lead and Zinc Study Group, the increase in global demand of zinc excluding the demand from China, is rather low, which is reported to be 2.3 percent hike in the year, 2014 and 1.3 percent hike in the year 2015.
The group also stated that, in Europe, 1.2  percent hike in demand is expected this year and 1 percent hike in demand is expected the year after, after remaining constant through the year of 2013.  In the year 2014, a sharp increase in the demand of zinc is expected with a raise of 8.4 percent, followed by the large scale import of zinc into the United states, even so the demand from the United States will decline in the year 2015 to 0.4 percent.
At the same time the production of zinc is expected to have a slight hike of 1 percent to 13.33 million metric tonnes in the year 2014, and a 3.8 percent increase in the production by 13.80 million metric tonnes, in the year 2015.

Zinc Outlook 2015: ‘Crunch Time’ is Coming

It’s been a good year for zinc market participants. While most commodities spent 2014 down in the dumps, zinc performed well, particularly during the summer, when it rose to an impressive 35-month high of $2,325.50 per tonne.
But what exactly helped zinc put on such a positive performance this past year? Here Zinc Investing News gives an overview of what happened to the base metal in 2014, then provides a look at what may be in store for it in 2015.
2014 good, but not great
This time last year there was a divide in the zinc space: while some believed the combination of major zinc mine closures and lack of new production would push the metal’s price up in 2014, others were certain the zinc price would go nowhere in 2014 — or indeed 2015 and 2016.
As the chart below shows, the bulls turned out to be correct. Though zinc’s performance wasn’t particularly exciting for the first half of the year, the summer brought some upward movement — including the 35-month high mentioned above. And while the base metal’s price has declined since then, it’s still well above where it was at the beginning of 2014.
Zinc Outlook 2015: ‘Crunch Time’ is Coming
That said, it’s worth noting that the metal’s performance was muted by the fact that zinc stocks remain fairly high. Indeed, as the chart below shows, while LME zinc warehouse stocks have sunk markedly throughout the year, they are still nothing to sneeze at.
Zinc Outlook 2015: ‘Crunch Time’ is Coming
And if the above chart isn’t enough of an eye opener, consider this: according to the International Lead and Zinc Study Group, the refined zinc metal market was actually in deficit in 2014. The organization identified a deficit at the end of 2013, and reported last month that it has stayed in place since then, with the deficit from January to September 2014 coming to a total of 309,000 tonnes. However, with stocks of the metal available it’s been hard for prices to gain too much traction.
“Crunch time” coming in 2015
Of course, the fact that zinc stocks are available now doesn’t mean they’ll continue to be. As Stefan Ioannou, mining analyst at Haywood Securities, told Zinc Investing News, while 2014 wasn’t a “breakout year” for zinc, he believes “crunch time” is coming in 2015.
Expanding, Ioannou said he sees momentum building in the zinc market during 2015 as stocks of the metal decrease and the space is further impacted by major mine closures and limited supply from new mines. He pointed to the upcoming closure of MMG’s (HKEX:MMG) Australia-based Century mine as a key point to watch — though the company said in October that it will stop producing in 2015, the timeline has bounced around.
However, he cautioned market participants to be wary of China. The Asian nation is the world’s largest zinc producer and consumer, and though it currently “imports a lot now because it isn’t profitable to produce,” a higher zinc price “will revitalize in-country production in China.” As a result, a zinc price rally could be short lived.
Execs weigh in
Responding to a Zinc Investing News survey, executives at three zinc-focused companies expressed similar views to Ioannou. For instance, Alan Taylor, COO and vice president of exploration at Canadian Zinc (TSX:CZN), commented, “we expect an increase in base metals prices as the year passes due to dropping inventories and an increasing deficit in metals,” while Chris Staargaard, president and CEO of InZinc Mining (TSXV:IZN), said, “zinc will continue to be one of the main commodity stories in 2015. As more and more people and potential investors become aware of it, it may be enough to overcome the essentially unprecedented and unwarranted collapse in investor confidence in the mining sector in the last couple of years.”
Doug Ramshaw, director at Vendetta Mining (TSXV:VTT), was a little more cautious, and noted, “I think zinc is likely going to pause for breath with some modest growth off of the new +$1 per pound foundation that appears the new benchmark for the metal.” However, he added, “I would expect the deficit in refined zinc to continue to increase, and there is no reason to think that demand won’t stay strong.”
He also offered an alternative to Ioannou’s prediction about Chinese production, noting, “looking back at a number of analyst projections on Chinese production growth, the impact of Chinese production commonly gets overestimated, and future consumption growth should more than accommodate any increase in domestic mine supply.”
Companies to watch
Ioannou’s picks for 2015 include analyst favorite Trevali Mining (TSX:TV), which already has a zinc mine in Peru and is looking to start up another in New Brunswick. He also mentioned Foran Mining (TSXV:FOM), whose McIlvenna Bay preliminary economic assessment (PEA) he described as “interesting,” and Nevsun Resources (TSX:NSU,NYSEMKT:NSU), which is currently focused on copper, but will shift toward zinc starting in 2016.
He pointed to HudBay Minerals (TSX:HBM,NYSE:HBM), Teck Resources (TSX:TCK.B,NYSE:TCK) and Lundin Mining (TSX:LUN) as well.
Meanwhile, Canadian Zinc’s Taylor said catalysts on the horizon for his company include “detailing out the Prairie Creek project to a feasbility level,” and noted that “some innovative metallurgical possibilities are presently being tested.” Similarly, Staargaard of InZinc mentioned that the projected economics outlined in the PEA for West Desert suggest that the project “more than qualifies to be advanced to the prefeasibility stage.” The company plans to “continue on that path as soon as market conditions permit.”
For his part, Ramshaw highlighted that Vendetta is currently drilling at its Australia-based Pegmont project, which he said “has an existing resource with excellent upside and is surrounded by infrastructure and mining operations” that may make potential future development low cost. He added that Canaccord Genuity recently placed the company on its Watch List 2015.
Investor takeaway
2015 looks set to be an interesting year for the zinc market, and investors would do well to keep an eye on the sector, especially given that many other commodities continue to struggle. Overall, thinking zinc looks to be a good bet heading into the new year.