Happy New Year 2015

Mining in 2015: Copper price topped

What happened in 2014:

The price of the red metal briefly dipped below $3 a pound in March – a near four-year low – on market expectations of a move into surplus after years of deficits.

By the third quarter it was clear mining output and shipments were falling far short of predictions thanks to suspended Indonesia concentrate exports and (surprise, surprise) project delays and production disruptions.

While oversupply fears proved to be overblown, copper is ending the year down 15% near its lowest for the year as uncertainty over Chinese consumption continues to gnaw at investors.

How things could change in 2015:

While not all of it will reach markets, forecast mine output growth through the year of 6% or 1mt and another 800kt in 2016 is still a lot to absorb.

Falling oil, the top input costs for all miners bar those lucky enough to sit on copper oxide, could also have the perverse effect of keeping high-cost mines in the game for longer, further depressing prices.

Too much is being asked of Chile and Peru which together must bring 7.5mt to the table

China’s refined output is racing ahead hitting a record 7.2mt from January-November, up 11.5% year-on-year and more capacity will come on stream 2015.

There’s nothing like a crises to focus minds so Mongolian politicians could even resurrect Oyu Tolgoi’s much anticipated and mammoth phase II while other long shots like Iran – expected to produce 300kt in 2015 no less – returning to the market could weigh on the price beyond 2015.

There is price upside potential: Too much is being asked of Chile and Peru which together must bring 7.5mt to the table in 2015. Codelco’s problems with arsenic, grades, labour and funding are well documented.  And Peru’s new flagship projects like Las Bambas and Constancia still needs work.

Price end-2015:

Not much below $3/lb (and that counts as bullish) and a rising trend into 2016.

All bets are off if…

China State Grid Corp’s $65 billion annual fixed investment budget plus rollover from funds unspent during 2014 finally gets deployed.

Mining in 2015: Nickel price promises much

What happened in 2014:

The metal was languishing at multi-year lows in January but against market expectations Indonesia stuck to its guns and stopped nickel ore from leaving its shores.

Reaction was muted at first – unlike LME-watchers Chinese nickel pig iron producers took them at their word and amassed millions of tonnes of nickel laterite. Tensions with Russia and fears about Norilsk added spice and by May nickel scaled $20,000.

China will run out of stocks of the good stuff soon enough, forcing mills to buy pricier sulphides

Ever-volatile St Nick soon disappointed again and will end 2014 with barely a double digit gain as the Philippines take up the slack, inventories stay stubbornly high and old bugbear, China’s economy, drain investor confidence.

How things will change in 2015:

The Philippines can’t do anything about their grades or their monsoons and China will run out of stocks of the good stuff eventually (as soon as April?), forcing mills to buy pricier sulphides.

Stainless steel growth rates are strong with robust auto sales the US, Europe, and Japan and China’s bumping manufacturing to record 21.4m units.

After a decline of 9% in mining output in 2014, another 6% contraction is forecast for 2015 despite an additional 1–2mt from New Caledonia.

Everything nickel had going for it in 2014 will only become more evident during 2015.

Price end-2015:

Not over $20,000, but that may be too pessimistic

All bets are off if…

Indonesia – even partially – lifts its ore export ban (don’t worry, won’t happen).

Mining in 2015: Zinc price with zing

What happened in 2014:

Zinc became the darling of the mining world, reaching a near three-year high mid-2014.

The four-letter metal benefitted from falling stockpiles and expected supply cuts due to the scheduled closures of among others Australia's Century and the Lisheen mine in Ireland with a combined output of 600kt.

By September doubts were creeping in and the metal’s stellar run began to look as if it could’ve been too much too soon as mothballed mine restarts were fast-tracked in North America and new capacity were planned everywhere from Sweden to India to Mexico and Peru.  

Zinc will end the year up single digits only, but that’s no mean feat into the teeth of a rampant dollar.

How things will change in 2015:

When stock levels fell below three weeks’ worth in 2006 and 2007 the price shot up to nearly $4,000

Once sky high stocks on the LME and in China will continue to be drawn down – zinc is especially sensitive to stock levels and when it fell below three weeks’ worth in 2006 and 2007 the price shot up to nearly $4,000.

New mines ­– even in China which has added 225kt capacity every year for the last decade – aren’t opening at a fast enough rate to replenish lost output and meet demand growing at 4% per year.

That said, there are plenty of projects out there and expansions like Glencore’s McArthur River will hit its stride at 370,000tpa in 2015. Refined output from South Korea will jump and projects like Zijin’s 200kt Bayannur smelter will make zinc not all that hard to come by.

Price end-2015:

Well up, but $2,400 seems like the ceiling for 2015. 2016 could have more upside.

All bets are off if…

A stockpile shock panics the market.

The Most Important US Events Of 2014, According To Twitter

When it comes to social networks, Instagram is where the world's best food photographers reside, Facebook is where "cool parents" and ad-clicking robots can be found, while Twitter is where the up to the minute super-informed, sophisticated intelligentsia hides. At least according to Twitter. So what did said sophisticated audience find to be the most important and talked about American events of the year? The following infographic from Echelon Insights gives the answer:

The top 10 US stories of 2014 were:

1. Ferguson
2. Midterms
3. Ebola
4. Israel
5. Iraq
6. Russia/Ukraine
7. Sterling/Clippers
8. Guns
9. Obamacare
10. Marijuana

What is more interesting is that the top 2 most talked items were defined as such by Liberal Activists, where the topic dearest to Conseratives' hearts, Guns, was only 8th in the combined ranking.

Which begs the question: while the media may or may not have a liberal bias, it does appear that the main talking points in at least media distribution outlet are set by those a liberal bent. Maybe simply because they have far more time to retweet and engage in meaningless Internet debate?

Meaningless internet speculation aside, here is how 2014 progressed through the eyes of Twitter users.

Gold Held In NY Fed Vault Drops To Lowest In 21st Century After Biggest Monthly Withdrawal Since 2001

Exactly one month ago we observed that, as expected in the aftermath of the Netherlands' shocking and still not fully-explained gold repatriation from the NY Fed, the amount of foreign earmarked gold on deposit with the Fed had just experienced a 42 ton withdrawal: the single largest outflow of gold held at the NY Fed in over a decade, going back all the way to 2001. This had brought the total amount of YTD gold withdrawals from the NY Fed to a whopping 119 tons: the most since the Lehman collapse.

However, because this total was insufficient to cover just the Dutch repatriation of gold from the NY Fed (which amounted to 122 tons), we knew there would be more activity when the November data hit. Sure enough, earlier today the Fed reported the total amount of earmarked gold (or gold "held in foreign and international accounts and valued at $42.22 per fine troy ounce; not included in the gold stock of the United States") for the month of November: at $8.184 billion, this was a $60 million drop from the previous month (or it would be at the $42.22/ounce "price"; at market prices the value of the withdrawn gold is about $1.7 billion).

In actual tonnage terms, this means that in November some 47.1 tons of gold were withdrawn from the NY Fed, bringing the Fed's total earmarked gold to just 6,029 tonnes: the biggest single monthly outflow going back to the turn of the century. This is also the lowest amount of gold held at the NY Fed vault located at 33 Liberty street (and just across from the even bigger vault located at 1 Chase Manhattan Plaza) in the 21st century.

But even more notable is that with the November data, we now know that all of the Dutch repatriated gold is fully accounted for.

Which brings up a far more important question: net of the Netherlands withdrawals, there is some 44 tons of extra gold that has been also quietly redeemed (by another entity). The question is who: is it now the turn of Austria to reveal in a few weeks that it too, secretly, withdrew some 40+ tons of gold from "safe keeping" in the US? Or was it Belgium? Or did the Dutch simply decide to haul back some more. Or did Germany finally get over its "logistical complications" which prevented it from transporting more than just a laughable 5 tons in 2013? And most importantly, did Germany finally grow a pair and decide not to let "diplomatic difficulties" stand between it and its gold?

We should have the official answer shortly, but we know one thing: it sure wasn't Ukraine.

Source:zerohedge

What Are Major Factors to Affect Copper Prices in 2015?

Copper prices posted sharp declines in 2015, with Shanghai Futures Exchange (SHFE) copper falling by 12.92% as of December 26, and copper London Metal Exchange (LME) down by 14.58%. What will be the main factors to affect 2015’s copper prices?

Growing Copper Supply
Most of Chinese futures analysts interviewed by SMM still consider market fundamentals the key factor to impact copper price trends in 2015.

“The oversupply pressure in copper concentrate market will pass on to refined copper market with copper smelters expanding capacity, so we expect a more than 4% increase in copper supply in 2015,” analyst from BOC International Futures told SMM, “while copper consumption growth is expected at only 3.3%.”

Analyst from Minmetals Futures agreed and noted that global copper supply will grow faster than 2014 next year, and the increase in demand will slow down, boding ill for copper price outlook.

Monetary Policies
“On the macroeconomic front, monetary policies in the US and China will garner much attention,” said an analyst from the CIFCO. “Although the timing of the Fed’s first interest rate since QE was not decided yet, market prediction is for the Fed to raise interest rate in mid-2015, and the rate hike is bound to bolster the US dollar index, affecting commodity market,” the analyst added.

“China’s central bank may employ relatively loose monetary policies and pro-growth measures to help with its housing market which experienced a downturn in 2015,” analyst from Jinrui Futures told SMM. The analyst considers it a positive factor for copper market.

Crude Oil
“Copper prices have been largely hit by slumping crude oil prices in late 2014 and any rebound in copper in 2015 will be subject to a bottom-out in crude oil,” said an analyst from Dayou Futures.

China’s Copper Stockpiling
“We expect a 370,000-tonne surplus in global copper market in 2015, but China’s potential copper stockpiling will help ease the glut,” analyst from Galaxy Futures said in an SMM interview lately. An analyst from BOC International Futures expressed his agreement, explaining that the possible copper purchases by China’s State Reserve Bureau will be a wild card.

Other Uncertainties 
Analysts interviewed by SMM also listed a number of uncertain factors, such as volatile yuan’s spot exchange rate arising from any change in China’s foreign exchange policies, possible strikes at copper mines, and the potential El Nino conditions.