US Debt Soars By $100 Billion On Last Day Of 2014, Hits Record $18.14 Trillion

It seems like it was only yesterday when we reported that, in yet another sleight of hand for the US Treasury and Social Security Administration, US debt rose by $32 billion on the last day of November sending total US debt above $18 trillion for the first time ever.  As we further noted, it also meant "that total US debt has increased by 70% under Obama, from $10.625 trillion on January 21, 2009 to $18.005 trillion most recently."

Fast forward to today when we are happy to report that according to the US Treasury, America's debt-funded spending spree, while supposedly slowing down if looking at the declining monthly budget deficit report, never actually has.

As of the last day of 2014, total US debt soared by $98 billion in one day (driven again by Social Security debt surging on the last day of the month to a record $5.117 trillion), and closing off 2014 with a new all time high total of $18.141 trillion in Federal debt - an increase of $136 billion in the month of December and $790 billion for all of 2014.

Source: US Treasury

And The Second Best Performing Currency Of 2014 Is... Gold

Arguing that gold is not a currency?

GREENSPAN: Yes... Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.

Source: The Market Oracle

Chinese November net Lead product exports hit 2014 high of 5,547 tons

China’s net exports of lead products, which include refined lead, lead alloy, lead plate, and other lead semis, hit 5,547 tons in November, the highest thus far in 2014, Customs reported.

China imported 1,402 tons of lead products in November, and exports climbed to 6,949 tons.

4,672 tons of refined lead and 1,872 tons of lead plate were shipped from China in November, with their combined number representing 94.2% of total lead product exports for the same month.

The SMM/LME lead price ratio left few profitable opportunities for lead exports, but many Chinese companies exported refined lead and lead plate in the form of processing trade, driving up the export volumes.

Taiwan and Vietnam were still major buyers of refined lead from mainland China, while lead plates were primarily exported to ASEAN members.

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.