|Posted by baypeaktraders on March 4, 2010 at 11:46 AM||comments (0)|
Chinese stainless steel production rose 26.8% to 8.8 Mt in 2009, according to the Stainless Steel Council of China. China’s apparent consumption of stainless steel increased by almost 32%, to 8.22 Mt. The near 0.6 Mt gap between production and consumption supports our view that stainless steel stockpiles in China are vast, and could dampen apparent demand for nickel in the near term.
Moreover, China’s production and net imports of nickel, excluding low-grade nickel ore, rose 66% in 2009, to 0.43 Mt, which implies similar vast off market stocks also exist. Nevertheless, we anticipate Chinese stainless steel production will rise by as much as 20% in 2010 to 10.5 Mt, which should see most of these stocks eroded within H1.
Stalled nickel supply set to return. A crucial support to nickel prices will be largely removed if Vale follows through with its threat to restart full production at its strike-stalled Sudbury operation in Canada.
The company has already partially restarted two of its nickel mines and the first of two furnaces at its main Sudbury smelter using contracted workers. Its next step, which has as yet no timetable, is to ramp-up Sudbury to full production. In addition Xstrata has settled wage talks with workers at its Sudbury operation, removing yet another potential support to prices.
Stainless demand outside China remains weak. There is little to shout about concerning nickel consumption outside of China in the near term.
Finnish stainless steel producer Outokumpu recently summed this up: “No major improvement in the underlying demand for stainless steel is yet visible.” It is surprising therefore to see that nickel prices have fallen only 5% since the start of the year, compared with double digit declines in aluminium, copper, lead and zinc.
Short-term outlook of Nickel
We expect nickel prices to fall in line with corrections in the other base metals over the coming weeks. The fact that they have not, as at 9 February, may be due to expectations that the OECD restocking phase is likely to be vigorous and remove much of the visible stock.
However, judging by the mood of many stainless steel producers, this is unlikely to happen any time soon. Furthermore, LME stocks are still rising, albeit at a slower pace than in December, and this too is negative.
We expect nickel to break below $16,300/t in the very near future and then possibly decline to $15,500/t, but we maintain that nickel prices will average more than $20,000/t in 2010. LME 3-month short-term price: $15,500/t-$19,500/t.
Source: Commodity Online
Courtesy: Fortis Bank Nederland - The Metals Monthly February 2010
|Posted by baypeaktraders on August 23, 2009 at 8:05 AM||comments (0)|
August 23, 2009
Cash prices for iron ore delivered to China, the world?s biggest buyer, may have peaked this year amid declining steel prices, Liberum Capital said.
The price for ore from Australia is trading at $105 a metric ton after dropping last week from a high this year of $105.90, according to The Steel Index.
Benchmark steel prices in China last week had their first decline in six weeks, while a measure of commodity shipping costs on the Baltic Dry Index slumped 17 percent this month on speculation the nation's demand for iron ore may be slowing. The Steel Index price has risen 46 percent this year as the Chinese government's stimulus plan spurred demand.
"The vertiginous rise in the spot iron ore price into China seems finally to have paused last week with prices topping out", Liberum analysts said yesterday in an e-mailed note. "We feel we have now seen the highs for the year," they said, citing the decline in steel and cargo prices.
Iron ore swaps for settlement this month traded at $100.60 a ton yesterday, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd. They indicate prices may drop to $96.08 by December.
Ore from India dropped last week for the first time in four months, declining 0.5 percent to $110.50 a ton, according to Metal Bulletin.
|Posted by baypeaktraders on August 23, 2009 at 8:01 AM||comments (0)|
The cash price for Australian iron ore delivered to China, the world's biggest buyer, slumped 9.3 percent after Chinese steel prices declined.
The price for 62 percent grade ore fell $9.70 to $95 a metric ton yesterday, according to The Steel Index. It rose to $105.90 on Aug. 13, the highest this year. Prices for hot-rolled coil steel in China fell 2.1 percent yesterday and have declined 13 percent since Aug. 7.
The drop came as output rose in China and steel prices slumped, Tom Albanese, chief executive officer of Rio Tinto Group, the world's second-biggest ore exporter, said yesterday. The Steel Index price has risen 32 percent this year as China's 4 trillion-yuan ($585 billion) stimulus plan spurred demand.
"The steel market is overheated," said Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. "The ore price may move back towards $90 a ton near term," he said.
The Baltic Dry Index, a measure of commodity-shipping costs, fell for a third straight day yesterday. Ore prices have likely topped out this year amid the declining steel prices, Liberum Capital analysts said this week.
Iron ore swaps for settlement this month traded at $99.25 a ton yesterday, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd. They indicate prices may drop to $90.08 by December.
Rio Tinto, BHP Billiton Ltd. and Fortescue Metals Group Ltd. are the three-largest iron ore exporters from Australia.
The ore price may re-test its highs later this year, ANZ's Pervan said.
|Posted by baypeaktraders on August 23, 2009 at 7:59 AM||comments (0)|
August 23, 2009
Copper traded near a 10-month high in London and is poised for its longest string of weekly gains since April as the global economic recovery increases demand.
Copper was little changed after jumping as much as 4.2 percent yesterday on reports showing the economies of Germany and France unexpectedly expanded in the second quarter. A phase of rapid growth in metals and energy demand in major industrial nations may be imminent, Barclays Capital analysts including Gayle Berry said in a report e-mailed today.
"Economic recovery in Europe and the U.S. is the key driver of copper prices, though the metal has been climbing much faster than the economy could rebound," said Edward Fang, an analyst at China International Futures (Shanghai) Co. "There's no correction in sight before London copper may top $6,600."
Three-month delivery copper dipped 0.3 percent to $6,360 a metric ton on the London Metal Exchange at 12:25 p.m. in Singapore. It earlier climbed as much as 1.6 percent to $6,480, the highest since Oct. 1.
Copper for November delivery on the Shanghai Futures Exchange climbed as much as 2.8 percent to 51,290 yuan ($7,506) a ton, the highest since Sept. 26. It last traded at 49,900 yuan.
Oil and metal prices jumped yesterday after reports showed the French and German economies expanded 0.3 percent from the first quarter. Economists surveyed by Bloomberg News had predicted declines.
A day earlier, the U.S. Federal Reserve said it would keep interest rates "exceptionally low" for an extended period, acknowledging signs that the worst recession since the 1930s may be ending.
Copper futures in China, the world's biggest consumer of the metal used in plumbing and power transmission, gained 82 percent the past six months. LME prices gained 91 percent the same time.
Shanghai prices "trended weaker than London" after record imports swelled domestic supplies, Fang said from Shanghai.
China's imports of copper and copper products fell for the first time in six months in July, declining 15 percent from record levels reached in June. Industrial production last month rose 10.8 percent from a year earlier, the nation's statistics bureau said Aug. 11.
The key concern for metal markets is whether increased demand from developed countries will come quickly and strongly enough to offset an anticipated slowdown in China's commodity imports, Barclays said.
While there are risks around China's second-half demand, they should not be "blown out of proportion in relation to the backdrop of strong underlying demand," the bank said.
"There is plenty of evidence that China's growth recovery has surprised on the upside," the analysts wrote.
UBS AG last month said China's copper imports may plunge 64 percent in the second half as stockpiles may have exceeded industrial demand by as much as 700,000 tons.
Among other LME-traded metals, nickel climbed 0.2 percent to $20,650 a ton and aluminum fell 0.4 percent at $2,051 a ton. Lead dropped 1.8 percent to $1,900 a ton, zinc slid 1.6 percent to $1,880 a ton and tin fell 1.6 percent to $14,910 a ton.
|Posted by baypeaktraders on July 2, 2009 at 4:03 PM||comments (0)|
July 2, 2009
BEIJING: The recent discovery of iron ore in northwest China may pose a threat to India?s iron ore exports to the Communist country. India?s exports to China are mainly iron ore. Following a recent tax Indian iron ore exports have been crying foul as they felt this will hit their exports badly. To add to that now China has declared huge iron ore deposits.
Beijing also heavily depends on iron ore supplies from India, Australia, Japan and South Korea to feed its high speed industrial growth. However, the situation is likely to change soon with Chinese geologists discovering Asia?s largest iron ore deposit in northwest China. Bureau of Geology and Mineral Resources Exploration in Liaoning Province has announced it has found iron ore deposit with an estimated reserve of more than 3 billion tonnes. It will take some time before any of the ores is actually mined but it is good news for the planners in the National Development and Reform Commission in Beijing, who maps the long-term trajectory of development.
The iron content in the ores, which is an important aspect for the steel industry, ranges between 25% and 62%. Apparently, the quantum of low-grade iron ore is higher than the high grade ones at 60-62% per cent. But China has already impressed upon the world with its capacity to upgrade low-grade iron ore through certain industrial processes.
The deposit can be exploited for more than 50 years. High-grade iron ore was also found even at a depth of 2,015 metres. But most of deposit is available at depths of 1,200 metres to 1,860 metres and spanning an area of 4 km by 3 km. The iron ore deposit is a mixture of magnetite and hematite.
The Benxi municipal government hailed it as Asia?s largest deposit. China?s minister of land and resources Xu Shaoshi has urged the local authorities to start exploitation as quickly as possible. News of the discovery has given a boost to share prices of steel makers like Baosteel, Angang Steel and Hunan Valin Iron and Steel Group.
Going by its current level of usage, the deposit is enough to satisfy China?s requirement of iron ore for 25 years. The province has yielded good quantities of iron ore in the past.
|Posted by baypeaktraders on July 2, 2009 at 3:47 PM||comments (0)|
July 2, 2009
BEIJING: A single nation which is powering the commodity prices, especially metals, is China now. According to market analysts across the globe, China has breathed life back into commodity prices.
Scotiabank's Patricia Mohr said she expects copper imports to decline in the summer and rebound late this year and early 2010. As imports of refined copper and iron ore achieved records during the first four months of this year, Scotiabank economist Patricia Mohr noted in an analysis published recently that China's copper imports will fall back in late summer, which is a normal seasonal event. She noted prices edged down to $2.31 late this month.
Nevertheless, Mohr predicts China's copper imports will rebound again in late 2009 and early 2010-driving prices forward. Mohr forecasts Chinese production of copper will likely expand by 10% next year although more will be met by scrap rather than primary metal. This development, combined with the gradual return of shutdown mines, will check copper prices from time-to-time in 2010. However, a pick-up in US motor vehicle production in the second half of 2009 and improving global economic conditions should underpin prices.
The copper price forecast has been revised up to $1.90 for 2009 and $2.30 for 2010, with tight market conditions expected medium-term. In her analysis, Mohr noted that potash markets now await news on contract settlement with India where potash demand is still strong.
Buyers are awaiting news on annual contract negotiations between BPC (Belarusian Potash Company) & then Canpotex (representing Western Canada?s three producers) and India likely to settle before China, where contract negotiations are expected to be protracted.
Potash demand is strong in India and inventories relatively low at an estimated 05.-0.6 million tonnes, she said. Mohr forecasts that while potash prices are likely to decline over the summer, she expects a big rebound in prices in 2010, given this year's marked deferral in world fertilizer application.
|Posted by baypeaktraders on July 2, 2009 at 9:35 AM||comments (0)|
July 1, 2009
China has softened its demands for a large iron ore price cut after failing to agree terms with global miners by Tuesday's deadline, Chinese media reported, the first sign of a possible compromise meant to restore annual supply deals and avoid a total breakdown of the benchmark system.
Citing officials attending a closed meeting of the China Iron and Steel Association (CISA) on Tuesday, Caijing magazine and the official Shanghai Securities News said China was still expecting a better deal than the 33 percent reduction agreed by Rio Tinto with Japanese steel mills, but offered an olive branch.
China is now ready to discuss a smaller price cut of 33-40 percent rather than its previous demand of a 40-45 percent reduction and hopes to end talks quickly, the Shanghai newspaper quoted a source close to the situation as saying.
No substantive discussions between CISA and the three global miners -- Rio Tinto and BHP Billiton of Australia and Brazil's Vale -- had taken place over the last two weeks, Caijing reported.
Rio Tinto has shown no inclination to go lower than the one-third price cut, saying it is ready to sell to its customers on whatever basis they prefer.
Spot iron ore prices to China have risen by a fifth in just a month, and now trade at a 4-month high above $80 a tonne on a delivered China basis, equivalent to around $65 free on board. This is higher than the contract price of $61 that the Japanese and South Korean mills secured, giving miners the upper hand.
"By abandoning the benchmark price... Chinese mills run the risk that if the spot price rallies further, they could end up paying higher prices than the rest of the world," Macquarie analysts said on Wednesday in a report.
"The fact that spot and new benchmark prices have converged already must be a source of concern for the Chinese given that European, Japanese, Korean and Taiwanese import demand remains extremely depressed."
In another development, some domestic big steel mills have tacitly reached agreements with miners and issued letters of credit to buy iron ore at the price accepted by Japanese mills, the official China Securities Journal citing industry sources as saying.
Small Chinese mills, eager to fix production costs and prepare for demand upturn, had already signed private deals, ignoring threats from CISA that it would not recognise the deals and revoke import licenses.