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Small price increases for LME base metals; only zinc declines (27.04.)

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Another morning of wispy price increases today, on the London Metal Exchange. Following average gains of 0.8% on Wednesday.

Zinc was the only base metal to see a decline this morning, falling just $2 per ton. All other metals recorded small increases.

Copper prices were followed by the news that major copper producers BHP Billiton, Freeport-McMoRan and Antofagasta had lowered their production forecasts for 2017 due to operation disruptions. The three-month copper price continued to rise, currently trading at $5,719.50 per ton.

Nickel hit its lowest since June 2016 at the kerb of trading yesterday, but rose $40 per ton during premarket trading this morning.

“On balance, we remain mildly bullish for the base metals’ fundamentals but volume on the LME remains low, so it may take a pick-up in volume before prices become more directional again.” (Metal Bulletin senior analyst William Adams.)

Copper price rallies

 

  • The three-month copper price rose by $4.50 to $5,719.50 per ton – this is the fourth day in a row the copper price has increased.
  • Inventories fell 900 tons to 260,575 tons, a fifth consecutive day of decline. 
  • Sucden Financial noted in its Q2 metals forecast: “Supply disruptions [for copper] and labor disputes will have the potential to squeeze prices higher still and, with macro tailwinds suggesting robust demand growth, we expect prices to trade on the floor at around $5,550 per ton.”
  • BHP Billiton has cut its copper production guidance for the 2017 financial year again due to the 44-day long strike at its Escondida mine during the quarter ending March 31, following a 2% reduction on its guidance in the fourth quarter last year.
  • Rio Tinto has also revised its 2017 copper production guidance downward after reporting a 37% decline in first quarter copper output due to the significant impact of the strike at Escondida and the production curtailment at Freeport’s Grasberg.

All other base metals rise; Zinc decline

The three-month aluminium price continued its premarket trend of the week with a small increase. It rose $5.50 to $1,969.50 per ton.

Aluminium stocks fell again, but by the smaller margin that we have recently been seeing; they dropped just 3,925 tons to 1,652,200 tons.

Nickel rose $40 to $9,265 per tons, as it tries to recover from freefalling prices over the last few days. Nickel stocks were down 336 tons to 379,002 tons.

Zinc was the only metal to see a price decline. The three-month zinc price fell $2 per ton to start trading at $2,624 per ton.

The three-month lead price saw an increase of $6 to $2,191 per ton and Inventories fell 350 tons to 165,400 tons.

Tin rose $10 to $19,910 per ton, and it looks to bounce back above the $20,000 per ton mark. Stocks for tin fell 10 tons to 3,020 tons.

Currency moves and data releases

  • The dollar index was up 0.01 to 98.96.
  • In other commodities, the Brent crude oil spot price was down 0.62% to $51.13 per barrel.
  • The UK FSTE 100 was down 38.22 (0.52%) to 7,250.50.
  • In data, US crude oil inventories saw a decline of 3.6 million. The stronger-than-expected decline is crude oil inventories is boosting oil prices, which in turn exerts upward pressure across the metals complex.
  • The Gfk German consumer climate for April was 10.2, up on the previous rating of 9.8. The Spanish unemployment rate for Q2 of 2016 was 18.8% – higher than the forecasted 18.6%.
  • The economic agenda is busy today with a host of US data out, including on core durable goods orders, unemployment claims, goods trade balance and pending home sales.

 

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Rising Tensions in Grasberg; Mine workers planning one-month strike in May

 

Grasberg Mine, Indonesia

Tensions are increasing around Grasberg, the world’s second-biggest copper mine. It is happening because operator Freeport laid off thousands of workers. In order to retain losses from an underway argument with the Indonesian government, over mining rights.

Firstly, copper miner Freeport-McMoRan Inc. warned it will punish workers for absenteeism at its Indonesian unit. Secondly, yesterday, one of its main unions announced plans to go on a one-month strike. Following, they are not satisfied with the employment conditions.

A strike could impact Freeport efforts to ramp up production. Company is expecting to soon affix agreements with Jakarta to allow it to temporarily resume copper concentrate exports.

“Workers were very absent over the last several days.” “We are tracking absenteeism, and disciplinary actions will be enforced. Under the terms of the Collective Labor Agreement.”

Cutting the workforce

 

Last week Freeport has discharged over 10 percent of its workforce of 32,000. This number will grow until its dispute with the government comes fully resolved.

Further adding to tensions around Grasberg, clash injured several Freeport workers and police officers in Papua on Thursday, when officers fired rubber bullets at demonstrators.

“Company is giving efforts to reduce its workforce. It has extensive impacts on workers and their families”. The workers union spoke about this, stating it is not a solution.

Workers are worrying about the discharges. “Because there are no limits or specific criteria on workers who will be furloughed.” They requested an end to the furlough policy. And informed Freeport of their plans to strike for 30 days. Beginning from May the 1st.

 

‘Shaken & Confused Workers’

 

“Efforts by the company to cut costs and reduce numbers of workers, made a fiasco among them.” It led to agitated tensions and their determination to protest.

One worker added that in his view Freeport was only doing what it needed to survive. And that cutting costs is one of the strategies to turn around company’s conditions. He said there are many workers who would not join the strike.

Thursday some workers “were carrying out acts of anarchy … so police took action and fired rubber bullets on them.” Solossa said the clash injured four workers and seven police officers. But that the controvert was not related to the planned strike.

 

The incident

Timika Police Chief confirmed the details of the incident. He added that incident included roughly 1,000 demonstrators. Also when the tear gas was fired there were many of them present.

New rules demanded the Arizona-based company to adopt a special license. Affected by that Indonesia blocked Freeport’s copper concentrate exports in January. It payed new taxes and royalties. Divested a 51 percent stake in its operations, and relinquished arbitration rights. This stoppage made hundreds of millions of dollars cost. As for the company, also for Indonesia. But negotiations over sticking points will continue for the next six months at least.

“We have the right to commence arbitration in 120 days if no agreement is reached.” (Freeport saying to Jakarta)

In the end, it is all up to workers now. They will decide their own destiny. But the fact that many of them are discharged from their workplaces is scary. There are families behind who depend on these wages. And there is also cruel fact of a cold economy. The costs must be cut, if the company plans to get over the wounds and bloom. Grasberg is going to be very agitated in the next few months. We will see the outcome.

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LME: copper price up; all other base metals slightly lower this morning

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Friday April the 21st LME:

 

Copper was the only base metal which went slightly up in this mornings trade. All other base metals prices fell.

 

With the three-month aluminium price falling $2 per t and zinc dropping $10.50 per t.

“The market is looking volatile at the moment; we have had a few quiet days but have recovered from earlier week weakness.” (FastMarkets)

LME copper prices hit three-month lows at the start of the week but have rallied in the past few days. Instantly, it is trading at 0.5% higher than Thursday’s kerb price.

“Dip-buying appears to have emerged into the recent weakness in base metals prices, this fits in with our overall view to remain mildly bullish for the complex,” Metal Bulletin analyst William Adams noted. (FM)

 

Copper prices edging up

 

The three-month copper price rose by $28.50 to $5,651.50 per ton. While copper stocks fell by 50 ton to 268,400ton, with 11,025 of freshly re-warranted copper. Global refined copper market posted a surplus of 51,000t in January, the International Copper Study Group (ICSG) said in a monthly report on April 20.

 

Chile’s Codelco suspended operations at a concentrator plant at its Salvador copper mine after a supervisor died in an accident. The facility produced 60,000 tons of copper in 2016. (Reuters)

 

All other base metals see decline

Aluminium price in three-month report fell by $2 to $1,941 per ton as it restored above $1,900. Inventories were down 14,925t to 1,687,875t. Nickel’s three-month price fell by $35 to $9,445 per ton – nevertheless bouncing back from dips over the last few days.

Stocks for nickel increased by 5,208 t to 380, 946 t. Zinc price (3months) started trading at $2,621.50 per ton, down $10.50 on yesterday’s kerb. Inventories fell 1,300 tons to 355,150 tons.

“Data released by China’s NBS showed its domestic zinc production fell to 504,000 tons in March, the lowest level in a year as smelters conducted maintenance during the recent ore shortage,” ANZ Research said on Friday.

Lead was trading $6 lower this morning at $2,153.50 per ton. Stocks were down 500 tons to 167,175 tons.

Tin price in three-months fell $15 to $19,860 per ton as it failed to rally back above the $20,000 per ton mark. Inventories for tin were unchanged at 3,195 tons for the second day in a row.

 

Currency moves and data releases

  • Dollar index was down to 99.76, a 0.08% decrease.
  • The Brent crude oil spot price fell by 0.02% to $52.97 per barrel.
  • The UK FSTE 100 was up 2.58 to 7121.12.
  • In data, EU consumer confidence was -4 for April after being forecast at -5, while the CB leading index was 0.4% for March.
  • EU and US flash manufacturing and services PMI, EU current account, US existing home sales and UK retail sales are due.

 

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Base metals subdued; Aluminium went slightly up

 

Essentially lower levels

Base metals prices started a holiday-shortened week mostly on the defensive. With LME premarket trading on Tuesday April 18 seeing lower levels. – Potentially supportive macroeconomic developments were shrugged off.

The exception was aluminium. It pushed higher on weekend news that planned Chinese capacity extensions were being put on ice.

On the other hand, copper and zinc were wafting. Near last week’s three-month lows, nickel touched its softest for two-and-a-half months. Lead hit its weakest for two months.

“Sentiment was a bit sloppy last week, and that has carried over today it seems. There is a run of short weeks now so business looks like being a bit patchy at times.”

Consequently, there was a muted reaction to Monday’s upbeat Chinese data! First quarter GDP grew 6.9% year-on-year, marking the fastest growth rate in 18 months. And most noteworthy beating forecasts of 6.8%

 

Metals session except Al

 

The rest of the session may see the lackluster trend being maintained ahead of a string of metals.

“The base metals have been showing weakness in recent weeks and have so far not seen any pick-up even amid the shift into the seasonally strong second quarter. The lack of upside momentum in most of the metals since mid-February has increased the chance of stale long liquidation,” William Adams of Metal Bulletin said.

 

 

Aluminium

Aluminium goes it alone; China supply clenching?

The three-month aluminium price forged higher, recently trading at $1,928 per tonne, up $18 from the Thursday close. The local government in Xinjiang, western China, halted three new aluminium projects with combined capacity of 2 million tons per year for violating rules aimed at curbing output.

 

 

Other near multi-month lows

 

The three-month copper price slid to $5,663 per tonne, a $29 decline, and looks vulnerable to a test of last week’s $5,615 low. While three-month zinc price was at $2,593 per tonne, a $31 loss, with a test of $2,558 – last week’s low-point – possible. Also, three-month lead price skidded as low as $2,200 per tonne, a $39 loss, while nickel fell to $9,560, down $190. Most noteworthy, three-month tin price stood at $19,795 per tonne, however, a $190 advance.

 

Currency moves and data releases

 

The dollar index was recently down 0.29 at 100.29.

Brent crude oil fell $0.61 to $55.00 per barrel.

In equities, the UK FTSE 100 index fell nearly 70 points to around 7,258.

In data today, US building permits, housing starts, the capacity utilisation rate and industrial production are due.

 

Crude Oil Update

Venezuela’s crude-stained oil tankers banned at sea (*check the link below)

http://www.reuters.com/article/us-venezuela-oil-tankers-insight-idUSKBN17K0CE

  • June West Texas Intermediate crude oil futures are trading lower shortly before the regular session opening as investors react to a bearish government report.

Government data released on Monday showed that May output is expected to rise by 123,000 barrels per day to 5.19 million bpd.

If this information is right, May production will post its biggest monthly increase since February 2015 and the highest monthly production level since November 2015.

Overcoming the angle at $53.08 will indicate the return of buyers. This could create a labored rally into angles at $53.39, $53.77 and $53.95. Other is the last potential resistance angle before the $54.14 main top.

OPEC commented on its plans about extending to cut productio . But it may not be strong enough to turn this market around.

 

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COPPER forecasts in 2017

Cochilco, Chile’s copper commission, has raised its forecast for the price of the copper in 2017. Wanting to reflect the impact of global supply breaks. The commission anticipates copper price to average $2.60 per lb this year. Which is up from its previous estimate of $2.40 per lb.

 

A worker monitors a process inside the plant at the copper refinery of Codelco Ventanas in Ventanas city, northwest of Santiago, Chile

Meanwhile, according to Cochilco’s vp, Sergio Hernández, the move reflects the decline in global production. Mostly due to issues at Grasberg, Cerro Verde and Escondida mines. Amid such disruptions, Cochilco reduced its forecast for global copper production increase to 0.7% in 2017.

In the same time, Chile’s production should come in slightly below the 5.6 million tonnes of copper, which would represent a 0.8% year-on-year growth from 2016.

Earlier in January, the commission expected the global output to grow 2.9% this year.

Cochilco also said that it expects the copper price to remain at the average of $2.60 per lb in 2018.

“We believe that the construction market and the infrastructure and power projects in China will be reactivated until the third quarter of this year [2017].” Said Hernández, which should sustain the country’s demand for copper.

Cesco Copper week

There was a defnite improvement in sentiment at this year’s Cesco copper week in Chile. With more market participants seeing upside price potential amid tightening supply but many still erred on the side of caution.

Cesco Week 2017, the picture is bright if not overly bullish. The three-month price was above $5,900 per tonne last week. It was driven by a host of supply disruptions in Indonesia, Chile and Peru, which have removed some 200,000 tonnes of anticipated production from the market this year. The price has since eased back to $5,780 per tonne. It happened mainly due to rising inventories and the resolution of the strikes at Escondida and Cerro Verde and the temporary export agreement for Freeport’s Indonesian subsidiary. The next World Copper Conference will be in Santiago, Chile. It will happen 9-11 April 2018.

Shanghai Future Exchange copper inventories drop 14%

Deliverable copper stocks at Shanghai Futures Exchange-approved warehouses declined by 43,543 tonnes. In percentage: 13.8% – to 271,267 tonnes as of Friday April 14 from a week earlier.

This week, R&S Logistics MHC in Shanghai saw the biggest decrease in stocks. Exactly 26,073 tonnes of the red metal exited its sheds.

Market stockpiles dropped due to active spot trading this week. With spot premiums staying in positive territory.

Copper in the physical market was traded with a premium of 25-40 yuan per tonne. As a result of which producers intend to achieve sales in the spot market rather than deliver to SHFE sheds.The Shanghai-London arbitrage window was closed today. The SHFE copper price dropped since the start of this week, although with a brief pause on Thursday, influenced by the LME complex amid concerns over geopolitical tensions.

“The decline of SHFE copper inventory indicated that consumers are dip-buying,” noted Guotai Junan. China imported 430,000 tonnes of unwrought copper and copper-fabricated products in March, 25% lower compared with 570,000 tonnes in March 2016. Info according to preliminary Chinese customs data released on April 13.

 

Zinc and nickel stocks down

 

  • Shangai Futures Exchange zinc stocks declined 16,846 tonnes to 165,398 tonnes. Furthermore, SHFE nickel stocks was slightly down 146 tonnes to 84,043 tonnes.

 

All other base metals stocks increase

  • In conclusion, Aluminium stocks climbed 5,981 tonnes over the past week to 345,942 tonnes. Lead stocks in SHFE was up 212 tonnes to 72,662 tonnes. As a result, tin stocks rose from 100 tonnes to 2,119 tonnes.
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