Steel production shuffles upwards :Macquarie Research,

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Commodities Comment
Steel production shuffles upwards
 We review January’s crude steel production data, which highlights further
reacceleration of YoY growth outside of China.
Latest news
 Precious metals were the big winners on Monday trading, as worries over the
multiple disruptions in the Middle East and North Africa pushed investment
towards safe havens. Silver was again the big winner, up 4.7% on the day to
$33.4/oz. Copper fell again to $9,814/t while nickel rose to $29,281/t as the
market digested the disruptions announced at the end of last week
 Flash PMIs for the Euro area were again very strong, rising to 59.0 from 57.3
in February. The Eurozone PMI is now at the highest level since June 2000,
with the increase resulting from a broad-based improvement in new orders,
output, new export orders and employment. The German PMI rose to the
highest level in the series history at 64.9, while the French PMI also improved
to 55.3 from 54.9. All this suggests that manufacturing activity in Europe
remains vibrant.
 Eramet, the French-based mining and metals company, gave an upbeat
presentation to analysts in London yesterday, outlining capital expenditure
projects totally €9bn out to 2020 including projects in manganese, nickel,
superalloys, lithium, titanium, aluminium forgings and rare earths. In nickel,
Eramet says it is on course to give approval to its 35ktpa Weda Bay nickel
project in Indonesia (phase 1) by the end of 2012. It stated that it is using a
long run nickel price assumption "in excess of" $10/lb, believing that most
analysts have under-estimated rising capital and operating costs in the
industry and also the large depletion of existing nickel ore bodies likely over
the next 10 years or so. It expects no growth in Chinese nickel pig iron
production this year (from 159kt last year) due to lack of growth in ore
supplies from Indonesia.
 Extract Resources announced that it is in discussions with Rio Tinto over the
potential joint development of the Husab uranium project with the
neighbouring Rössing uranium mine in Namibia, as well as being in
discussions with Kalahari over simplifying the shareholding structure of
Extract. Environmental approval was granted by the Namibian Ministry of
Environment and Tourism in January 2011. Next steps will include the
publication of a definitive feasibility study for the project, which is scheduled
for commissioning in 2014. Husab is the fifth largest uranium-only deposit in
the world and an open-pit mine and conventional acid leach process plant
could see it producing ~5,8000tUpa or 15mlbs U308pa.
 Just released data by Cochilco shows that Chilean molybdenum production
totalled 82m lbs in 2010, up 6.5% YoY. Codelco produced 47.8m lbs, up
0.6% YoY, while Antofagasta reported a 12.4% YoY rise to 19.3m lbs and
Collahuasi's output rose 76.1% YoY to 9.9m lbs.
 The ILZSG released zinc and lead data for December 2010 on Monday. The
data suggest that the refined lead market was in surplus of 62,000t in the
world ex-China in 2010, while the zinc market in the world ex-China was
458,000t in 2010. ILZSG assumes apparent demand = consumption for
China, so using this data gives misleading conclusions given large swings in
stocks in China year to year.