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Nickel under pressure from pig iron
Feature article
We review the reasons for recent nickel price weakness and give our
projections for the balance of this year – a critical factor is falling nickel pig
iron costs in China.
Latest news
Prices for the main LME base metals fell on Monday, with nickel and tin
recording the steepest declines on the day of 2.5% and 2.2%, respectively.
Lead, zinc and copper lost less than 1% and lead now has the best price
performance of the major LME base metals measured over the past year
(until the latest sell off it had been tin). Precious metals prices also fell with
silver sliding by 5%, while gold gave up only 0.2% and continued to trade well
above $1,500/t.oz.
Japan's factory orders fell by 3.3% MoM in April, following a rise of 1% in
March. This was disappointing (consensus market expectations had been for
an increase) but it is difficult to disaggregate the impact of the devastating
earthquake and tsunami in March with the result that even more caution than
usual is warranted in interpreting this single data point.
Chinese new loans were RMB551.6bn in May, compared to RMB639.4bn in
May 2010, with M2 slowing from 15.3%YoY to 15.1%YoY in the month. New
loans for Q2 were reported to be set at 30% of the annual quota of RMB7.5tr,
but total new loans in May and April are currently well below this at RMB1.3tr.
This suggests credit currently remains tight, although policy makers have
scope for easing into 2H11.
Coal shipments from China's main ports totalled 270mt, rising 22%YoY
according to the China Coal Resource. These data imply May shipments
totalled 59mt, or 665mt on an annualised basis. The incredibly strong growth
in coal shipments and solid growth in coal railings (12.6%YoY YTD) suggest
that the domestic coal supply chain is performing well, albeit below the
breakneck speed of demand growth.
Heavy rainfall has continued over the week in China, with drought affected
regions receiving 100-200mm of rain over the past 20 days. The rain has
seen drought-stricken fields drop from 3.8m hectares to 1.86m hectares with
further forecasted rains increasing the risk of floods in some regions.
Codelco’s El Teniente copper mine was operating at 73% capacity on Monday
after a nearly three-week contractor strike. Up to June 9th, according to
management, the mine had lost about 7,000 tons of copper. Meanwhile on
Monday, South Africa’s main mine workers union began wage talks with the
country’s Chamber of Commerce demanding a 14% increase in pay for gold
and coal miners. The current contracts are set to expire on June 30th.
The Chinese government has reiterated it will maintain a tight reign on rare
earths exports having recently announced that its current output is
unsustainable. It has cut export quotas of rare earth metals by 35% for the
first half of the year and capped total output of rare earth oxides at 93,800t for
2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Nickel under pressure from pig iron
Feature article
We review the reasons for recent nickel price weakness and give our
projections for the balance of this year – a critical factor is falling nickel pig
iron costs in China.
Latest news
Prices for the main LME base metals fell on Monday, with nickel and tin
recording the steepest declines on the day of 2.5% and 2.2%, respectively.
Lead, zinc and copper lost less than 1% and lead now has the best price
performance of the major LME base metals measured over the past year
(until the latest sell off it had been tin). Precious metals prices also fell with
silver sliding by 5%, while gold gave up only 0.2% and continued to trade well
above $1,500/t.oz.
Japan's factory orders fell by 3.3% MoM in April, following a rise of 1% in
March. This was disappointing (consensus market expectations had been for
an increase) but it is difficult to disaggregate the impact of the devastating
earthquake and tsunami in March with the result that even more caution than
usual is warranted in interpreting this single data point.
Chinese new loans were RMB551.6bn in May, compared to RMB639.4bn in
May 2010, with M2 slowing from 15.3%YoY to 15.1%YoY in the month. New
loans for Q2 were reported to be set at 30% of the annual quota of RMB7.5tr,
but total new loans in May and April are currently well below this at RMB1.3tr.
This suggests credit currently remains tight, although policy makers have
scope for easing into 2H11.
Coal shipments from China's main ports totalled 270mt, rising 22%YoY
according to the China Coal Resource. These data imply May shipments
totalled 59mt, or 665mt on an annualised basis. The incredibly strong growth
in coal shipments and solid growth in coal railings (12.6%YoY YTD) suggest
that the domestic coal supply chain is performing well, albeit below the
breakneck speed of demand growth.
Heavy rainfall has continued over the week in China, with drought affected
regions receiving 100-200mm of rain over the past 20 days. The rain has
seen drought-stricken fields drop from 3.8m hectares to 1.86m hectares with
further forecasted rains increasing the risk of floods in some regions.
Codelco’s El Teniente copper mine was operating at 73% capacity on Monday
after a nearly three-week contractor strike. Up to June 9th, according to
management, the mine had lost about 7,000 tons of copper. Meanwhile on
Monday, South Africa’s main mine workers union began wage talks with the
country’s Chamber of Commerce demanding a 14% increase in pay for gold
and coal miners. The current contracts are set to expire on June 30th.
The Chinese government has reiterated it will maintain a tight reign on rare
earths exports having recently announced that its current output is
unsustainable. It has cut export quotas of rare earth metals by 35% for the
first half of the year and capped total output of rare earth oxides at 93,800t for
2011.
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