LME Summit Poll pt 2: Looking for resolution to EU risks ::Macquarie Research,

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LME Summit Poll pt 2: Looking for
resolution to EU risks
Feature article
 The second part of our LME Summit poll focuses on the macro concerns
facing our audience. The risk of further financial contagion from the Eurozone
debt crisis was seen as a bigger risk than a slowdown in growth in China, with
a resolution to these problems seen as the key turning point for base metals.
Latest news
 Base metals fell in Tuesday trading, with precious metals also suffering the
same fate, falling by 1–1.5%. Thermal coal prices were also down $1.50–2/t,
with DES ARA seeing some weak trades, with a cargo for December delivery
pricing at $118/t and a very prompt Richards bay cargo at just $109/t.
 The weaker European climate is forcing further idling of capacity in the
European steel sector. Spanish long products producer, CELSA, has
announced that some of its facilities may need to be idled to "adapt to lower
apparent steel consumption in the fourth quarter 2011 and first quarter 2012."
The company is currently operating at a capacity utilisation rate of 70% in
Spain and France. Meanwhile, French steelmaker, Vallourec, has stopped
output at its 650ktpa Saint-Saulve EAF facility for two weeks of maintenance,
although the company notes this is not linked to a lack of demand for tubes
and pipes.
 India's state-run National Aluminium Co Ltd (NALCO) plans to build a
500,000tpa aluminium smelter and associated power plant in Indonesia's East
Kalimantan province, Indonesia's trade minister said on Tuesday.
 Codelco has cut the copper premium charged to European buyers next year
by 8% to $90 a metric ton, according to Bloomberg reports. However, this
remains above the 2010 level of $80/t. Meanwhile, Codelco's CEO, Diego
Hernandez, noted that customer orders from Asia look "quite strong" for 2012,
while clients in Europe are "cautious" on requirements.
 Ferrous metals financial contracts continue to gain traction, with the volume of
iron ore futures contracts traded on the Singapore Mercantile Exchange
reaching 1.1 million tonnes in September, representing the second month
above 1mt levels.
 The International Copper Study Group has released its latest update following
the pre-LME meetings held in Lisbon last week. The group sees the global
market for refined copper in a 250kt deficit for 2012 (compared with
Macquarie's 177kt estimate), before moving back to balance in 2013 (in line
with Macquarie). World refined copper production was seen at 20.840 million
tonnes in 2012. Adjusted for production disruptions, world refined copper
production was seen rising by about 3.4% to 20.1 million tonnes, from 19.5
million tonnes in 2011. For 2012, world usage is expected to grow by 3.6%,
mainly supported by a growth of 6% in China, as the rest of the world is
expected to grow by only 2%, the ICSG said.