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Commodities Comment
ETFs undermine Palladium
Feature article
Palladium has fallen very sharply over the past few weeks, with ETF holdings
dropping by a dramatic 115koz. In contrast, holdings in platinum ETFs have
strengthened, although this hasn’t stemmed the decline in prices.
Latest news
The lead price was the outperformer today, with recent strength in part at
least, based on market perceptions that demand may be lifted in the wake of
the earthquake in Japan.
The uranium spot price has been in freefall in recent days, and was reported
to have traded in the high $40s/lb on Wednesday, down by over 30% from its
local peak of $73/lb. The continued declines have reflected the lack of
resolution of the problems at Fukushima Dai-ichi (in particular, reactor number
2), the announcement that Germany will shut 8.34Gwe of nuclear capacity for
at least 3 months (with at least 2 plants likely to be shut permanently), and the
news that China is temporarily halting new nuclear projects in order to review
the safety of its nuclear build plans.
As each day passes, we wipe out more demand from the uranium model.
However, we are also wiping out substantial supply growth with lower prices,
as well as reducing substitution from uranium to enrichment. In 2011, we see
China continuing to import at recent rates, resulting in ex-China remaining
relatively tight (so after this sell-down there should be a decent bounce, with a
potential catalyst being underperformance of the Ranger mine owing to recent
heavy rains). However, as China reduces its stocking into 2012/13, the risk is
that prices to trade down to around marginal costs of $40–50/lb.
ARMZ/Uranium One pulled an offer for Mantra Resources shares on
Wednesday. Mantra was developing the Mkuju River uranium project in
Malawi, but recent developments have seen support for that project pulled.
The other major outstanding bid in the uranium space was made by China
Guangdong Nuclear Power Corporation for Kalahari Minerals.
US aluminium orders (ex-canstock) rose by 0.9% MoM in February, which
was a strong outturn given that seasonally, orders fall by around 7.3% MoM in
February. Orders were 15.3% higher YoY in February and 18.2% higher YoY
over the first two months of the year. The rise was driven by strong increases
in extruded products, drawing stock and bare wire, and electrical conductors
sectors.
India is reported to be raising electricity prices by INR0.2–0.6/kWh from 1
April 2011. This will lift prices to a range of INR3.40–4.15/kWh (equal to about
$70–90/MWh) in the main states where ferroalloys producers are located and
will, of course, increase costs of production for ferrochrome and manganese
alloys. South African electricity prices, however, are rising even more steeply.
Eskom is about to implement the second of three annual price rises of
approximately 26% on 1 April 2011 and most in the market expect further
double digit percentage increases in 2013 and 2014 (although no firm
agreement is yet in place for these years). As a result, South African FeCr
producers are moving from the lower end towards the upper end of the
industry cost curve, in many cases.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Commodities Comment
ETFs undermine Palladium
Feature article
Palladium has fallen very sharply over the past few weeks, with ETF holdings
dropping by a dramatic 115koz. In contrast, holdings in platinum ETFs have
strengthened, although this hasn’t stemmed the decline in prices.
Latest news
The lead price was the outperformer today, with recent strength in part at
least, based on market perceptions that demand may be lifted in the wake of
the earthquake in Japan.
The uranium spot price has been in freefall in recent days, and was reported
to have traded in the high $40s/lb on Wednesday, down by over 30% from its
local peak of $73/lb. The continued declines have reflected the lack of
resolution of the problems at Fukushima Dai-ichi (in particular, reactor number
2), the announcement that Germany will shut 8.34Gwe of nuclear capacity for
at least 3 months (with at least 2 plants likely to be shut permanently), and the
news that China is temporarily halting new nuclear projects in order to review
the safety of its nuclear build plans.
As each day passes, we wipe out more demand from the uranium model.
However, we are also wiping out substantial supply growth with lower prices,
as well as reducing substitution from uranium to enrichment. In 2011, we see
China continuing to import at recent rates, resulting in ex-China remaining
relatively tight (so after this sell-down there should be a decent bounce, with a
potential catalyst being underperformance of the Ranger mine owing to recent
heavy rains). However, as China reduces its stocking into 2012/13, the risk is
that prices to trade down to around marginal costs of $40–50/lb.
ARMZ/Uranium One pulled an offer for Mantra Resources shares on
Wednesday. Mantra was developing the Mkuju River uranium project in
Malawi, but recent developments have seen support for that project pulled.
The other major outstanding bid in the uranium space was made by China
Guangdong Nuclear Power Corporation for Kalahari Minerals.
US aluminium orders (ex-canstock) rose by 0.9% MoM in February, which
was a strong outturn given that seasonally, orders fall by around 7.3% MoM in
February. Orders were 15.3% higher YoY in February and 18.2% higher YoY
over the first two months of the year. The rise was driven by strong increases
in extruded products, drawing stock and bare wire, and electrical conductors
sectors.
India is reported to be raising electricity prices by INR0.2–0.6/kWh from 1
April 2011. This will lift prices to a range of INR3.40–4.15/kWh (equal to about
$70–90/MWh) in the main states where ferroalloys producers are located and
will, of course, increase costs of production for ferrochrome and manganese
alloys. South African electricity prices, however, are rising even more steeply.
Eskom is about to implement the second of three annual price rises of
approximately 26% on 1 April 2011 and most in the market expect further
double digit percentage increases in 2013 and 2014 (although no firm
agreement is yet in place for these years). As a result, South African FeCr
producers are moving from the lower end towards the upper end of the
industry cost curve, in many cases.
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