Monthly Metal Review

Overview

    Financial markets suffered further bouts of extreme volatility this month as worries persisted over the Euro zone sovereign debt crisis, monetary tightening in China and rising geopolitical tensions in the Korean peninsular. In late May, Fitch downgraded Spain’s debt to AA+ as worries mounted about the country's banking sector after the Bank of Spain stepped in to rescue CajaSur, a failed regional lender. Such news triggered severe sell-offs in equity, commodity and credit markets and sent investors scurrying for the perceived safety of “core” government bonds, the dollar and gold.
    Yet Euro zone industrial output in March rose for the tenth month in a row to 6.9% YoY compared to a 3.9% increase in February. Growth in the production of intermediate goods accelerated from 6.8% to 11.7% while the output for durable goods rose by just 2.2%.
    In the US, durable goods orders leapt a further 2.9% MoM in April, although this was largely driven by a rise in transport goods. Indeed, excluding this item, orders fell 1%. Nevertheless, it appears that US manufacturing will remain very healthy through Q2. US new home sales jumped 14.8% MoM and 47.8% YoY in April. Data from the US Commerce Department showed that consumer spending stalled in April after posting six consecutive months of gains. However, at 0.5% MoM real disposable income recorded its largest gain since 1H09 as a combination of greater labour market confidence and subdued inflation put more money in the back pocket. However, this month has been screened with too many imponderables to allow the commodity markets to refocus on these positive macro readings. As a result, the micro and macro environments are pulling metals prices in opposing directions sparking a surge in volatility which is likely to characterise the market for much of 2010.
    Some metals have suffered much worse than others so once the dust settles there could be some relative value opportunities. But from a fundamental perspective, in a market where there are demand doubts, price performance will be differentiated by the supply side, which means that zinc prices face the strongest headwinds while copper and nickel the least. Zinc production is growing the quickest of all the metals. With few constraints on the raw material availability, solid supply growth is expected to continue. Copper and nickel production, however, is struggling to grow in the face of lower ore head grades, labour issues and new project delays. Tin should also find support from a constrained supply environment, while market opinion is divided on lead.
    In China, the Ministry of Industry announced that it will seek the closure of more “outdated” metals production capacity over the next three years. It is targeting reductions of 300,000 tpy in copper smelting capacity and 600,000 tpy in zinc and lead smelting capacity.
    In Australia, the government announced proposals to impose a 40% tax on profits generated from mining in the country from 2012. Miners have contested it, and Rio Tinto and major miners said they would review all mining operations if the new tax comes into force. Such a draconian measure could definitely hamper domestic expansion.

Daily Prices

May 2010

Copper
Date(Fix.) ($/MT)
Average 6837.68
28-05-2010 6926
27-05-2010 6875.5
26-05-2010 6836
25-05-2010 6685
24-05-2010 6770.5
21-05-2010 6639
20-05-2010 6500
19-05-2010 6465.5
18-05-2010 6605.5
17-05-2010 6721
14-05-2010 6955.5
13-05-2010 7010.5
12-05-2010 7082
11-05-2010 6885
10-05-2010 7165.5
07-05-2010 6872
06-05-2010 6945
05-05-2010 6801
04-05-2010 7175.5
Silver
Date(Fix.) ($/OZ)
Average 18.42
28-05-2010 18.53
27-05-2010 18.36
26-05-2010 18.27
25-05-2010 17.63
24-05-2010 17.78
21-05-2010 17.72
20-05-2010 17.93
19-05-2010 18.53
18-05-2010 18.82
17-05-2010 19.11
14-05-2010 19.64
13-05-2010 19.43
12-05-2010 19.59
11-05-2010 18.42
10-05-2010 18.46
07-05-2010 17.7
06-05-2010 17.69
05-05-2010 17.63
04-05-2010 18.71
PM MEAN AM Gold
Date(Fix.) ($/OZ)
Average -
28-05-2010 -
27-05-2010 -
26-05-2010 -
25-05-2010 -
24-05-2010 -
21-05-2010 -
20-05-2010 -
19-05-2010 -
18-05-2010 -
17-05-2010 -
14-05-2010 -
13-05-2010 -
12-05-2010 -
11-05-2010 -
10-05-2010 -
07-05-2010 -
06-05-2010 -
05-05-2010 -
04-05-2010 -
Date(Fix.) ($/OZ)
Average -
28-05-2010 -
27-05-2010 -
26-05-2010 -
25-05-2010 -
24-05-2010 -
21-05-2010 -
20-05-2010 -
19-05-2010 -
18-05-2010 -
17-05-2010 -
14-05-2010 -
13-05-2010 -
12-05-2010 -
11-05-2010 -
10-05-2010 -
07-05-2010 -
06-05-2010 -
05-05-2010 -
04-05-2010 -
Date(Fix.) ($/OZ)
Average 1205.43
28-05-2010 1207.5
27-05-2010 1211
26-05-2010 1212
25-05-2010 1198.25
24-05-2010 1187
21-05-2010 1179.75
20-05-2010 1192
19-05-2010 1195
18-05-2010 1216.75
17-05-2010 1236
14-05-2010 1236.5
13-05-2010 1237.5
12-05-2010 1237.5
11-05-2010 1222.5
10-05-2010 1196.5
07-05-2010 1202.25
06-05-2010 1185.25
05-05-2010 1165
04-05-2010 1185
Lead
Date(Fix.) ($/MT)
Average 1882.68
28-05-2010 1821
27-05-2010 1777
26-05-2010 1760
25-05-2010 1724
24-05-2010 1779
21-05-2010 1722.5
20-05-2010 1720
19-05-2010 1721
18-05-2010 1795.5
17-05-2010 1864
14-05-2010 1952
13-05-2010 2016.5
12-05-2010 2026
11-05-2010 1976
10-05-2010 2081
07-05-2010 1979
06-05-2010 1965
05-05-2010 1962
04-05-2010 2129.5
Zinc
Date(Fix.) ($/MT)
Average 1968.37
28-05-2010 1895.5
27-05-2010 1875.5
26-05-2010 1881.5
25-05-2010 1830.5
24-05-2010 1888
21-05-2010 1855.5
20-05-2010 1817.5
19-05-2010 1822.5
18-05-2010 1893
17-05-2010 1968
14-05-2010 2051
13-05-2010 2073
12-05-2010 2069
11-05-2010 2011
10-05-2010 2116
07-05-2010 2045
06-05-2010 2090.5
05-05-2010 2036
04-05-2010 2180
Tin
Date(Fix.) ($/MT)
Average 17566.05
28-05-2010 18105
27-05-2010 17725
26-05-2010 17710
25-05-2010 17350
24-05-2010 17705
21-05-2010 17255
20-05-2010 17110
19-05-2010 17105
18-05-2010 17105
17-05-2010 17700
14-05-2010 17550
13-05-2010 17630
12-05-2010 17795
11-05-2010 17425
10-05-2010 17950
07-05-2010 17555
06-05-2010 17650
05-05-2010 17250
04-05-2010 18080