Monthly Metal Review

Overview

    Base metals continued to edge higher on the back of US dollar depreciation against most major currencies. In fact, weaker-than-expected US economic data have raised expectations that the Federal Reserve will extend its quantitative easing program before the end of the year. The anticipation of intervention has driven the dollar lower and a wall of money has flooded into emerging markets in Asia, as well as South America, in search of yields that are not on offer in developed economies. 
    Beijing responded to the US House of Representatives voting for measures to penalise China for keeping its currency weak by allowing the renminbi to fall 0.1% from its recent highs to Rmb 6.6903 versus dollar on the 29th of September.
    Meanwhile, the yen hit its strongest level relative to the greenback since Tokyo intervened twice to hobble its ascent. The currency has risen about 10% against the dollar this year, and business leaders were pressing the government for help. The yen's rise had gained momentum as worries about banks exposure to the debt of European countries with stagnating economies triggered a search for safety.
    The Eurozone's debt crisis is the focus of investor attention after Dublin gave details of its €34 billion bailout of Anglo Irish bank and Moody’s downgraded Spain’s credit rating. However, there was some respite for embattled peripheral Eurozone government bonds as a successful €4 billion auction of Spanish debt attracted strong demand and saw yields below market rates. But peripheral yield spreads continued to widen over German Bonds.
    Base metals have also rallied on a further improvement in Chinese PMI data suggesting stronger economic growth ahead. Chinese production has strongly recovered in 2010 compared with 2009. This mostly reflects that, in 2009, high-cost production was closed rapidly in China and, in 2010, as prices have recovered, production has been restarted. However, production appears to be leveling out and, in some cases, is being cut again. The data do not yet reflect any energy-related cuts. To the extent that this is happening, it will be reflected in data from September onward. 
    While production has been rising this year, net imports of finished production have mostly fallen sharply YoY and, in some cases, China has switched back from being a net importer in 2009 to being a net exporter this year. Net imports of copper remain surprisingly strong. The pattern of imports in 2009 was strongly suggestive of a one-off opportunistic restocking. By comparison, the pattern of monthly trade in 2010 suggests the opposite - heavy destocking. 
    Further support for the destocking theory is provided by the contrast between apparent consumption for many commodities and the trends in their end-use sectors. Weak apparent demand growth this year for nickel, copper, zinc and lead in particular, suggests heavy destocking in these commodities this year. 
      While Chinese apparent demand has slowed sharply in 2010, the rest of the world has had a strong rebound in apparent demand for base metals. This is one of the few years during the past decade when non-Chinese demand growth should exceed Chinese demand growth. 
    In Australia, the formation of the Labor minority government, supported by independent and Green MPs, will see iron ore and coal miners hit by a new resource tax. Gillard's proposed 30% tax on mining profits is due to start in July 2012, but the shape of the tax may change with Labor relying on support from the Greens. Because the tax applies only to coal and iron ore mining companies earning   $46 million or more, some 2,000 copper, silver, lead, zinc, gold, nickel and other minerals producers are unaffected if the proposed tax is passed intact. 
    In the Philippines, the government and mining industry expect foreign firms to invest over the next few years, despite an uncertain investment environment and opposition from the powerful Catholic Church. The Philippines has mineral deposits estimated to be worth $1 trillion, and the new government of President Benigno Aquino tries to attract foreign investment to sectors such as mining as essential to developing local industry and creating jobs. But foreign miners have found it difficult to operate in the Philippines. Key concerns are corruption, governance and security risks from two long-running insurgencies.


 

Daily Prices

September 2010

Copper
Date(Fix.) ($/MT)
Average 7709.30
30-09-2010 8053.5
29-09-2010 8016.5
28-09-2010 7866
27-09-2010 7922
24-09-2010 7911
23-09-2010 7876.5
22-09-2010 7705.5
21-09-2010 7695
20-09-2010 7735.5
17-09-2010 7756
16-09-2010 7670
15-09-2010 7595
14-09-2010 7517
13-09-2010 7630
10-09-2010 7525
09-09-2010 7532
08-09-2010 7620
07-09-2010 7520
06-09-2010 7660.5
03-09-2010 7631.5
02-09-2010 7625.5
01-09-2010 7540.5
Silver
Date(Fix.) ($/OZ)
Average 20.55
30-09-2010 22.07
29-09-2010 21.87
28-09-2010 21.165
27-09-2010 21.54
24-09-2010 21.35
23-09-2010 21.08
22-09-2010 21.08
21-09-2010 20.76
20-09-2010 20.91
17-09-2010 20.85
16-09-2010 20.76
15-09-2010 20.44
14-09-2010 20.31
13-09-2010 19.93
10-09-2010 19.9
09-09-2010 19.97
08-09-2010 20.02
07-09-2010 19.65
06-09-2010 19.86
03-09-2010 19.66
02-09-2010 19.45
01-09-2010 19.47
PM MEAN AM Gold
Date(Fix.) ($/OZ)
Average -
30-09-2010 -
29-09-2010 -
28-09-2010 -
27-09-2010 -
24-09-2010 -
23-09-2010 -
22-09-2010 -
21-09-2010 -
20-09-2010 -
17-09-2010 -
16-09-2010 -
15-09-2010 -
14-09-2010 -
13-09-2010 -
10-09-2010 -
09-09-2010 -
08-09-2010 -
07-09-2010 -
06-09-2010 -
03-09-2010 -
02-09-2010 -
01-09-2010 -
Date(Fix.) ($/OZ)
Average -
30-09-2010 -
29-09-2010 -
28-09-2010 -
27-09-2010 -
24-09-2010 -
23-09-2010 -
22-09-2010 -
21-09-2010 -
20-09-2010 -
17-09-2010 -
16-09-2010 -
15-09-2010 -
14-09-2010 -
13-09-2010 -
10-09-2010 -
09-09-2010 -
08-09-2010 -
07-09-2010 -
06-09-2010 -
03-09-2010 -
02-09-2010 -
01-09-2010 -
Date(Fix.) ($/OZ)
Average 1270.98
30-09-2010 1307
29-09-2010 1307.5
28-09-2010 1294
27-09-2010 1297
24-09-2010 1297
23-09-2010 1290.75
22-09-2010 1293.5
21-09-2010 1275
20-09-2010 1279.25
17-09-2010 1274
16-09-2010 1272.5
15-09-2010 1267
14-09-2010 1265.5
13-09-2010 1243.75
10-09-2010 1246.5
09-09-2010 1255
08-09-2010 1255
07-09-2010 1256.75
06-09-2010 1249
03-09-2010 1240.5
02-09-2010 1248.5
01-09-2010 1246.5
Lead
Date(Fix.) ($/MT)
Average 2184.23
30-09-2010 2262
29-09-2010 2272.5
28-09-2010 2223
27-09-2010 2251
24-09-2010 2256
23-09-2010 2217.5
22-09-2010 2160.5
21-09-2010 2126
20-09-2010 2188
17-09-2010 2208.5
16-09-2010 2191.5
15-09-2010 2196.5
14-09-2010 2189
13-09-2010 2186
10-09-2010 2170
09-09-2010 2162
08-09-2010 2151
07-09-2010 2126
06-09-2010 2160
03-09-2010 2137
02-09-2010 2130
01-09-2010 2089
Zinc
Date(Fix.) ($/MT)
Average 2151.41
30-09-2010 2176
29-09-2010 2187
28-09-2010 2145.5
27-09-2010 2195
24-09-2010 2237
23-09-2010 2206
22-09-2010 2129
21-09-2010 2130
20-09-2010 2155.5
17-09-2010 2164
16-09-2010 2132.5
15-09-2010 2119
14-09-2010 2130
13-09-2010 2147
10-09-2010 2130
09-09-2010 2125
08-09-2010 2170
07-09-2010 2137
06-09-2010 2146
03-09-2010 2132.5
02-09-2010 2148
01-09-2010 2089
Tin
Date(Fix.) ($/MT)
Average 22701.14
30-09-2010 24650
29-09-2010 24355
28-09-2010 23610
27-09-2010 23850
24-09-2010 23750
23-09-2010 23645
22-09-2010 23175
21-09-2010 23350
20-09-2010 23650
17-09-2010 23750
16-09-2010 23325
15-09-2010 22860
14-09-2010 22195
13-09-2010 22050
10-09-2010 21800
09-09-2010 21750
08-09-2010 20980
07-09-2010 20875
06-09-2010 21375
03-09-2010 21450
02-09-2010 21550
01-09-2010 21430