Monthly Metal Review

Overview

This month and the New Year follow in stride with the continued market volatility of the past year yet mostly still moving strong on an upward trend. In fact many natural resource companies are climbing London’s blue-chip index, in such a way as never seen before. Oil and mining now accounting for more than a third of the index capitalization, the latter ranking in second place in terms of weightiness in the FTSE 100. This rise of resource stocks is a global phenomenon which is tied to the volatile commodities prices and could possibly increase the waves of rises and falls in an index that had often been valued for its stability. Miners are likely to swing the index more as the underling metals prices are particularly recently inclined to be rather volatile. Indeed Morgan Stanley’s mining analyst Ephrem Ravi predicts that the, “index will become a lot more volatile”. Indeed according to the Financial Times statistics, the mining sectors measure of volatility relative to the whole London market was 1.7 in 2010, meaning it outperformed the wider market by that same number. This as the trend keeps rising, “It must be an absolute record” as put by JPMorgan’s Ian Henderson, who also stated “I cannot imagine that at any time in history, recourses, as defined by mining and energy companies, have ever represented as much on the exchange as they do today”. While mining and oil and gas companies now account for 34% of the total UK benchmark’s capitalization. Profiting from this clearly are resource rich regions though haunted by the possibility and risks of a bust after the boom. Alongside the soaring commodities prices have also come extreme economic dislocations, especially as surging prices have begun to fuel regional currency concerns. After all for some it could be possible to have too much of a good thing, bring with it determent to other sectors. One of the regions grappling with this dilemma is Latin America as it learns to manage its astounding success. The continent is thriving with even talks of the coming “Latin American decade”, fueled by the commodity boom mostly driven by the Asian market, leading since 2000 to a thirteen fold increase in trade with China. Commodities have lifted to account for an increasing 53% of regional exports versus a lower 40% only a decade ago. In contrast manufacturing has shrunk by close to a tenth, leaving it at 15% of output. “There are a lot of interrelated effects,” as put by Capital Economics Neil Shearing in relation to the effect commodities in the long term could have on Latin American currencies. If the current trend is sustained the resulting economic transformation could lead the so called “Dutch Disease”. This term was coined following the plunge in the 1970’s manufacturing sector after the currency soared with the discovery of a large natural gas field, that ultimately lead to a bust when gas prices collapsed. The regions governments are trying to mitigate the issue to the best of their abilities. Brazil has implemented controls to curb the capital inflows that have bumped its currency to disadvantage of the manufactures. Chile likewise has also weighed in on its currency markets to alleviate its exporters. Perhaps Latin America is learning from past experiences and learning to better manage this profitable deluge. These soaring prices and expanded development have had a strong Asian motor pushing it along mostly fueled by China. Indeed Beijing has put large sums to work and considerably increasing their involvement in the developing world spurring a certain growth across Asia, Africa, and Latin America. Within the last two years China has consider-ably mobilized some of the vast liquidity available to its banks making it accessible for investment in emerging economies. This has not been an altruistic move but more broadly, Beijing evidently interested in using its financial haft in an attempt to stimulate a fresh wave of self-reinforcing growth between China and other countries it has chosen to invest in. These investments have been beneficial to resource rich nations that noticeably interest commodities hungry China. Nevertheless the undervalued Chinese currency could become a point of contention as other countries exports suffer, faced with what could be considered an unfair disadvantage against their Chinese counterparts.

Daily Prices

January 2011

Copper
Date(Fix.) ($/MT)
Average 9555.70
31-01-2011 9720
28-01-2011 9590
27-01-2011 9490
26-01-2011 9376
25-01-2011 9330
24-01-2011 9509
21-01-2011 9485
20-01-2011 9485
19-01-2011 9788
18-01-2011 9740
17-01-2011 9690
15-01-2011 9591
14-01-2011 9622
12-01-2011 9625
11-01-2011 9484
10-01-2011 9384
07-01-2011 9399
06-01-2011 9591
05-01-2011 9461
04-01-2011 9754
Silver
Date(Fix.) ($/OZ)
Average 28.40
31-01-2011 27.75
28-01-2011 26.68
27-01-2011 27.39
26-01-2011 27.1
25-01-2011 26.7
24-01-2011 27.56
21-01-2011 27.14
20-01-2011 28.41
19-01-2011 29.32
18-01-2011 28.79
17-01-2011 28.19
15-01-2011 28.52
14-01-2011 29.22
12-01-2011 29.6
11-01-2011 29.54
10-01-2011 28.79
07-01-2011 28.39
06-01-2011 29.08
05-01-2011 29.21
04-01-2011 30.67
PM MEAN AM Gold
Date(Fix.) ($/OZ)
Average -
31-01-2011 -
28-01-2011 -
27-01-2011 -
26-01-2011 -
25-01-2011 -
24-01-2011 -
21-01-2011 -
20-01-2011 -
19-01-2011 -
18-01-2011 -
17-01-2011 -
15-01-2011 -
14-01-2011 -
12-01-2011 -
11-01-2011 -
10-01-2011 -
07-01-2011 -
06-01-2011 -
05-01-2011 -
04-01-2011 -
Date(Fix.) ($/OZ)
Average -
31-01-2011 -
28-01-2011 -
27-01-2011 -
26-01-2011 -
25-01-2011 -
24-01-2011 -
21-01-2011 -
20-01-2011 -
19-01-2011 -
18-01-2011 -
17-01-2011 -
15-01-2011 -
14-01-2011 -
12-01-2011 -
11-01-2011 -
10-01-2011 -
07-01-2011 -
06-01-2011 -
05-01-2011 -
04-01-2011 -
Date(Fix.) ($/OZ)
Average 1356.50
31-01-2011 1327
28-01-2011 1319
27-01-2011 1334.5
26-01-2011 1328
25-01-2011 1324
24-01-2011 1343
21-01-2011 1345.5
20-01-2011 1345.5
19-01-2011 1372
18-01-2011 1369.5
17-01-2011 1360.5
15-01-2011 1367
14-01-2011 1381.5
12-01-2011 1378.75
11-01-2011 1374
10-01-2011 1368.25
07-01-2011 1367
06-01-2011 1368.5
05-01-2011 1368
04-01-2011 1388.5
Lead
Date(Fix.) ($/MT)
Average 2601.65
31-01-2011 2576
28-01-2011 2545
27-01-2011 2490
26-01-2011 2444
25-01-2011 2535
24-01-2011 2490
21-01-2011 2550
20-01-2011 2530
19-01-2011 2650
18-01-2011 2693
17-01-2011 2720
15-01-2011 2652
14-01-2011 2699
12-01-2011 2662
11-01-2011 2630
10-01-2011 2642
07-01-2011 2660
06-01-2011 2703
05-01-2011 2569
04-01-2011 2593
Zinc
Date(Fix.) ($/MT)
Average 2371.55
31-01-2011 2334
28-01-2011 2300
27-01-2011 2251
26-01-2011 2239
25-01-2011 2228
24-01-2011 2280
21-01-2011 2340
20-01-2011 2334
19-01-2011 2427
18-01-2011 2443.5
17-01-2011 2446.5
15-01-2011 2431
14-01-2011 2448.5
12-01-2011 2435
11-01-2011 2400
10-01-2011 2367.5
07-01-2011 2400
06-01-2011 2446
05-01-2011 2409
04-01-2011 2471
Tin
Date(Fix.) ($/MT)
Average 27465.25
31-01-2011 30100
28-01-2011 29900
27-01-2011 29195
26-01-2011 28515
25-01-2011 28200
24-01-2011 27705
21-01-2011 27695
20-01-2011 27200
19-01-2011 27225
18-01-2011 27020
17-01-2011 27005
15-01-2011 26755
14-01-2011 26925
12-01-2011 26795
11-01-2011 26650
10-01-2011 26125
07-01-2011 26350
06-01-2011 26650
05-01-2011 26095
04-01-2011 27200