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LONDON, March 21 (Reuters) - The London Metal Exchange (LME) has discovered that some of its registered nickel is missing. Bags of stones shouldn't pass any inspection, whether at original load-in or during the annual audit of registered stock required by the LME's warehousing agreement. But it folds into the bigger issues around the exchange's governance and regulatory capacity after the blow-out of the nickel contract this time last year. BROKEN NICKELThe latest scandal will also intensify the question of whether the LME nickel contract is fulfilling the function of efficient price discovery forum. The nickel market was already looking for different pricing solutions before the March 8, 2022 suspension of LME nickel trading.

[1/3] Samples of rare earth minerals from left: Cerium oxide, Bastnaesite, Neodymium oxide and Lanthanum carbonate at Molycorp's Mountain Pass Rare Earth facility in Mountain Pass, California June 29, 2015. Australia's Lynas Rare Earths Ltd. (LYC.AX) slumped 6.8% on the news and has fallen further since. It hasn't helped the price of rare earths either, accentuating a sharp slide that began in February. Shanghai Metal Market rare earth assessmentsRARE EARTHS ROLLER-COASTERRare earths have been on a price roller-coaster over the last three years. There is also the lingering threat that China could weaponise its rare earths supply if relations with the West deteriorate.

LONDON, March 3 (Reuters) - The race for electric vehicle (EV) battery metals is heating up. Carmakers have already been busy tying up supplies of battery metals under direct off-take agreements with existing metals producers. Automakers' collective move into the mining sector has so far largely prioritised the lithium sector, where Western companies have been playing catch-up with Chinese investors. Lithium supply is struggling to scale up at the speed required to meet accelerating demand from battery-makers. Capital expenditure in the sector slumped, miners opting to return cash to shareholders rather than dig more big copper mines.

Aluminium will be hardest hit with penal tariffs of 200% on imports of Russian metal, effective March 10, and imports of any third-country product containing Russian metal, effective April 10. This sort of "super contango" is the market's cry for financiers to pick up spare metal, particularly Russian metal. The Gwangyang deliveries are reported to be Russian aluminium being delivered by Glencore (GLEN.L), which has a long-term off-take deal with Rusal. The cash-to-threes time-spread will be a litmus test of financing appetite for Russian aluminium over the coming period. The only get-out for supplier nations is if they too impose minimum 200% tariffs on their own Russian aluminium imports.

LONDON, Feb 24 (Reuters) - The global nickel market flipped from deficit to surplus over the course of 2022, according to the International Nickel Study Group (INSG). Indonesia's mined nickel production expanded by 48% to 1.58 million tonnes in 2022, according to the INSG. However, as Indonesian production of Class II nickel rises, the Class I market shrinks. Around 70% of the physical nickel supply chain is now priced at a discount to the LME benchmark. LME nickel volumes slumped by 28% last year and January's activity was 60% lower than that of January 2022.

Power-hungry aluminium producers in Yunnan and neighbouring provinces were already operating at reduced capacity, some of them since September, dragging down China's national output. The latest cuts will impact around 740,000 tonnes of annual production capacity, adding to the million tonnes already offline, according to industry consultancy Mysteel. Aluminium capacity has grown to around 5.25 million tonnes, making it the fourth largest provincial producer after Shandong, Inner Mongolia and Xinjiang. January's estimated annualised production was 40.50 million tonnes, a drop of almost one million tonnes over the last five months. Registered inventory on both exchanges has risen fast, cushioning the supply chain from the loss of Chinese production momentum.

☆ Column: The devil's metal strikes again in Trafigura nickel fraud case
▼ + stars: | 2023-02-17 | by ( Andy Home | Thomson Reuters | Senior Metals Columnist Who Previously Covered Industrial Metals Markets For Metals Week | ) www.reuters.com time to read: +7 min

Appearances can be deceptive when it comes to nickel, as Trafigura has just found out half a millennium later. Just as it's impossible to say whether some of the recent price volatility on the LME nickel contract was down to Trafigura restructuring hedge positions. The problem is that LME nickel trading has been volatile and unpredictable ever since last year's meltdown. There is now also a growing crisis of confidence in the world of physical nickel trading. Nickel could really do with a reputational break but recent history suggests it's just a matter of time before the devil's metal strikes again.

With Europe's winter energy crisis abating and power prices falling, there are growing expectations that idled zinc smelter capacity will restart. The exchange's latest positioning report shows four dominant long positions on cash zinc as of Monday. All of which serves to underline just how depleted LME zinc stocks are. STOCKED OUTLME zinc stocks total just 25,075 tonnes, less than one day's worth of global consumption. LME zinc pricing is going to remain volatile for a while yet as shorts betting on a return to surplus have to navigate today's low-stock reality.

Surging Shanghai metal stocks have injected an element of doubt into the bull narrative and the LME Index is now showing year-to-date gains of only 3% after a February pull-back. Shanghai Futures Exchange stocks of aluminium, copper and zincSEASONAL SURGEMetals bulls have been nervously watching the fast build in Shanghai Futures Exchange (ShFE) stocks over the past few weeks. Copper stocks have grown equally dramatically, from 69,268 tonnes to 242,009 tonnes over the same period. It is currently assessed by Shanghai Metal Market at a bombed-out $22.50 a tonne, down from an October high of $152.50. WAIT AND WATCHIt's difficult to say until China's seasonal stocks pattern plays out in full.

Western policy-makers are still mindful of the supply-chain chaos caused by U.S. sanctions on Russian aluminium giant Rusal and its owner Oleg Deripaska in 2018. A unilateral move to shut out Russian aluminium will accelerate the splintering of what was once a highly globalised market-place. Excess Chinese product in the Asian region is now being supplemented by excess Russian primary aluminium as many Western users choose to self-sanction and not buy Russian metal. Were the United States to impose high tariffs on Russian metal, the LME need only suspend delivery to U.S. locations, a precedent set with the United Kingdom's post-war tariffs on Russian nickel. The LME decided in November not preemptively to ban Russian metal deliveries ahead of formal government action against Russian producers.

Cobalt has lost share to lithium as the Chinese EV market in particular pivots towards non-cobalt battery chemistry. The abrupt turnaround in both narrative and price has led to a surge in trading activity on the CME cobalt contract as producers and consumers respond to the shifting landscape. CME cobalt price, total volume and market open interestCHANGE OF GEARCobalt's fortunes are still tied to the EV sector but the relationship is changing. That eye-watering growth rate would be stronger still were it not for a shift towards non-cobalt battery chemistries, led by China, the world's largest EV market. COBALT FUTURES TAKE OFFOne beneficiary of this turnaround in cobalt market dynamics has been the CME (CME.O), which has seen activity in its cobalt contract mushroom since the middle of last year.

LONDON, Feb 3 (Reuters) - China was a net exporter of refined zinc last year for the first time since 2007, while exports of refined lead remained super strong for the second year running. China's net trade in refined leadTRADE SWITCHChina exported 116,500 tonnes of refined lead last year, the highest-volume outflow since 2007. The Flin Flon zinc smelter in Canada produced its last zinc in 2022 after more than 25 years of activity. That of the Florence secondary lead plant in South Carolina in 2021, by contrast, was an unexpected hit to the U.S. supply chain. If China gets there first, last year's east-west imbalances in both zinc and lead markets may last longer than expected.

Median 2023 price forecasts for all the core LME base metals are lower than both last year's price and current trading levels. The LME copper cash settlement price was $9,075 per tonne on Tuesday, up 10% on the start of January. A median forecast of $8,625 for the full year is 2.1% lower than last year's average of $8,814 per tonne. Aluminium is viewed as more finely balanced, with a median forecast supply surplus of 80,535 tonnes this year and 92,100 tonnes in 2024. That said, last January's median forecast proved surprisingly close to the mark at $34,880 in what was a year of extraordinary volatility.

LONDON, Jan 30 (Reuters) - China raised export tariffs on unwrought primary aluminium and alloy at the start of this year after a rare burst of export activity in the first part of 2022. Russian aluminium dominated the import mix and Russian smelters were the main recipients of Chinese alumina exports last year. China's unwrought aluminium imports vs Russian metalRUSSIAN IMPORTS GROWDecember's imports of primary aluminium, by contrast, accelerated to 128,000 tonnes, the highest monthly tally in over a year. China's total alumina exports vs RussianCHINA LIFTS ALUMINA EXPORTSThe two countries' aluminium trade also extends to the intermediate alumina stage of the processing chain. It could also mean China returning to consistent net importer of unwrought aluminium, particularly if domestic smelter production continues to be plagued by power constraints.

China's net refined copper imports and year-on-year changeBOOMING IMPORTSThe strength of last year's imports was even more surprising given the financial problems at privately-owned Maike Group. But it has clearly had minimal impact on the overall flow of refined copper into China. But China's imports of Russian copper actually fell by 20% to 324,000 tonnes in 2022. China's net imports of refined copper were running below year-earlier levels through May but steadily accelerated over the second part of the year. Goldman suggests that a sign of restocking by China's copper sector would be net refined imports being consistently higher than 280,000 tonnes per month.

China's own production of refined tin was flat year-on-year at 165,900 tonnes in 2022, according to Shanghai Metal Market. ShFE tin price, market open interest and stocksSHIFT IN POSITIONINGWhile China has reshaped tin's fundamental picture, the price recovery has forced an equally significant shift in fund positioning. Investment funds turned net short on the LME tin contract in September as the price was imploding. Tin market open interest collapsed from 102,106 to 71,218 contracts in the week before the Lunar New Year holidays, indicating a big clean-out of short positions. GOLDILOCKS PRICEThe tin price is now in the Goldilocks zone, not high enough to frighten off physical users, and not low enough to threaten existing supply.

LONDON, Jan 23 (Reuters) - Global aluminium production rose by a marginal 2.0% last year, a rate of growth that was down from 2.7% in 2021 and the slowest since 2019, according to the International Aluminium Institute (IAI). Global aluminium production by region change versus 2021EUROPE POWERS DOWNWestern European aluminium output was running at an annualised 2.73 million tonnes in December, down by 540,000 tonnes on December 2021 and the lowest production rate this century. Latin America was the fastest-growing aluminium production region last year with output up 10.7% year on year. As ever more smelters switch to green energy sources, global aluminium production is ever more dependent on seasonally variable power availability. Such regional adjustments are now part and parcel of the global aluminium production landscape but they have injected a new degree of volatility into aluminium's previously slow-changing supply side.

Currently trading around $9,130, the copper price is up by 9.6% since the start of January. Investors played copper from the short side for much of last year, if they were prepared to engage at all. The funds' sudden return is a sign that many are betting on a much sunnier outlook. "To the degree these short positions have not already covered, this may support copper in the short term", the bank said. It's clear, though, that copper long positioning is primarily a bet on Chinese recovery, underpinned by measures to revitalise a foundering property sector and more metals-intensive green infrastructure.

It's the lowest end-year inventory in the system this century and reflects two years of steady withdrawals which have left exchange stocks of metals such as zinc and lead almost depleted. It's no coincidence that all the LME base metals have experienced bouts of extreme tightness over the last couple of years. Zinc stocks were down by 65% and lead stocks down by 59% on December 2021. LME stocks could desperately do with any sort of rebuild, whether seasonal or cyclical. So far, however, significant arrivals remain conspicuous by their absence and until that changes, low visible inventory is going to keep roiling the LME base metals.

The four each held a sizeable short position of between 13,000 and 24,000 lots, equivalent to 78,000 to 144,000 tonnes. LME warehouses held just 80,088 tonnes of nickel stocks when Russia invaded Ukraine on Feb. 24. The mix of producer hedging and speculative overlay in the short position landscape is impossible to know with any precision. It's worth remembering that Tsingshan is itself a huge nickel producer, albeit not in a form that can be delivered against an LME short position. Excerpt from Oliver Wyman reportLATE ARRIVALThe shorts were not helped by the rapid build-up of a long position on March 7 which the report links to "one financial client with no material existing nickel position".

Although commanding a weighting of just 0.936%, lower than any other industrial metal, lead is included in the Bloomberg Commodity Index (BCOM) for the first time this year. LME lead three-month price, stocks and spreadsSTOCKED OUTLME lead stocks fell by 54% to 25,150 tonnes over the course of last year. The distribution of LME warehouse stocks says a lot about the underlying stresses in the physical supply chain. China has emerged as a supplier of last resort to a stretched Western market. REBALANCINGThe lead market that has been trying to rebalance for two years and the return of Nyrstar's Port Pirie smelter in Australia after three months of maintenance should help.

LONDON, Jan 6 (Reuters) - March 2022 will go down in the history books as the moment the global nickel market broke down. The search is on for a new nickel price discovery process. Global Commodities Holdings (GCH) thinks it has a solution, a blast from the LME's own distant past that could have far-reaching consequences for industrial metals trading. This is self-evidently true of the LME nickel contract, which simply could not absorb the scale of short positions accumulated by China's Tsingshan Group. It may not just be nickel players keeping a close eye on GCH's proposed new metals pricing solution.

LONDON, Dec 22 (Reuters) - China's imports of primary aluminium jumped to a one-year high of 110,700 tonnes in November in a significant reversal of the recent trend. China's imports and exports of primary unwrought aluminiumTRADE FLOWS FLIP AGAINChina's primary aluminium export surge has passed. Global aluminium production monthly change annualisedSLOWING MOMENTUMChina's renewed import appetite for primary aluminium looks at odds with the combination of lockdown-weakened demand and strong domestic production growth. Expressed in terms of annualised production, China's collective run-rate has dropped by almost 1.2 million tonnes since August. Sichuan briefly rationed power to industrial users, including aluminium smelters, in August because of a protracted drought in the hydro-rich province.

London Metal Exchange (LME) warehouse stocks of the galvanising metal total 36,525 tonnes, the lowest amount this century. LME zinc price, spread and stocks; Shanghai Futures Exchange stocksSMELTER DISRUPTIONGlobal refined zinc output fell by 3.2% in January-October, according to the ILZSG, matching the drop-off in usage. Shanghai Metal Market (SMM) estimates total "social" inventories of zinc ingot across seven domestic markets at a low 56,000 tonnes. The longer-term question-mark over Europe's power-hungry smelters hasn't gone away, injecting a whole new twist in the zinc market narrative. In the short term the zinc market is going to remain beholden to the European power market.

☆ Why California’s 2022 Wildfire Season Was Unexpectedly Quiet
▼ + stars: | 2022-12-20 | by ( Elena Shao | ) www.nytimes.com time to read: +8 min

Maps of California show the perimeters of wildfire burns for every year between 2018 and 2022 (desktop version) or 2017 and 2022 (mobile version). The extent of acreage burned in 2022 is far less than what burned in 2021 and 2022, and looks more similar to what burned in 2019. 2018 2017 Camp fire 2022 2021 2020 McKinney fire 2020 was the state’s worst fire year on record. Wildfires have burned about 362,000 acres this year, compared to 2.5 million acres last year and a historic 4.3 million acres in 2020. Acres Burned by Wildfires in California A bar chart showing the total acres burned by California wildfires since 1987.

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