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☆ 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.

☆ International ETFs are surging to start 2023, but investors should brace for volatility
▼ + stars: | 2023-01-13 | by ( Jesse Pound | ) www.cnbc.com time to read: +4 min

"'We believe Asian markets are well positioned vs. developed markets as we expect China re-opening to be a key driver, which would benefit even Asia ex China markets," McCarthy wrote. Broadening that out even further, emerging markets in general are a favorite of many investment strategists. But emerging markets can be tricky for investors, and volatile. Another way for investors to play a recovery in emerging markets, with more dispersed currency and political risk, could be sector funds tied to commodities. "I can buy ETFs that have exposure to say BHP, Rio Tinto, Anglo American, Glencore," Sohn said.

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.

From spodumene ore through lithium carbonate to lithium hydroxide, prices have more than doubled again this year after an explosive rally in 2021. Even Goldman Sachs, which outraged lithium bulls with a bearish market call in May, now thinks global supply will fall 84,000 tonnes short of demand this year. New EVs rolling off the automotive production line are the end of the lithium supply chain, but the chain itself is also expanding fast. All of them need raw materials, so their collective stock-building accentuates the rising EV demand curve. Moreover, much of lithium's supply growth is coming from new sources such as China's lepidolite deposits which come with their own new disruption potential.

Money manager positioning on the CME's copper contract shifted back to a net long at the start of November for the first time since early May. Bulls remain conspicuous by their absence, waiting to see how Doctor Copper prices the confusing combination of Western recession and tentative recovery in China. The bounce has forced an unwind of fund short positions, which have more than halved to 31,177 contracts as of last Tuesday. Bears have retracted their claws on both exchanges but there's been no corresponding surge in bullish exuberance among fund managers. Investment fund and other financial net positioning on LME copperRECOVERY AND RECESSIONFunds' reticence to commit to copper is understandable given the market is trying to price two conflicting trends.

☆ Shares of this under-the-radar global miner are set to rally 50%, analyst says
▼ + stars: | 2022-12-12 | by ( Ganesh Rao | ) www.cnbc.com time to read: +2 min

Shares in Sylvania Platinum , a little-known London-listed miner, are set to rise by 50%, according to Ben Davis, mining analyst at Liberum Capital. The company, which extracts metals such as platinum, palladium, and chrome, also offers an 8% dividend yield. Shares in the company were trading around £1 ($1.21) Friday, but Davis sees them hitting £1.50 in 12 months. Sylvania Platinum is also favored by Neil Shah, director at the investment research group Edison Group. The metals the company extracts are bought by both investors and industrial customers, which means their prices are more resilient than other commodities during economic downturns.

☆ Buying these 9 ETFs will give investors a leg up in 2023 and for the rest of the bull market after a near-record year, according to Bank of America
▼ + stars: | 2022-12-09 | by ( Marley Jay | ) www.businessinsider.com time to read: +4 min

Bank of America is telling investors not to increase their stock investments until early 2023. It's telling investors which ETFs to buy to apply those themes in 2023 and beyond. So Woodard's group is telling investors that next year will be marked by a mild recession, lower inflation, and reduced corporate profits. Collectively, investors have poured $510 billion into equity ETFs this year, which is the second-highest on record according to BofA. In deciding which funds to buy next year, BofA first recommends that investors tack away from large, high-growth stocks.

LONDON, Dec 8 (Reuters) - A wave of new copper mine supply is washing through the market, with smelters reaping the benefits in higher treatment and refining charges (TCRCs). Annual benchmark copper smelter treatment and refining chargesNEW MINES, OLD PROBLEMSOnly two major copper mines were brought on stream between 2017 and 2021, according to the International Copper Study Group (ICSG). Moreover, what is not produced for whatever reason in 2022 will be deferred into 2023, when the ICSG expects the world's copper mines to produce 5.3% more metal. While mined production was up by 3.5% in January-September, refined copper production growth lagged at 2.3%, according to the latest ICSG estimates. Glencore says it can raise its copper production by around 60% to 1.6 million tonnes per year through relatively low-cost brownfield expansions.

LONDON, Dec 6 (Reuters) - The world is going to need another 50,000 tonnes of tin per year by 2030 to meet a looming surge in demand, according to the International Tin Association (ITA). The country exported 75,000 tonnes of refined tin last year with shipments running 8% higher through the first 10 months of this year. State producer PT Timah needs around two years to develop its existing tin chemical facility and longer to secure markets, Alwin Albar, chairman of the Association of Indonesian Tin Exporters, told a parliamentary hearing. China imported 22,600 tonnes of refined tin in the first 10 months of the year with Indonesian metal accounting for 19,000 tonnes. After peaking at 5,160 tonnes in September, headline LME tin stocks have fallen to 3,075 tonnes with 535 tonnes awaiting physical load-out.

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