Archive for the ‘MARKETS PRICES’ Category


Tuesday, November 6th, 2012



Canada’s economy shrank 0.1% in August, the first drop in six months, driven mainly by depressed manufacturing and energy sectors, Statistics Canada said Wednesday.

Hardest hit were mining and oil extraction operators, with the sector shrinking 0.7% Excluding oil and gas extraction, mining fell 2.8%. Metal ore mining declined 4.7% as a result of decreased output at copper, nickel, lead and zinc mines as well as at gold and silver ore mines.

Statistics Canada said scheduled maintenance affected metal ore output in August, while non-metallic mineral production fell 2.6% as a result of decreases in output at potash mines.

Oil and gas extraction declined 0.4%, as a drop in crude petroleum production outweighed an increase in natural gas extraction. Maintenance activities at some oilfields affected crude petroleum output in August, the statistics agency said.

Overall, StatsCan noted shrinking output in 10 out of 18 industrial sectors.

Sourced & published by Henry Sapiecha


Wednesday, May 16th, 2012



(Reuters) – Prices of rough diamonds are expected to rise this year after a turbulent 2011, driven by recovering consumer demand in the United States and a robust appetite for the gems in Asia, the head of the World Diamond Council (WDC) told Reuters on Monday.

Diamonds had a rollercoaster 2011, with a bumper first half followed by a steep drop in prices as markets unraveled over the summer months, despite the dearth of new mines, low inventories and Asia’s growing demand.

“Prices have been stabilizing and (are heading) towards going up again. Outlook seems to be bullish,” the WDC President Eli Izhakoff said in an interview on the sidelines of the annual meeting of the council, which represents diamond manufacturing and trading companies, held this year in northern Italy.

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“I think the prices will end the year …higher,” Izhakoff said. He declined to give a more precise forecast.

Demand in the U.S., the world’s biggest consumer of polished diamonds, has been strong so far this year as the world’s biggest economy shows signs of recovery. Forecasts for demand in India and China are also very positive, Izhakoff said.

Asia’s growing appetite for diamonds has helped the sector offset weaker patches elsewhere and is key to several market debuts in the pipeline, not least the Hong Kong initial public offering of London-based high end jeweler Graff Diamonds. Graff will launch its $1 billion float this month.

Entrepreneur Beny Steinmetz’s Octea diamond operations, which include the Koidu mine in Sierra Leone, could brave stock markets later this year, most likely in Hong Kong to tap China’s love of luxury.

But Izhakoff said a question mark hung over demand in Europe, which is struggling to rein in the unfolding euro zone sovereign debt crisis. He added consumer demand in Europe was largely driven by tourists from Asia and eastern Europe while local demand is hit by austerity measures in many countries.

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The market expects more stable rough diamond prices in 2012, with an improvement in the second half after a slow start due to inventories built up by buyers when prices weakened.

“Our view is that, provided the leading producers are restrained in what they offer for sale and in the level of their prices, the second half of the year should see further improvement,” RBC Capital Markets said in a note on May 11.

“Looking through to 2013 and beyond we are more optimistic, though the economic turmoil in Europe will continue to weigh on sentiment,” the RBC capital Markets analysts wrote.

Diamond demand is expected to exceed supplies this year, giving a fundamental support to prices, but announced exits of major mining companies from diamond operations is unlikely to reduce supply of rough diamonds to the market, Izhakoff said.

Mining giants Rio Tinto (RIO.L) and BHP Billiton (BLT.L) have said they could sell their diamond units, putting, between them, four major diamond operations on the block – a huge number in an industry that gets most of its production from 20 or so mines, and where no large discovery has been made in 15 years.

Some analysts have said such exits could lead to a reduction of investment in diamond mining and hence to a reduction in supplies. But Izhakoff said he would expect any possible buyer of the mines to have enough funds to pump into production and keep supplies steady.

Sourced & published by Henry Sapiecha

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Wednesday, January 18th, 2012

Oil demand has not been this low  since


By Guy Chazan in London

Oil demand is falling for the first time since the 2008-09 global financial crisis as a result of a mild winter, high crude prices and the European economic crisis, according to fresh estimates from the International Energy Agency.

The industrialised nations’ watchdog said oil demand dropped by 300,000 barrels a day in the final quarter of 2011. Such a fall is rare: over the last decade, oil demand has posted drops only in the financial crisis of mid-2008 to mid-2009.

The IEA revised down its outlook for growth in 2012 to 1.1m b/d from 1.3m b/d amid signs of weakness in the world economy.

It also warned of the geopolitical risk posed to oil markets by rising tensions with Iran.

Global oil demand in 2011 was 89.5m b/d, the IEA said.

David Fyfe, head of the IEA’s oil industry and markets division, said the year-on-year fall in demand was largely due to the exceptionally cold winter of 2010-11 compared to this winter’s milder temperatures. But it was still surprising.

“Even in the 2008-9 crisis we only had a couple of quarters of absolute contraction, so it is quite rare,” he said. “We’re flagging that there are clearly downside risks to the global economy and to oil demand.”

The IEA’s latest monthly oil market report comes against the backdrop of a looming showdown between Iran and the west over Tehran’s nuclear ambitions.

Oil prices jumped $4-$5 a barrel at the new year as the European Union prepared to impose a ban on Iranian oil imports and Tehran threatened to close the Strait of Hormuz, a crucial conduit for oil exports from the Gulf.

The agency characterised the oil market as finely balanced between fears of supply disruptions due to the coming Iranian embargo and concerns about an economic slowdown that will weaken demand for oil.

The price of crude has been relatively stable since last spring within a range of $100 to $120 a barrel. But the IEA said the stability was “more apparent than real.”

It said markets were caught between a “rock” – the growing likelihood of a sharp economic slowdown, or even outright recession, in 2012 – and a “hard place” – possible geopolitical turmoil triggered by the west’s face-off with Iran.

“That is scarcely a source of comfort,” the report said.

Oil markets in Europe and Asia, hit badly last year by the loss of Libyan supply, worry that sanctions against Iran will seriously affect the availability of crude.

The leaders of Japan, China and South Korea have been seeking assurances from Middle Eastern producers like Saudi Arabia that they can make up any shortfall.

Europe, which imports about 600,000 b/d of Iranian crude, is also on the hunt for replacement supplies.

These concerns come at a time of tightness in physical oil markets.

Last year, non-Opec supply grew by only 50,000 barrels a day, the third lowest performance in the last decade – largely due to a series of unscheduled disruptions in places like the North Sea, Canada and China. That was compounded by the unrest in Libya, which knocked out its exports.

While members of the Opec cartel, especially Saudi Arabia, increased production to compensate, and the IEA released emergency stocks, this was not enough to make up for the Libyan shortfall.

The IEA said crude stock levels in industrialised countries remain below the five-year average for a fifth consecutive month.

European refiners faced a “difficult task” in finding substitutes for Iranian supply, and some market dislocation was inevitable, the agency warned.

But the gradual phase-in of any EU import ban and the “considerable latitude in implementation” built into the US sanctions “will serve to minimise unwanted market disruptions,” it added.

Sourced & published by Henry Sapiecha


Friday, November 4th, 2011

More bad news for iron ore, coking coal prices: world’s largest steelmaker profits halve, sees worse ahead

Frik Els, 3 Nov 2011 – PERMALINK

ZeeNews report the world’s largest steel-maker Arcelor Mittal on Thursday reported a dip of over 51% in net income to $659 million for the quarter ended September 30, 2011, due to rising raw material costs and a fall in demand. The Indian giant also said it will face increasing pricing and volume pressures in the final quarter and is idling production as a result – it has mothballed eight furnaces in Europe and permanently retired another just over the last two months. Arcelor’s gloomy outlook prompted one analyst to observe: “We’re in a very dark market environment right now.”

Sourced & published by Henry Sapiecha


Wednesday, November 2nd, 2011

Nearly all of non-Chinese rare earth projects

will fail, says Jack Lifton

Andrew Topf

Consultants in the mining industry  say that the high processing costs and level of expertise required in bringing rare earth mines into production means most of them will eventually fail. In an interview with Reuters, Jack Lifton, founder of Technology Metals Research, said of the 244 companies hoping to extract REEs, less than 4% will be profitable: “The choke point for all the companies is the question of what they can do with the concentrated REM ore once it’s above ground. You can extract the rare earths together, but then you have to separate them…the world’s REM separation capacity is 99 percent Chinese and they have unused capacity,” Lifton said. “The Chinese overwhelmingly control this and that is the key to the rare earth industry. Without separation capacity, all you have is a loss-making ore concentrate company.”

Sourced &n published from mining journals by Henry Saoiecha


Tuesday, March 22nd, 2011

Metal Market Price Indicators


February 2011 Indicators
Aluminum Sheet & Cast: 123.0
No. 1 Heavy Melt: 155.0
Yellow Brass Solids: 143.8
Stainless 304 Solids: 111.4

AMM price indicators show trends in key scrap prices. Each figure represents the current month average dollar price relative to an average price over the last two years, for that commodity. These indicators will be published monthly to track these critical markets.

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Sourced & published by Henry Sapiecha


Monday, February 21st, 2011

As good as gold?

Copper producers will lead the way

February 21, 2011

All punters are predicting that the copper market will be in (supply) deficit in 2011. So for the time being at least, the much used metal is what you might call scarce, giving it a ”store of value” hue usually reserved for gold.

It’s no wonder then that the price of the stuff marched to record levels earlier this month, to $US4.63 a pound. It’s backed off a little since, settling back at $US4.47 a pound on Friday.

So there has never been a better time to be a copper producer than now. As luck would have it, ASX-listed Tiger Resources (ASX: TGS) is but a couple of months off becoming a producer from its Kipoi project in the Democratic Republic of Congo (DRC).

Now the DRC is not everyone’s first choice as an investment destination. But it is fast recapturing its status as one of the major copper producers and unlike much of Africa, it has got a fair dinkum democratically elected government.

Kipoi’s economics are also proving hard for investors to ignore in the lead-up to its first production in April, and this has been reflected in the run-up in Tiger’s share price, from 25¢ five months ago, to 53.5¢ on Friday.

Tiger has not updated the economic indicators on Kipoi since November. Back then it said that after capital expenditure of $31.5 million and assuming a copper price of $US3.50 a pound, Kipoi would pay back its capital inside about four months.

With copper at near-on $US4.50 a pound, payback will be shorter still. All that means is that over the expected three-year life of ”Stage 1” mining at Kipoi (three years at 35,000 tonnes of contained copper annually from material grading a magical 7 per cent copper), Tiger is going to pull in one big chunk of cash.

The extra  free cash will support the push for a much longer mining life from a solvent extraction and electro-winning (SX-EW) operation that brings into play the rest of the (lower grade) resource that Tiger is outlining at Kipoi and its Sase prospect.

Tiger’s story in the DRC is very similar to that of Anvil Mining (ASX: AVM), now a $1 billion company. Anvil has been a DRC copper producer since 2002 and is now spending $US400 million on its Kinsevere project, a 60,000-tonne-a-year SX-EW operation.

Interesting thing is that both companies have commodities trader Trafigura as their major shareholder. In Tiger, Trafigura holds 28 per cent (fully diluted) and in Anvil, it sits at 35 per cent.

There have been whispers that it would make sense to bring Tiger and Anvil together. No action to report on that front just yet, but it could be a space worth watching as Tiger gets into production and as Anvil beds down the Kinsevere projects.

VICTORIA’S Ballarat-Bendigo gold corridor has yielded more than 33 million ounces of gold over time, making it one of the most prolific & consistant gold regions anywhere in the world.

But all that is old news, very old. To recapture its status as the place to be for gold as it was in gold rush days of yesteryear, the ”corridor” needs a modern-day discovery to fire up the imagination of investors. Only problem is, much of the corridor’s prospective rocks are hidden beneath thick sequences of Murray Basin sediments.

So there has been little, if any, in the way of new deposits being uncovered since Australia’s third gold production boom got going in the early 1980s. But there have been some promising finds, including the Lockington find by South Africa’s Gold Fields Ltd on the northern end of the Ballarat-Bendigo corridor.

The experts will tell you that it is the first significant discovery of gold mineralisation under the thick Murray Basin sediments. Significant all right, but not yet in the category of a discovery to maintain Gold Fields’ full attention after spending some $6 million on exploration.

That task is being handed to a new $10 million gold float called Timpetra Resources, using the model that Gold Fields has used previously of striking a strategic alliance with a focused junior explorer to pick up the running, while keeping its foot on the potential upside.

Timpetra is picking up Lockington in return for shares, enough to give Gold Fields a 22 per cent interest on Timpetra listing.

It has also an anti-dilution right under which it can maintain its cornerstone shareholding.

On listing, Timpetra will have 68.75 million shares on issue.

Of that, new shares from the float will account for an impressive 72.8 per cent. That’s compared with the usual 50 per cent that goes to the public after vendors and promoters have their fill from a float.

At the float price of 20¢ a share, Timpetra will have a market cap of $13.75 million.

Its board is filled by well-known mining types, including Tony Grey as chairman.

Grey is the Canadian lawyer who arrived in Australia in 1969 and got bitten by the mining bug after watching the craziness of the Poseidon nickel boom.

He went on to make his own fame and fortune when a company he founded, Pancontinental Mining, found one of the world’s biggest uranium deposits, Jabiluka.

It’s now owned by Rio Tinto’s listed uranium subsidiary Energy Resources of Australia.

Lockington lies some 50 kilometres north of Northgate’s Fosterville gold mine, currently Victoria’s biggest mine, with annual production of more than 100,000 ounces from a gold endowment of some 2.5 million ounces.

Mineralisation discovered by Gold Fields at Lockington is of the fine-grained type found at Fosterville, rather than the coarse (nuggety) stuff that makes grade estimation and reserve definition so difficult at places like Bendigo and Ballarat.

Work by Gold Fields since 2003 at the project has outlined eight separate mineralised trends, with strike lengths of up to 10 kilometres. Best drill results included 7.7 metres grading 4.2 grams of gold a tonne from a 166 metres depth and 4.1 metres grading 6.3 gram/tonne from 231 metres.

Timpetra’s future drilling will be attempting to zone in on the fault system where the gold activity lies. It could start in April. The share offer is fully underwritten by Ord Minnett.

Sourced & published by Henry Sapiecha


Monday, January 31st, 2011

Go for cash, investors tell Rio, BHP

Louise Armitstead
January 31, 2011

INSTITUTIONAL investors have written to BHP Billiton and Rio Tinto demanding that they ditch ambitions for ”wasteful mega-deals” and each embark on multibillion-pound share buyback schemes instead as speculation builds that BHP is lining up another big takeover target.

The shareholders, who have written individually, have asked for commitments from the boards of the mining companies that they use their strong balance sheets to return cash to investors.

The investors have moved to pre-empt deals in the mining sector that analysts and investment bankers have predicted.

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Some shareholders have told the companies they are prepared to move to vote down the re-election of key members of the board if they do not agree to the commitments.

On Friday, rumours swept the market that BHP was planning a bid for BG Group. Analysts at Exane BNP Paribas fanned the flames by saying that a takeover would allow BHP to revitalise its oil and gas arm.

BG has extensive interests in Australia following the 2008 acquisition of Origin Energy for $13 billion, and late last year announced plans to spend $15 billion developing an LNG project in Queensland.

In London trading, BG’s shares rose to £14.041 ($A22.38) valuing the company at £4.5 billion, while BHP shed 53p to £23.841.

Investors have been spooked by the rumours coming so soon after BHP’s disastrous $US40 billion hostile attempt to buy Potash, the Canadian giant.

The bid’s failure fed expectations that BHP would target the energy sector as its only viable expansion option.

One of BHP’s top 10 shareholders said: ”Frankly after the Potash debacle, we are not too enamoured with BHP’s bid ambitions. It was expensive and ambitious and even then Marius Kloppers [chief executive of BHP] told us that we wouldn’t see the benefits of the deal for as long as 10 years. This is not the sort of thing we want him to spend the money on.”

Another investor said: ”Kloppers is very deal hungry – he’s told us he wants to preserve the cash for expansion, but we just don’t see the point, or the value.”

BHP has reportedly got an eye on Anadarko, one of BP’s partners on the ruptured well in the Gulf of Mexico.

Rio chief Tom Albanese is seen as being just as ambitious to complete a deal, particularly after the collapse of its merger talks with BHP three years ago.

Rio is in talks with Australian miner Riversdale over an agreed $3.9 billion bid. The company has also agreed to increase its holdings in Ivanhoe Mines in Mongolia.

Rio approved major capital projects totalling $5.5 billion in the fourth quarter last year.

The company spent time recovering after it bought Canadian aluminium producer Alcan for $38 billion in 2007.

The damage to Rio’s balance sheet from what was regarded as a reckless acquisition, made when global metal prices were at record highs, had to be repaired by a series of asset sales and a $15.2 billion rights issue.

The company’s net debt load is now $27 billion lighter than it was at the end of 2009.

One of Rio’s key shareholders said: ”There’s a danger with Rio that Riversdale is just the start. We want assurances that there will not be any attempt at big deals.”

Sourced & published by Henry Sapiecha


Thursday, July 29th, 2010

Soaring cocoa price

to hit chocolate makers

ROWENA MASON & AMANDA SAUNDERS, The West Australian June 8, 2010, 7:05 am

A soaring price for cocoa is expected to make chocolate more expensive.WA News / Robert Duncan ©

A shortage of cocoa is threatening to force prices for chocolate higher.

Cocoa prices are at their highest levels since 1977, mainly because of a plant disease blighting the crops of thousands of cocoa growers in the Ivory Coast, which accounts for almost 40 per cent of the 3.5 million tonnes of cocoa that end up as plastic-packaged chocolate bars and luxury boxes of truffles across the globe.

Swollen-shoot viral disease, heavy rain and poor infrastructure have cut the Ivory Coast’s production by 20,000 tonnes compared with the year before. The crop failures, together with a forecast fifth year in which cocoa demand will outstrip supply, have sent cocoa futures soaring.

In early trading last night, the benchmark contract for cocoa on the London International Financial Futures and Options Exchange was at a 33-year high of £2553 a tonne, up from just £600/t only 10 years ago.

Margaret River Chocolate Company co-owner Martin Black said the retailer had felt upward price pressure from suppliers for the past six months, with wholesale prices for cocoa rising 10 to 15 per cent over the period.

“We haven’t let it affect our prices at a retail level and are just hoping that the fluctuations in the markets will pan out again,” he said.

“But if it continues on this upward trend for another few months we will probably have to start reviewing some of our in-store prices.”

The Margaret River Chocolate Company’s main supplier is international cocoa giant Barry Callebaut, which sources about 90 per cent of its product from Africa. However, Mr Black said the biggest issue facing the company was futures trading in cocoa, which had hurt the chocolate industry.

“Most of the cocoa trading done in recent years is not among people who use cocoa, it is speculators and traders seeking a safe haven away from equity markets and property markets,” he said. “It artificially inflates prices for the people who want to buy cocoa to make and sell chocolate.”

One rumour sweeping London last week was that a major trading house had bought a very large position in cocoa for delivery in July, throttling liquidity in the market and driving up prices.

Jenni Blance, an owner of Chokeby Road in Subiaco, said it was possible the price of stock would rise next financial year if suppliers passed on increased costs. She said Lindt had already signalled it was increasing prices for its bars and Chokeby Road would have no choice but to pass on the rise next month.

Mr Black said sales at the Margaret River Chocolate Company, which sells about 100 tonnes of chocolate a year, had held up well over the past two years, despite tougher economic conditions.

“People are acquiring a taste for better-quality chocolate, so we have found even though the market has been tough globally for the last couple of years and the price of sugar and milk are also peaking at the moment, sales are holding up relatively well,” he said.

Sourced & published by Henry Sapiecha


Saturday, June 19th, 2010

Gold hits new record


LONDON – Gold rallied on Friday to an all-time record above $US1,260 an ounce, as investors looked to precious metals for an alternative to equity or debt investments given renewed uncertainty about the economic recovery.

Several surprisingly weak US economic readings released a day earlier renewed investors worries, driving them to seek the safety of a tangible asset like gold.

Spot gold hit an all-time high of $US1,261.90 an ounce, but was bid at $US1,256.65 an ounce at 15:20 EDT, against $US1,243.40 late on Thursday. US gold futures for August delivery also climbed to a record at $US1,263.70, and settled up $US9.60 at $US1,258.30, its highest ever close.

“I think it is a case of gold’s ability to compete with both credit and equity markets for investments. Competing with credit markets has been in play for a long time, because of low interest rates and low opportunity cost of holding gold,” MF Global precious metals analyst Tom Pawlicki said in Chicago.

“The data yesterday from initial claims and Philadelphia Fed was another thing indicating to investors that the economic recovery will be sub-par compared with other recession recoveries. That makes gold more attractive,” he added.

The precious metal has risen nearly 15 per cent since the end of 2009, fueled by sovereign risk in the euro zone, historically low interest rates, and concern over the stability of paper currencies.

“Sovereign debt worries, central banks raising their holdings and record low interest rates keep attracting new buyers to gold,” Saxo Bank senior manager Ole Hansen said.

“The Goldilocks scenario continues. Risk-off helps gold through safe haven (buying), risk-on helps it as well through a weaker dollar.”

The euro, along with gold, was strengthened as well by the US Philadelphia Federal Reserve’s plummeting June factory index and a rise in first-time filings by unemployed US workers last week, which pushed US Treasury yields to their lowest in a week.

The dollar’s decline to three-week lows against the euro, headed for its best weekly gain in over a year as European leaders said they would publish details about the health of European banks.

Lingering fears over European sovereign debt levels are also burnishing the metal’s safe-haven appeal.

“We expect gold to continue to perform well given continued fiscal/debt challenges in Europe and the potential for this to spread to other regions,” Deutsche Bank said in a note.

SPDR ETF hits record

Holdings of the world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Trust, hit record highs at 1,307.963 tonnes on Thursday as investors continued to turn to physical bullion as a haven from risk.

Silver tracked gold higher to a four-week peak of $US19.24 an ounce. Late in the session it pulled off the highs to trade around $US19.16 an ounce against $US18.67 late Thursday, slightly outperforming the yellow metal.

Some investors said silver had lately under-performed gold’s gains and was due for a greater percentage rise.

The gold:silver ratio fell to its lowest since late May on a day-to-day basis, with one ounce of gold now buying 66 ounces of silver. The silver market, smaller and less liquid than gold, tends generally to outperform when prices are rising.

“If both gold and silver continue to improve, we expect silver to outperform, thus moving the gold-silver ratio lower,” ScotiaMocatta said in a note.

Platinum advanced to $US1,588 an ounce from $US1,574, and palladium was higher at $US487 than $US479.50 late Thursday. Both hit a one-month highs during the session.

The world’s biggest palladium producer, Norilsk Nickel, said it had received an offer for some of its Australian assets, and that it planned to proceed with plans to divest them.

Sourced and published by Henry Sapiecha