Globally, gold prices rose for a third day, helped by a weaker dollar and falling US bond yields ahead of inflation data later that could influence how quickly the Federal Reserve will raise interest rates.
David Fuller and Eoin Treacy's Comment of the Day
Category - Precious Metals / Commodities
Gold makes some recovery on fresh demand, global events
This article from Bloomberg may be of interest to subscribers. Here is a section:
Rio Tinto joins race for stake in world's largest lithium miner
Rio Tinto joins race for stake in world’s largest lithium miner – This article by Cecilia Jamasmie for Mining.com may be of interest to subscribers. Here is a section:
El Mostrador suggested Tinto Rio had already made a bid, potentially trumping Chinese companies Sinochem, Tianqi and GSR Capital, all of which had also expressed interest in SQM.
The news came on the heels of PotashCorp and Agrium announcing Tuesday that China’s ministry of commerce had approved the merger, but required the sale of PotashCorp’s minority holdings in Arab Potash Company and SQM within 18 months of closing, and Israel Chemicals Ltd. within nine months.
SQM, which has a market value at just over $15 billion, produced roughly 44 million tonnes of lithium carbonate last year and is developing new projects in Chile and Australia.
Rio's current incursion in the lithium market is mostly limited to its 100%-owned lithium and borates mineral project in Jadar, Serbia, which is still in the early stages of development.
Iron Ore Imports Collapse as China's Great Cleanup Kicks In
This article by Jasmine Ng and David Stringer for Bloomberg may be of interest to subscribers. Here is a section:
Purchases dropped to 79.49 million tons in October, according to customs data on Wednesday. That’s down from September’s 102.8 million tons, and is the lowest amount since February 2016. Over the first 10 months, imports by the world’s top buyer still expanded 6.3 percent to 896 million tons.
Iron ore users and investors have been tracking China’s bid to rein in pollution this winter by imposing restrictions on mills’ production, in addition to curbs on other industrial activity. The drive has buttressed prices of higher-quality ores that are more efficient, while spurring speculation about a demand roller-coaster, with weaker consumption seen near term before a possible snapback in spring. At the same time, miners in Brazil and Australia have added supply.
The decline in China’s iron imports was the standout item amid a broader weakening of purchases, Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd., said in a note. “The closures of steel mills due to environmental concerns were behind the fall,” he said. Demand for raw materials imports is likely to rebound, according to the bank.
Interesting charts November 8th 2017
Nickel Rallies Most in Five Years on Promise of Electric Cars
This article by Yuliya Fedorinova and Martin Ritchie for Bloomberg may be of interest to subscribers. Here it is in full:
The nickel market has caught fire, with prices posting the biggest two-day advance in five years.
Nickel rose as much as 6 percent to $13,030 a metric ton on the London Metal Exchange, the highest since June 2015. That added to Tuesday’s 5.3 percent gain after Trafigura Group Pte joined Glencore Plc in unveiling bullish usage forecasts. In Shanghai, prices climbed by the daily limit.
"Such breakthrough has been cooking long, backed by relative value and EVs," Richard Fu, head of Asia Pacific at Amalgamated Metal Trading Ltd., said by email.
Nickel sulphate, a key ingredient in lithium-ion batteries, will see demand increase by half to 3 million tons by 2030, Saad Rahim, chief economist at Trafigura, said in an interview. That echoes bullish views from miner and trader Glencore. Batteries are likely to use more nickel and less cobalt in future, Rahim said.
Nickel is now up 28 percent for 2017, vying with aluminum for the title of top base metal of the year.
Chinese investors piled into Shanghai futures at the start of morning session, and prices were locked up by the limit just short of 100,000 yuan a ton, the highest intraday level since November.
MMC Norilsk Nickel PJSC, which competes with Vale SA as the world’s top nickel producer, has warned that the market may have become too bullish too quickly. The company sees this year’s nickel demand from batteries at about 65,000 tons, compared with total usage of 2 million tons, according to Anton Berlin, head of analysis and market development. It will take a few years for EVs to become a significant consumer, he said.
Why own gold?
Xi's China a boon for mining
This article from mining.com may be of interest to subscribers. Here is a section:
And Xi's enormous power also means his pet projects should receive the full backing of the state.
The One Belt One Road initiative to recreate the Old Silk Road connecting Asia with Europe was mentioned five times during the speech. (Mao Zedong and Deng Xiaoping received four mentions each)
Another mega-undertaking, Beijing-Tianjin-Hebei integration, which includes the Xiongan New Area, Xi mentioned twice.
And even if the party's priorities are shifting away from market-orientated reforms, Beijing's transformation of its heavy industries coupled with programs to fight pollution has already benefitted mining.
For instance, eliminating overcapacity has boosted profitability in the domestic steel industry and in the process steelmaking raw material prices have been dragged higher. At the end of last year consensus forecast for the iron ore price was $57 a tonne during 2017. Year-to-date it's averaging $71.
Venezuela's Behind on Its Debt and Facing Two Huge Bond Payments
This article from Bloomberg may be of interest. Here is a section:
Venezuela could still also make the payments on time. While $10 billion in foreign reserves isn’t much for a country that now owes some $140 billion to foreign creditors, it’s still enough to pay the bills for a while.
And the Maduro government has surprised the bond market before, making payments the past couple years that many traders had anticipated would be missed. Some of those now betting that these next two payments will also be made actually point to the $350 million currently overdue on the other notes as an encouraging sign. Those arrears indicate, they contend, that officials are prioritizing the payment of bonds with no grace period at the expense of those they can put off without penalty.
Even if Venezuela can make the payments due this year, investors say that, unless oil prices stage some sort of miraculous comeback, they still see default as an inevitable outcome. Credit-default swaps show they’re pricing in a 75 percent chance of a PDVSA default in the next 12 months and 99 percent in the next five years.
Electric Vehicle Revolution and Implications for the Nickel Market
Thanks to a subscriber for this presentation from Vale which may be of interest. Here is a section:
Electric vehicles will usher in a new age for nickel
A more balanced nickel consumption profile between stainless and non-stainless applications
Batteries need high purity nickel sulphate, cannot readily use Class II such as nickel pig iron or ferronickel units – today, only ~50% of global production is suitable
Nickel industry needs to grow significantly in suitable units to meet demand for battery manufacture
Growing in suitable nickel units is expensive