What Metal Bulletin expects to see in 2013

Here are a few of Metal Bulletin's predictions for 2013.

Here are a few of Metal Bulletin’s predictions for 2013.

M&A activity will increase across the board
Mergers and acquisitions will increase, especially among juniors and miners without strong cash reserves, as traditional sources of financing dry up. Consolidation among majors is also likely following the tie-up between Glencore and Xstrata (once it is finally approved by China and South Africa). Responding to a possible new era of consolidation driven by the increased clout of Glencore Xstrata will be a crucial issue for the new ceo at major mining company Anglo American after Cynthia Carroll’s resignation last year and also for Marius Kloppers’ possible successor at BHP Billiton.

Al consumers to come to terms
Aluminium consumers will come around to the fact that record-high premiums are not only sustainable but likely to go higher. As producers formulated new types of supply contract in 2012, with flexible premiums and shorter terms that suit them, so the consumers – once they accept high premiums over the longer term – will devise new supply contracts that work to their own benefit, and negotiations will be spirited.

New Ni and Co supplies to come on stream
Ambatovy cobalt and nickel finally enter the market in volume, ending years of anticipation and leading to heightened competition among sellers.

Increasing recognition of the world’s most significant copper market…
The world’s most active (and significant) copper market arguably takes place in certain free-trade zones in China, as a result not only of the country’s significance as a producer and consumer but also the deals under which copper is used as collateral for other investments there. But the pricing of that market is hampered and opaque as a result of the lack of London Metal Exchange warehouses and restrictions on trade in and with China. Expect attempts to solve this conundrum from innovators in the market.

… growth of Chinese partnerships and brokerages…
A growing number of private Chinese partnerships are already profitably trading the arbitrage between Chinese and Western markets, exploiting their knowledge of conditions and prices in mainland China and how they are being read (or misread) outside the country. Expect more Chinese brokerages to join Bank of China (International) as members of the LME too.

(… with rules to accommodate them)
Offshore accounts for Chinese companies that are trading material in certain specified zones? Allowances to import and export a percentage of profits from trading certain commodity contracts? Companies and authorities in China are looking at ways to ensure that restrictions on China’s currency and trading do not stifle attempts to develop trade.

Cu concentrate treatment terms will diverge
The spread between treatment and refining charges for clean and complex copper concentrates will widen as miners deliver more concentrates to the market, and traders invest in blending facilities.

The supply of concentrates will increase, but many of the new or enlarged deposits that are being mined will produce complex concentrates, while clean concentrates will remain comparatively tight.

So, while the market for complex concentrates will turn in favour of buyers in 2013, traders will continue to compete aggressively on clean material to feed enlarged blending operations.

For more forecasts, click here.

editorial@metalbulletin.com

What to read next
The most recent financial results published by base metals mining companies highlight just how inflation is affecting profit margins, with increasing wages, financing costs and input prices all hitting profits, sources told Fastmarkets in the week to Thursday March 28
Century Aluminum is among those selected to start award negotiations for up to $500 million in Bipartisan Infrastructure Law and Inflation Reduction Act funding to build a new aluminium smelter, the company said on Monday March 25
Participants in the copper concentrates market are struggling to comprehend an “unstoppable” decline in treatment and refinement charges (TC/RCs), with every week bringing spot deals at fresh lows and rumors each “crazier” than the last, sources have told Fastmarkets
The US Department of Energy selected five base metals projects to receive more than $900 million in federal investment from its Industrial Demonstration Program (IDP), leading to a reduction of four million tonnes of carbon dioxide emissions annually, according to a statement by the Department on Monday March 25
Aluminium producer and recycler Constellium announced on Tuesday March 12 that the company is moving to test hydrogen utilization at an industrial scale as a power source in its casthouses
Fastmarkets has corrected its MB-ALU-0002 alumina index, fob Australia and its MB-ALU-0010 alumina inferred index, fob Brazil, which were published incorrectly on Monday March 18.