WEEK IN BRIEF: LME copper withdrawal; Codelco capex cuts; aluminium premiums rise; nickel blending; manganese ore price falls; Noble-IFM court action

Charlotte Radford takes a look back at some of the key news and price moves from the past five days in the metals markets.

Charlotte Radford takes a look back at some of the key news and price moves from the past five days in the metals markets.

The week started with the withdrawal of 37,375 tonnes of copper cathode from London Metal Exchange (LME) warehouses. Most of the material is destined for China, traders believe.

China’s refined copper demand is likely to improve in the fourth quarter, due to accelerating grid investment, Kiki Kang wrote.

In Latin America, state-owned Codelco announced it will cut its five-year investment plan by as much as $4 billion, in light of Chile’s currency devaluation and having reviewed its projects.

And Chile’s copper commission, Cochilco, made another cut to its copper price forecasts for 2015 and 2016, on lower expectations for global demand growth.

Aluminium premiums in Europe increased on greater interest in buying metal for financing deals, after the October-November spread on the LME moved from backwardation to contango last week, and the cash-to-three-month spread widened.

Meanwhile, European aluminium scrap and secondary alloy prices are falling and will continue to drop as the market adjusts to lower all-in prices for primary aluminium, prompted by falling energy prices.

In the nickel market, a major Chinese NPI (nickel pig iron) producer has tried to blend imported refined nickel with ore to make higher nickel-content NPI, but the trial has not been a success, market sources said. Ellie Wang had the story.

Production results arrived from Boliden. The company’s revenue and net profit increased year-on-year in the third quarter of 2015 as a stronger performance by its smelter outweighed the effect of falling metals prices.

Australia-listed explorer Bass Metals has entered into a three-month exclusivity period with Mancala Resources, with the objective of divesting its Que River lead and zinc assets in Tasmania. James Heywood had the details.

And as the mating season for 2016 zinc premium contracts gets under way, the market seems cautious about the effect that Glencore’s production cut announcement will have on talks.

This week also saw Glencore tell analysts in London that it is looking to trim capital allocation within its marketing business as it moves to cut debt to about $20 billion by the end of next year.

The US Federal Reserve met this week, leaving market participants reluctant to take positions ahead of an announcement on interest rates. The news that the rate will hold firm at 0.25% until at least December led to depressed sentiment, pushing LME base metals prices down later in the week

Analysts at Barclays said they expect a bearish mood to persist for the rest of the year.

“We see the potential for a modest pick-up in prices throughout the first half of 2016, as today’s supply cuts become tomorrow’s tight market. Eventually, we think that poor supply-and-demand fundamentals will reassert themselves and copper will again give ground,” the analysts said on Tuesday.

Click here for Friday’s rolling price report.

Other exchange news came from Yunnan, China, where the regional government is now deciding whether the Fanya Metal Exchange should face fraud charges.

The matter will be handled strictly according to the law, the Yunnan government said.

Meanwhile, the Kunming municipal government has sent a team to the minor metals bourse to complete the required spot clean-up and rectification work, and to address concerns raised by investors.

Staying in China, the country’s State Reserve Bureau bought 5,300 tonnes of molybdenum oxide from major market participants on Wednesday, sources told Kiki Kang.

And sharp drops in manganese ore prices have led to buyers walking away from verbal agreements and trying to renegotiate prices over the past month. Janie Davies spoke to market participants.

Elsewhere in the ores and alloys markets, Noble has launched a court application to force International Ferro Metals’ South African subsidiary to allow the trading firm to take possession of 3,000 tonnes of ferro-chrome that it pre-financed in May. Details of the proceedings are here.

East Metals and Mastercroft have applied to launch court proceedings against troubled South African company Evraz Highveld Steel & Vanadium, aiming to have its business rescue plan declared invalid. Claire Hack looked at the reasons for the application.

And in people moves, Mark Jevons has retired from his role of senior vp of Jefferies Bache, while Sucden Financial has made a number of senior hires to its management team.

Charlotte Radford 
Twitter: @CRadford_MB 

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