WEEK IN BRIEF: LME Week, Concord Resources, Codelco premiums, benchmark TC/RCs, Evraz Highveld rescue plan

Charlotte Radford takes a look at some key stories from LME Week in London, and the metal market news from the past five days.

Charlotte Radford takes a look at some key stories from LME Week in London, and the metal market news from the past five days. 

As expected, China was the point of discussion at lots of the week’s events. Many miners admitted that the country’s days of double-digit GDP growth are in the past, and BHP Billiton’s president of marketing said the country’s economic growth will steadily lower over the coming years.

And China’s “one belt, one road” programme will be an important facilitator of China’s long-term internationalisation, delegates were told at the LME Metals Seminar.

However, as LME Week progressed, it became increasingly clear that the metals and mining industry is nervous, with the feeling that some kind of crunch time is looming, Andrea Hotter wrote. 

The LME is channelling more resources into expanding its presence in India – a country with strong untapped metals trading potential, ceo Garry Jones said on Monday.

Delegates at the LME’s seminar voted in favour of zinc as the base metal with the most upside price potential in 2016, with Glencore’s announcement that it would cut its production, providing a more bullish sentiment.

However, brokers trying to trade zinc in response to the cuts were unable to do so for some time at the end of last week, as the opening of LMEselect was delayed by a technical hitch.

Despite relatively favourable 12-month views on zinc, the metal struggled to hold on to all of its price gains this week. After trading closed on Thursday, the metal’s three-month price was down 0.44% compared with last Friday’s close, although remaining above $1,800 per tonne.

Click here for our latest rolling report, covering price moves on the LME and SHFE.

Meanwhile, the bourse’s plans for a monthly contract could completely restructure brokers’ business, the metals industry and the exchange, ring-dealing member Sucden Financial’s head of Asia business development, Jeremy Goldwyn, told Shivani Singh.

The exchange also flagged the possible effects of new EU financial markets regulations on the metals industry.

Andrea Hotter caught up with Cargill’s Federico Stiegwardt, following the company’s entry into the base metals risk management world over the past year. Click here for the interview.

And former traders from Noble Group have set up a new physical trading company, Concord Resources, with long-time commodities investor Dwight Anderson’s Ospraie Management Partners as one of the founding shareholders. Alex Harrison had the story.

People news also came from Standard Bank, which has appointed Mark Thompson as its new head of LME trading.

Jethro Wookey caught up with Evangelos Mytilineos. Recent falls in energy prices are a non-cyclical change in commodities markets that will keep aluminium prices down for the foreseeable future, the head of Greek company Aluminium SA said.

And customs data arrived from China. The country exported 350,000 tonnes of aluminium and aluminium products in September.

Company news came from Codelco. The Chilean copper producer has offered its copper cathode customers in Europe a contractual premium of $92 for 2016, consumers and traders said.

And, whatever happens in the global copper market, state-owned Codelco will not cut output at its core structural projects, the company’s chairman told Andrea Hotter.

Staying in the copper market, Freeport McMoRan is looking for a “two-digit” settlement for copper concentrates treatment and refining charges (TC/RCs) in 2016, believing it was “too hasty” in agreeing benchmarks for 2015.

Analysts expect benchmark TC/RCs to fall in 2016 negotiations, due to mine disruptions, delays and production cuts.

In the nickel market, physical trader Stratton is predicting average prices of $12,000-13,000 per tonne in 2016.

“It’s two months since we hit the $9,100 per tonne low and I think most of the bad news has been priced in,” senior trader and minority shareholder Gordon Buchanan said in an interview.

China has imported more ferro-nickel than it needs, Outokumpu’s Frank Ehrenberg told Janie Davies.

Staying in the ores and alloys markets, Claire Hack had the latest details on the business rescue plan for troubled South African company Evraz Highveld Steel and Vanadium.

Click here for an overview of the key changes made to the plan, and here for the business rescue practitioners’ contingency proposals. 

And as Evraz Highveld’s creditors have approved the plan, the hotly discussed “conditions precedent” attached to the plan are now publically available.

Meanwhile, Global Renewable Energy, the Isle of Man-registered company whose bid for Evraz Highveld was rejected, is negotiating over the purchase of Vanchem Vanadium Products, Vametco and Stratcor, Metal Bulletin understands.

In minor metals, sources said that Chinese cobalt companies had breached the terms of their intermediate contracts as they experience difficulties in obtaining letters of credit (LCs) More here.

And, to round off a busy LME week, here’s Geoffrey Sambrook’s fictional metal trading tale, Meltdown.

Charlotte Radford 
Twitter: @CRadford_MB 

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