WEEK IN BRIEF: London Metals Week; Bagri warning; copper surplus looms; destocking, financing weighs on nickel

Metal Bulletin looks back over the key market news following one of the biggest weeks in the metal industry calendar - London Metals Week.

Metal Bulletin looks back over the key market news following one of the biggest weeks in the metal industry calendar – London Metals Week.

The great and good of the metals market were in London this week to do business, meet new contacts and catch up with old friends, as well as attend the London Metal Exchange seminar and dinner.

Metdist md Apurv Bagri gave a half-hour speech at the dinner, warning the exchange and its owner, Hong Kong Exchanges & Clearing, to be careful not to turn the bourse into a “lookalike American-style exchange”, to rapturous applause. 

The exchange responded promptly, with LME ceo Garry Jones telling Metal Bulletin that “we are very keen to hear feedback from the market – in fact, we announced the fee changes early to allow time for this process, and we have held more than 30 meetings with our members to discuss the matter.” See the whole of Andrea Hotter’s report, here

Analysts from INTL FC Stone, CRU, Natixis, Citi and Noble Resources aired their views on the copper markets, telling those involved with the red metal that they are right to focus on an impending surplus of material.

Rising output from new and existing mines is a major headwind that will keep prices pegged back throughout 2015, the analysts said at the LME Seminar. 

For the nickel market, destocking in China, following the Indonesian export ban, and the tight financing situation will be the key factors for 2015, according to analysts at Bloomberg’s LME Week Breakfast.

Trafigura subsidiary Impala has signed an MoU with Citic to create a joint-venture warehousing and logistics business, as it deslists LME warehouses in a number of locations. 

Metal Bulletin’s Andrea Hotter believes that Impala will not be the only company to do it, and that a new era of warehousing is on its way as a result of new rules and regulations. More here

In copper, the concentrates market could start following a second reference price for blended feeds, following the recent commissioning of new large mines with high levels of impurities, in addition to referencing the clean benchmark, Freeport McMoRan’s Javier Targhetta told Copper Price Briefing. 

The week got off to a sour start for some, as nickel and bulk alloys market participants gathered for mating season under the growing threat of contract renegotiations prompted by falling spot prices and a weaker-than-expected quarter for the steel industry. More here

“Forget nickel, forget aluminium, cobalt is the talk of this week. There’s just not going to be enough raw materials,” one minor metals trader said, as the market anticipates tightening raw material supply in 2015. 

Staying with minor metals, indium prices are likely to remain stable, as the high price and uncertainty over the stability of stocks on the Fanya exchange are keeping traders out of the market, Metal Bulletin was told. 

Metal Bulletin’s pub lunch was held at the Shepherd’s Tavern in Mayfair, and a few key industry participants talked to us about their concerns for the year ahead, and what they are optimistic about in this video

Early in the week, Hong Kong Exchanges and Clearing (HKEx) announced that it will launch its suite of Chinese yuan-denominated base metals contracts on Monday December 1.

The copper, aluminium and zinc contracts, known as London Mini Futures, will be the first commodities contracts to be launched by HKEx since buying the London Metal Exchange.

“The new contracts will provide currency convenience, they will expand our range of RMB products, and they will further strengthen Hong Kong’s position as the leading offshore RMB centre,” HKEx ceo Charles Li said. See the full story here

To catch up with all the rest of the news from London, click here

In people news, ex-LME ceo Martin Abbot has made a return to the world of finance with his appointment as an adviser to Abu Dhabi Global Market (ADGM); Chinalco appointed Ge Honglin as its new chairman; the International Tin Research Institute appointed a new chairman; and Sam Walsh confirmed that he will stay with Rio Tinto indefinitely. 

James Heywood

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