WEEK IN BRIEF: Yuan devalued; LME fees; Noble results; Glencore production; copper production; ferro-chrome benchmark

Metal Bulletin's Charlotte Radford takes a look at the some of the key news reported by Metal Bulletin over the past five days.

Metal Bulletin’s Charlotte Radford takes a look at the some of the key news reported by Metal Bulletin over the past five days.

Big news from China this week, as the country’s central bank devalued the yuan by 4.6% over three days. The aftershocks were swift and harsh for the already struggling commodities markets, Andrea Hotter wrote, and Metal Bulletin reporters looked at the likely impact of the devaluation across the metals markets.

A weaker currency could provide further stimulus for China’s exports of semi-manufactured and manufactured aluminium products to Brazil, industry sources told Danielle Assalve.

In China’s cobalt sector, market participants are mulling price hikes because of the weakening yuan, yet they are still hesitant given the sluggish mood in the market. 

China’s minor metals producers will gain cost benefits from a weaker currency, making them more competitive and putting further pressure on global prices, market participants told James Heywood

The devaluation could eventually have an impact on the ammonium paratungstate (APT) market, sources said – but there are other influencing factors that may be more pressing. Claire Hack spoke to market participants.

India has raised its import duties for iron, steel and base metals by 2.5 percentage points, in a bid to aid domestic producers, which are struggling to maintain profits against cheap Chinese imports.

Find all of Metal Bulletin’s articles on the yuan devaluation, here.

The devaluation hit base metals prices on the London Metal Exchange (LME) this week, as the move prompted selling across the complex. But by Thursday, a degree of calm returned to the market and the base metals recovered some of their losses, as the People’s Bank of China issued a statement that the devaluation had been a one-off adjustment.

Our latest rolling price report tracking base metal moves on the LME and Shanghai Futures Exchange is here.

Base metals could have further to fall, with little sign of recovery at present, Edward Meir told Metal Bulletin. Claire Hack caught up with the INTL FCStone analyst in New York.

But the traditional role of commodities as a diversifier and hedge against inflation is coming back to the fore, and could tempt investors back to the asset class, Jodie Gunzberg told Andrea Hotter.

LME parent company Hong Kong Exchanges & Clearing (HKEx) posted a 73% increase in profit attributable to shareholders in the first half of 2015, as its LME commercialisation strategy came into effect.

However, the fee increases introduced in January had “no impact” on LME trading volumes, which fell 3% in the first half, according to the bourse’s ceo Garry Jones.

In other exchange news, Fanya investors reported the minor metals exchange to the police forces of major Chinese cities including Beijing, Shanghai, Shenzhen, Chengdu and Kunming on Tuesday August 11. Find the details here.

5N Plus lost $22.4 million in the first half of 2015, falling from a profit of $9 million a year earlier, as its operations were hit by falling commodities prices.

Financial results came in thick and fast over the past week. Profit at Noble Group’s mining and metals division slumped to $3 million (before interest and tax) in the first half of 2015, down 98% from a year earlier due to sharp falls in aluminium premiums and fundamental demand weakness.

The trading company also announced the closure of its Turkish chrome business as part of a $70 million cost-cutting initiative.

The group’s share price lost over 10% of its value on the Singapore Exchange on Wednesday August 12, as Iceberg Research issued a response to PricewaterhouseCoopers’ review of Noble’s mark-to-market valuations. 

Meanwhile, copper-molybdenum-gold producer Thompson Creek’s second-quarter results release was “worse than expected” and is likely to have a negative impact on the company’s stocks, according to a note from RBC Capital Markets.

Production results arrived from Glencore. Copper production fell 3% in the first half, coming in at a total of 730,900 tonnes.

The company’s Katanga Mining division posted an $84 million loss in the second quarter on higher operating costs, low copper prices and price-driven impairment charges at its assets in the Democratic Republic of Congo.

Find a summary of the production figures here.

Staying with copper, shares in Aurubis jumped by as much as 8.7% on Thursday August 13, as the recycler’s ceo said it is on course to achieve record-breaking full-year profits, after operating income more than tripled in the first three quarters of its fiscal year.

In other company news, striking contractors at Codelco agreed to put an end to the three-week-long labour action that affected the company’s Ministro Hales and Salvador divisions. 

Freeport McMoRan’s Indonesian unit has been unable to export copper concentrates since the end of July, as the miner awaits approval from the trade ministry for an exemption from a regulation on letters of credit.

Spot treatment and refining charges inched higher in the first half of August as mine tender activity slowed and traders turned their attention to sales in the Chinese market.

And in Tapped In, Janie Davies looked at the Japanese ferro-chrome industry benchmark price, which materialised late and in an unexpected form.

Charlotte Radford
Twitter: @CRadford_MB

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