This page is archived news covering the period of August 2007
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Stainless Steel News and Nickel Prices

Free comprehensive information on worldwide nickel market pricing, stainless steel prices and metals market analysis and forecasts


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London, England

LME Nickel Trading Times
Pre-market 7:00 am
1st ring 12:15-12:20
2nd ring 13:00-13:05
Official price 13:10
3rd ring 15:25-15:30
4th ring 16:05-16:10
London kerb 16:15
Unofficial price 16:35
NY kerb 17:00
Tokyo kerb 22:00

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Video about Kiva

Friday, August 31  (US and Canadian markets will be closed Monday for Labor/Labour Day)

  Today's official closing prices - cash $13.70/lb - 3 months buyer - $13.68/lb (117% higher than 1/1/07 - 9-1/2% lower than 1/1/07). Baltic Dry Index continues to shatter its daily record, gaining 116 points to register 7,702. LME warehouses showed another gain overnight, with inbound and outbound activity limited to two warehouses, on opposite sides of the globe. Rotterdam, Netherlands received 804 tonnes and shipped 96 tonnes. And Singapore received 138 tonnes and shipped 6 tonnes. Cancelled warrants jumped back into the mid 4 percentile range. So what happened to light a fire under nickel traders today? Seeing different reasons given by different analysts. Some feel the news about China shutting down small pig nickel producers in China accounts for some of it. We are skeptical about this one, as Chinese officials had already been discussing the problem of a glut of small smelters, and energy consumption was a viable excuse to shut the smaller ones down. This doesn't stop the larger ones from operating, and Metals Bulletin had a headline this morning that Taiyuan Iron & Steel has signed an agreement with a subsidiary of China's MMC to supply it pig nickel. Some of you may think we spend a little too much time on the pig nickel predicament, but there are too many unknown variables to dismiss it.

The economic news out of the U.S. continues to bewilder, but at the same time, motivate traders. It is becoming increasingly apparent that the government is willing to take whatever steps it feels necessary to keep the economy rolling, and rumors of some type of government bail-out were topic one this morning in London and around the world. LME markets were closing just as President Bush was making his announcement, and it will be interesting to see how traders react Monday, after a weekend of analysis.  The U.S. housing market itself, has a marginal effect on the nickel industry as a whole, but the fallout from the subprime problem could have economic effects down the road, if not handled properly. The government is in firefighter mode now, putting out the smaller fires before they turn into a major blaze. Analysts can disagree about the success or failure so far, but if you gauge it by investor sentiment, they are staying ahead of the game.

And there is the rumor that, despite all the producer statements, stainless steel production may be turning a corner, and has seen the worse. We will have to wait and see if this proves true, but hopefully, it doesn't get any worse. It appears a floor was established, so if nickel buyers need to buy, they will probably be doing it soon - unless nickel tanks again next week. This week, tank was not in the vocabulary. Nickel had a big day, and the official closing prices posted above are the highest since August 2nd. Prices eased a little after breaking thru the $30,000/tonne mark, but still ended much higher than yesterday. Three month nickel ended the day,week, and month at $13.51/lb ($29,795/tonne)  (Dow Jones - more) Considering it ended July at $14.25/lb, nickel ended August $.75/lb lower after a fairly volatile month.

US and Canadian markets are closed on Monday, but the LME will be open. We will run a daily update as normal. Have a great weekend!

  Nickel Rises to 1-Month High on Mill Speculation; Copper Gains - "Nickel rose to a one-month high in London on speculation that stainless-steel mills will increase purchases in the final quarter. Copper and all other metals advanced." - more here

  China's steel consumption to go weak this year - "Steel consumption is expected to be weakened this year, especially in the remaining months, said an official with the China Iron and Steel Association." - more here

  (excerpt from Chinese article) Imports of molybdenum into China thru July have slipped 43.5% YOY (5349 tons compared to 9467), and molybdenum ore has dropped 46.8% YOY (3907 tons compared to 7349 tons). (note - yet to find a secondary source to comfirm this)

  Indications at 7:50 am CST show 3 month nickel selling up by around $2000/tonne - or $.90/lb . Market started out in the green from the get -go this morning, but in the last hour of trading, has taken a huge bounce. A sudden movement like this is usually a reaction to some sort of big news, but we are unable to find anything of importance. According to the Bloomberg article "...said Michael Jansen, a metals strategist at JPMorgan Securities Ltd. in London. `It's still a story of investors' sentiment,'' Jansen said today by phone. ``For the most part of this month, metals prices have had little to do with underlying fundamentals.'' (Bloomberg- more)

  Copyright/courtesy Dow Jones Newswire - "Nickel's price correction is nearly over with stainless steel producers returning after a seasonal period of destocking and demand growth for the metal set to firm, says Morgan Stanley. Delays and cost overruns at new projects are also price supportive, the bank notes, while supplies of nickel concentrate remain tight. Sees a recovery in demand for nickel in 4Q with substitution away from the metal "likely complete and possibly overdone."..."LME nickel prices should stabilize at or above current levels as stainless steel producers return to market after seasonal de-stocking period, says Morgan Stanley; 3-month nickel last at $28,475/ton, +$175 on London kerb. Morgan Stanley says prices near current levels likely below marginal cost of production, which has forced some higher-cost nickel pig iron producers in China to reduce output. But lower nickel prices should stimulate demand from stainless steel producers. "We believe the combination of lower nickel prices, dwindling stainless steel inventories and steady final demand is likely to lead to a recovery in nickel demand" by 4Q."

  CVRD puts Brazilian pig iron makers on notice - "Companhia Vale do Rio Doce, reaffirming its commitment to the sustainable development of the regions where it is present and to the compliance with environmental and labor legislation by its clients, announced the followings..." - more here

  Chinese coke exports in July sunk due to strong domestic demand - "It is reported that China’s coke export volume shrank further in July 2007." - more here

  International Stainless Steel Forum introduces new leaflet on "Why use stainless steel reinforcing bar?" - here

  Stainless and Heat Resisting Steel Crude Steel Production (Ingot/Slab Equivalent) -  Statistics here

  Eramet releases 1st half 2007 results - (excerpt) "Furthermore, global nickel production should increase in 2007 compared with 2006 due to growth in Chinese nickel pig iron production. In this context, nickel prices should continue to be extremely volatile." - more here

  China now Australia's no.1 trade partner - "Mainland China is now Australia's number one trading partner, overtaking Japan's top position for the past 36 years." - more here

  Today's beginning nickel inventory - plus 840 tons = 24,126 tonnes (4.50% - 1086 tonnes cancelled warrants/ 23,040 net stock level) Shanghai Jinchuan nickel closed at 250000-251000 RMB/t, plus 2,000.

Thursday, August 30

  Today's official LME nickel closing prices - cash - $12.59/lb - 3 months buyer - $12.70/lb (102% higher than 1/1/06). The Baltic Dry Index continues to set records, gaining another 112 points to register 7,586. Nickel inventory movement thru LME warehouses was light yesterday.  Singapore received the only inbound shipment at 6 tonnes, and they negated this with a 42 tonne outbound shipment. The Rotterdam, Netherlands, warehouse also shipped 120 tonnes. Interesting note sent to us below by a reader about a problem with pig nickel. Management Engineering & Production Services, now known as MEPS, issued a rather discouraging report about world stainless steel production today. With nearly 60% of nickel production going into stainless steel, this is not good news for nickel producers. But the markets shrugged off the negative today, and liked the fact inventories fell overnight. After an initial market opening dip, the trading price went green and stayed there. Three month nickel ended the day at $12.84/lb ($28,300/tonne)  (Dow Jones - more).

While US and Canadian markets will be closed Monday, LME will be open for business, so we will have a report that date. We will also pay tribute Monday, to a special day held "down-under", when we will feature what sets atop the largest free-standing stainless steel structure in the southern hemisphere. To our visitors on the other side of the planet, we wish you a safe and restful weekend! If you need to get away, but can't find your passport, you can now take virtual vacations here To the rest of our readers, we hope to see you tomorrow.    

  (submitted by a reader) High phosphorus stainless - "In Russia, China-based stainless steel has been detected with extra high contents of phosphorous, probably due to the use of nickel pig iron in the production phase in Chinese plants. This incident has alerted the Russia Stainless Association and Russia has put Chinese stainless mills on notice warning them not to certify stainless steel made of nickel pig iron and that only standard stainless steel produced with standard refined nickel can be certified accordingly." - source Stainless Steel World here

  TD Bank Weekly Commodity Price Report - pdf here

  Copyright/courtesy Antaike - "According to statistics of non-ferrous metals, in July 2007 the National nickel concentrate output (nickel content) 5,081 tons, a decrease of 795 tons of 1-July cumulative production 38,987 tons, a decrease of 3.8%."


Nickel Producers Share of World Market
from June 2007 report here (thanks Monty)


  Update - Stainless Steel Producers Slash Output as Price Collapse Sets In - "Global stainless steel output is expected to reach 29 million tonnes this year - an increase of 2.2 percent on the figure in 2006. This may seem a reasonable outcome but all is not well in the market. In fact, if we exclude China, steel manufacturing in the rest of the world is forecast to decline by 5.3 percent." - more here

  (info from China about about one of our site sponsors) Adanac taps molybdenum mania with Ruby Creek mine - "Canadian small-cap miner Adanac Molybdenum is on the verge of cashing in a decision to snap up a neglected chunk of northern British Columbia that is now rich with promise, thanks to booming commodity prices." - more here

  Indications  at 7:50 am CST show 3 month nickel selling up by $.18/lb. Busy news day, typical for a Thursday. French Eramet reports sales numbers were up in second quarter, shipments in third are falling due to slower than expected demand, and until worldwide stainless steel de-stocking is completed, nickel prices will remain volatile. More stainless mills announced production cut-back's, Shanghai nickel falls for a third day, and Yusco in Taiwan announced it will raise the price of export stainless steel next month?. How would you like to be a Yusco sale rep and try to explain that?! Trading  price is up this morning, encouraged by LME inventories falling overnight, and still enthusiastic about China announcing plans to shut down smaller furnaces from making pig-nickel.  (Bloomberg - more)

  Industrial metal prices expected to fall further - "Domestic metal traders expect prices of industrial metals like copper, zinc, aluminium and nickel to go down further, but are still wary of trading as prices continue to be volatile." - more here

  Nickel Volatile As Stainless Cos Continue Drawdowns - Eramet - "Global nickel prices are expected to continue to be "extremely volatile" amid an ongoing drawdown in inventories by the stainless steel market, French metals and mining group Eramet SA said Thursday." - more here

  Asian steelmakers to cut steel output next month - "Asia’s third-largest steelmaker Posco of Korea said it will be reducing output of stainless steel by 25,000 tons in September due to declining orders." - more here

  Behre Dolbear Global Mining News - pdf here

  Steel Founders' Society of America Steel Market news - July recap here pdf

  Eramet: Nickel Delivery Expectations Cut As Demand Drops - "Nickel deliveries from French metals and mining group Eramet SA will fall short of the 55,000 metric tons previously estimated due to a sharp drop in metal demand, it said Thursday." - more here

  Eramet 1st-Half Net More Than Doubles on Nickel Gains - "Eramet SA, operator of the world's largest ferronickel plant, said first-half profit more than doubled after nickel prices climbed to a record." - article here

  China's Baosteel says to produce more low-nickel steel - "Baoshan Iron and Steel Co , China's second-largest stainless steel producer, said on Thursday that it would produce more low-nickel stainless steel to meet rising demand in the second half of 2007." - more here

  Price Of High Carbon Fe-Cr Starts To Be Cooled Down - "Immediately after summer vacation was over, heated spot price of high carbon ferro-chrome ( charge chrome ) has started to cool down. Since stainless steel mills in China have been decreasing their production, spot cargoes of high carbon ferro-chrome, having become an excess in China and lost the market for sales, are being offered at a discounted price of 95 US-Cents per lb. CIF." - more here

  Yusco lifts stainless prices for September - "Taiwan's largest stainless producer, Yieh United Steel Corp. (Yusco) is adding its export price for September." - more here

  Baosteel H1 net profit jumps up by 80% YoY - (excerpt) "Baosteel said that its stainless steel operation would face a big challenge in the second half because of large price fluctuations for the material." - more here

  China iron ore import figures for January to July 2007 - "World’s biggest importer of iron ore, China has imported 221.504 million tonnes of iron ore during January to July 2007. Its imports during July amounted to 33.605 million tonnes." - more here

  Nisshin Steel to cut SS output by 40% in August and September - "It is reported that Japan’s Nisshin Steel has reduced the nickel series stainless output by 40% for steel making and by 30% for cold rolling at Shunan works in August and September as compared with July 2007." - more here

  Stainless steel consumption rose 12% in H1 - industry body - "The Southern African stainless steel industry grew by 12% in the first six months of this year to a total apparent consumption of 111 025 t, the Southern Africa Stainless Steel Development Association (Sassda) said." - more here

  Copyright/courtesy Dow Jones - (excerpt) "Anglo American, based in London, UK, is conducting earth works at its ferronickel project in Barro Alto, Goias state, Brazil, due to complete in early 2008. The plant is expected to open in 1Q 2010 and will operate in full capacity in the same year."

  Sally Malay rides high on nickel - "Strong nickel prices and a big increase in production volumes have enabled nickel miner Sally Malay Mining Ltd to record a 453 per cent increase in net profit after tax to $88.1 million for the year to June 2007." - more here

  Interesting Video from U.S. Steel on "How Steel is Made - from Start to Finish" - 6 min video here And anyone interested in where aluminum comes from? Alcoa presents "It All Starts With Dirt" - video here  More "How Things Are Made" video's here

  Today's beginning nickel inventory - minus 150 tons = 23,286 tonnes (3.76% - 876 tonnes cancelled warrants/ 22,410 net stock level) Shanghai Jinchuan nickel closed at 248000-249000 RMB/t, minus 2,500.

Wednesday, August 29

  Today's official LME nickel closing prices - cash - $12.32/lb - 3 months buyer - $12.47/lb ( 98.3% higher than 1/1/07). Baltic Dry Index set a new record today, gaining 93 points to total 7,474. Nickel activity in LME warehouse's were limited to two warehouses. Rotterdam, Netherlands, received 12 tonnes and shipped 36 tonnes. And Singapore received 360 tonnes and shipped 6 tonnes. Lot more announcements coming from stainless steel producers, primarily in the Far East, announcing further cutbacks in stainless production. Unlike the conspiracy theorists, we feel this is a continuance of demand destruction, and not an attempt to drive down nickel prices further. It will take some time for the whole supply/demand situation to work itself out. Nickel traded wildly in a narrow price range today, and by the end of the day, had registered a gain. Three month nickel ended the trading day at $12.60/lb ($27,795/tonne) (Dow Jones - more)  

  Chile July Copper Output 453,724 Tons, Down 1.5% On Year - (excerpt) - "Chile's output of molybdenum, also a major export commodity, jumped 20.2% to 3,967 tons from 3,301 tons in July of 2006." - more here

  (comment - slow news on metals so we thought we would throw in some economic news) Defaults on credit card bills in US rising - more here The next credit crunch? - more here (opinion - for those of our readers who do not live in the United States, this really isn't news here. And while we acted shocked when people who couldn't talk their parents into loaning them $50, suddenly couldn't make their house payment, debt is a general fact of life among most American's. While the average family size in the last 3 decades as fallen, the average home size has doubled. Anyone with a lick of sense knows most Americans are living beyond their means, and the only question is, when will they have to pay the piper. According to The Center for American Progress, in 2006, and for the first time in history, the average American owed more that he makes. According to the report, American's spend up to 1/4 of their income to service their debt. (more) "A typical middle income family earning around $45,000 a year saw its debt burden grow by 33.1% between 2001 and 2004, even after adjusting for inflation." (more) And is our government leading by example? Today's U.S. debt here. If debt is good for the economy, then we American's are doing all we can to keep the world economy rolling. Just don't come collecting all at once!)

  Purchasing Agents - One of our main sponsors is running a fiscal year end inventory sale and among the many surplus fastener items they have  up for sale, is a list of 18-8 stainless steel square drive sheet metal screws. Square drive, known as the trademarked Robertson in Canada, never really took off in the US, thanks to Henry Ford. And speaking of taking off, one of their customers did the same thing and left them with some excess inventory. Here is a sample - all Square drive Type A SMS 18-8 Stainless Steel - 356M 8 X 1 Oval, 200M 8 X 1 Pan, 160M 8 X 3/4 Oval, 90M 8 X 1-1/2 Oval, 200M 8 X 1/2 Oval, 60M 8 X 1-1/4 Oval, 23M 10 X 2 Flat, 26M 10 X 1-1/2 Flat, 7M 10 X 3 Oval, 700M 8 X 3/4 Truss. If you are interested in any of these screws, contact their nearest sales office and ask for sales - locations in Florida at 800-862-7463, Indiana at 800-272-7397, and Missouri at 866-246-3916.  The list of surplus items is available here

  Indications at 7:50 am CST show nickel selling down by $.16/lb  LME net inventory total was incorrect yesterday and is now reflected properly. (Bloomberg - more)

  Commodities Prices Slump -  "Commodities prices sagged broadly Tuesday, following Wall Street lower amid persistent concerns about the availability of credit and the pace of economic growth." - more here  

  Rising stocks weigh on metals prices - "Industrial metals continued to fall on Wednesday as stockpiles of copper and nickel remained at multi-month highs, while fears over the US economy also weighed on prices." - more here

  China To Shut Small Furnaces Making Nickel Pig Iron - "China will shut blast furnaces smaller than 300 cubic meters used to produce nickel pig iron, in a bid to protect the environment and conserve energy, according to the National Development and Reform Commission." - article here (finally somebody translated this news!)

  Courtesy/copyright Dow Jones - "LME nickel is steady despite bearish sentiment in the other base metals with light buying from commodity trade advisors preventing a significant slide lower, a London-based broker says. But notes rising inventories could trigger a selloff given bearish demand from the stainless steel sector in the near-term."

  Base metals equities correction presents 'strong buying opportunity' - "CIBC analysts recently forecast that base metals prices will remain high despite the current credit crunch, while the correction of equity prices “represents a strong buying opportunity.” - more here

  Hyundai Steel to halt stainless CR production - "Owing to slower demand in South Korea and nickel price falling , South Korea Hyundai Steel starts its fourth production cut in stainless steel cold rolled this year, said an official from its company." - article here

  Posco to Reduce Stainless-Steel Output in September - "Posco, Asia's third-biggest steelmaker, will cut production of stainless steel in September as some customers are deferring orders in the expectation that a decline in nickel costs will prompt lower product prices." - more here

  Copyright/courtesy CNBC - (excerpt) ""We expect sizable rallies in metals, such as the one we saw last Friday, to have trouble sustaining themselves, as the metals complex will be working under the shadow of jittery global equity markets and uncertain U.S. economic data," wrote Edward Meir, MF Global analyst, in a report. Meir also stressed that the latest economic data hasn't yet reflected the credit contraction of the past month or the volatility that followed on Wall Street. Economic readings released in September and October may tell a different story than the relatively strong data from July suggest.

  From Scotia Capital China Commodities Weekly for the Week of August 20-24, 2007 posted on investors blog - "In July, China imported a record 2.278 million tonnes of nickel ore, up a whopping 49% MOM and 7.84 times YOY. Imports from the Philippines were 1.39 million tonnes, from Indonesia 684,402 tonnes, and from New Caledonia 196,791 tonnes. Year to date, China has imported 9.3 million tonnes of nickel ore, of which 4.65 million was from the Philippines, 3.88 million tonnes from Indonesia, and 0.64 million tonnes from New Caledonia. Apparently, China has over-imported the low-grade ore, and traders now have to cut their offered price by 30%-40% for the 2.5 million tonnes of nickel ore stockpiled at Chinese discharging ports, as we noted last week. ? On the refined metal side, China’s net imports of refined nickel were at 6,191 tonnes, up 12% MOM and 56.7% YOY. In the first seven months as a whole, China net imported 49,533 tonnes of refined nickel, up 17.7% YOY....On sectors, we are now bullish on coking coal, iron ore, copper, zinc, aluminum, oil, and hardwood pulp. We are neutral on grains, ethylene, potash, methanol, and nickel. We are cautious on steel, urea, and paper products on a relative basis from a China perspective."

  Today's beginning nickel inventory - plus 330 tons = 23,436 tonnes (3.22% - 846 tonnes cancelled warrants/ 22,590 net stock level) Shanghai Jinchuan nickel closed at 250000-252000RMB/t, minus 5,500.
 
Tuesday, August 28

  Today's official LME nickel closing prices - cash - $12.42/lb - 3 months buyer - $12.41/lb (97.3% higher than 1/1/06). The Baltic Dry Index rose 104 points to a new record high of 7,381 (old record of 8/16 at 7,319). And as if to remind us all not to count our chickens before they hatch, LME warehouses gained by a whooping 1,980 tonnes. And while this was over a two day period, the influx apparently came on Friday. One warehouse took in all of the inbound, and it was delivered to a warehouse we don't hear about very much. Liverpool, Great Britain, took in a total of 2,100 tonnes. Outbound shipments included 54 tonnes from Rotterdam, Netherlands, 24 tonnes from Genoa, Italy, and 42 tonnes from Busan, South Korea. Cancelled warrants also slipped back into the low 3 percentile range. All in all, a teeth chattering pothole for those of us who thought a corner may have been turned. The large gain thru the markets into an early tailspin, at one time trading $.64/lb ($1,400/tonne) lower, but by late morning, prices were recovering from the initial shock. By days end, 3 month nickel closed at $12.56/lb   (down $100/tonne from Friday) (27,690/tonne)  (comment - we added the "glut" article so you could see what is being published out there. According to the media, we have gone from possible rationing to a glut - in 3 months!)

  A reader from Turkey caught our remarks yesterday about miners with smelters attempting to curb exports of ore into China, and their partial success in chrome in South Africa. He sent us some figures that show just how "partial" this success has been. In July 2007, China imported 114,769 tonnes of high carbon ferrochrome from 7 countries. The big 3 exporters were South Africa, Kazakhstan, and India.  In the same month, China imported 529,518 tonnes of chrome ore from 17 countries. The big 3 here were South Africa, Turkey, and India. Here is also a report released this year by the South African Department of Minerals and Energy called "The Impact of Chrome Ore Exports on the Local Ferrochrome Industry" - pdf here   

  Base metals slip after large increase in inventories - "Base metal prices slipped as a large increase in copper and nickel inventories at London Metal Exchange (LME) monitored warehouses weighed on the complex." - more here  

  Metals melt on glut fears - "Nickel and copper fell in London as stockpile increases stoked speculation of a glut of metals in the international markets. Aluminium and zinc also dropped." - more here

  (another follow-up to yesterday) The national development changes about the prohibition backwardness iron-smelting blast furnace and so on - "Eliminates the equipment to transfer it to use the related question the urgent notice" - poorly translated article here  (original article here in Chinese - if anyone can translate this and advise us if this is going to cause problems for small pig nickel smelters in China, we would appreciate the feedback)

  Who needs gold? - "Why has CVRD, the world’s second biggest mining company, gained $25bn in market value in just over a week?" - more here

  Indonesia's Antam H1 profit jumps on metal price - "Indonesia's state owned miner, PT Aneka Tambang Tbk , reported on Tuesday its first half net profit rose more than five-fold, boosted by soaring metal prices." - article here

  Indications  at 7:55 am CST show 3 month nickel selling down by about $.04/lb , but trading appears to be in a recovery mode from an earlier plummet. (Bloomberg - more) (Financial Times - more) (Reuters - more)

  China Commodities Weekly - Surging nickel ore imports - "Shanghai copper prices moved generally in line with LME prices last week, although in recent weeks, there has been a noticeable narrowing of the differential between Shanghai and LME prices." - more here

  Reuters Metal Weekly - pdf here

  Canada Commodity Price Update - pdf here

  Korean Pohang Iron and Steel in September will be reduced stainless steel output, in response to slowing demand (Updated) - "Industry sources said Tuesday, the world's fourth-largest steel manufacturers -- Pohang Iron and Steel (CNOOC : rates) in September will again cut stainless steel output 25,000 tons, in response to slowing demand." - translated article here

  Japan Increases Imports Of Nickel Intermediates As Raw Material From Philippines And So On - "According to the statistics released by the Ministry of Finance, Japan has been increasing in order to import nickel intermediates and the quantities of nickel intermediates imported from two main sources ..." - more here

  Maoist attack to hit iron ore movement in Orissa-Jharkhand border - "BL reported that Maoists, protesting against arrest of 2 leaders, raided Topadih railway station under the South Eastern Railway on Monday morning, forcing suspension of freight movement, particularly iron ore movement in Orissa and Jharkhand border areas." - more here

  POSCO to cut stainless steel output in Sept - "POSCO Co Ltd , the world's fourth-largest steel maker, will cut stainless steel output by another 25,000 tonnes in September, responding to slower demand, industry sources said on Tuesday. " - more here

  Metal Center News reports the most recent Metals Activity Report from the MSCI show steel inventories at US metals service centers thru June, had reached their lowest levels since March 2006. In Canada, similar inventories were at their lowest levels since May 2006.  

  From Metal Center News August 2007 "Architects Digest Growing Metals Menu" - (quote from article) - "Stainless steel, in particular, has enjoyed a growing presence in architectural applications, notably in large-scale projects such as airports and office buildings. Stainless appeals to architects for both aesthetic and life-cycle reasons. Its attractiveness is well established, but its more practical benefits are just being realized. “Our view is that the use of stainless steel in architectural and building construction will grow at a pace at least equal to the overall growth of stainless steel, which is about 5 to 6 percent,” says Chuck Turack, vice president and general manager of coil products for Outokumpu Stainless Inc., Schaumburg, Ill. “It will actually grow at a faster clip than that in many regions of the world.” Turack says a region’s likelihood of adopting stainless depends on that culture’s tendency to put more emphasis on long-term value over short-term costs. North America, historically, is a short-term, cost-conscious culture, though Turack sees improvement on that front. “It’s better now than it was 10 years ago, and it will be better in five years than it is today,” he says. Stainless has made progress in some areas, particularly coastal regions where the atmosphere tends to be more corrosive than inland. Stainless is also valuable in areas where buildings are exposed to winter deicing products, in environments with industrial and urban pollution and, significantly, in areas where an environmentally friendly material is desired." rest of article here

  Today's beginning nickel inventory - plus 1,980 tons = 23,106 tonnes (3.22% - 744 tonnes cancelled warrants/ 21,126 net stock level) Shanghai Jinchuan nickel closed at 256000-257000 RMB/t, minus 1,000.
Monday, August 27  London Metal Exchange is closed today for Summer Bank Holiday

  Metals news was a tad lean today, with the London Metal Exchange closed for Summer Bank Holiday. The BDI is also published daily from London, and will return tomorrow. China has published 10 measures for the latter half of 2007, to cut down on, what it classifies, as wasteful energy consumption and pollution. Our Chinese translator butchers the translation, but # 3 states "Ma Kai indicated that, second half year, the department concerned the cement, the coke, the calcium carbide, the ferroalloy, the plate glass and the steel and iron (second batch) and so on profession elimination backwardness produces can the duty decomposes to the correlation area and the enterprise. Announces the small thermal power, the small steel and iron elimination enterprise name list and each place execution situation. Establishment elimination backwardness produces can withdraw from the mechanism, ...The place also should create the condition, arrangement fund support elimination backwardness produces can work, guarantees the whole year to close down 10 million kilowatts flames electrical machineries, the elimination backwardness iron-smelting produces can 30 million tons produce with backwardness steel-making can 35 million tons." This may turn out to mean absolutely nothing to the stainless steel and nickel industry in China, but we are watching notices like this, as we fill excessive energy consumption and pollution, may still be pitfalls pig nickel producers must overcome, behind economic feasibility, and supply.

Supply will probably never prove to be a problem, but recent news shared by our contact in Indonesia, Rohan, tends to make us believe Indonesia may be looking to clamp down on ore shipments from that country. This wouldn't be completely surprising, and we have seen similar action taken against chromite ore shipments from South Africa to China. Miners with smelters aren't really fond of those who sell raw ore direct at cut rate prices, and have been known to put pressure on governments. In two of the three major sources of pig nickel to China, Indonesia and New Caledonia, there are established nickel smelters, with more on the way. Their voice with the Philippine government, the largest Chinese source, could carry far less weight.

Economic feasibility of the so-called pig nickel production, is more a subject of contention, than fact. While the general consensus from analysts and a few large nickel miners have set the profitability point somewhere around $12/lb, we have seen media reports as low as $9/lb, and as high as $15/lb. Recent demand destruction in the stainless steel market has skewed much of the the recent info about slowing pig nickel production in China, and really does not assist us in determining a good dollar amount. We continue to follow the story closely, as we still feel the mysterious pig nickel will continue to play an important role in the future. Nickel prices will be back in play tomorrow, as London returns to the trading floor. 

  Added a new permanent link to the lower right hand column - Daily Shanghai Metal Index Graph - here

  US could be heading for recession - "Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany." - more here

  Slave labor persists in Amazon charcoal works -ICC - "Around 12 percent of Brazil's Amazon charcoal works still uses slave labor despite a major crackdown since 2004, the regional industry watchdog, Citizens' Coal Institute (ICC), said." - more here

  London Metal Exchange is closed today for Summer Bank Holiday.

  Yieh reports China’s Taiyuan Iron & Steel Group (Tisco) is raising the price of its SUS304J1, 304/304L, 321 and 301 CRC and plate by RMB800/ton for September contracts. It is also reporting Japanese Nippon Steel will cut back their output by 40% in September, while announcing price cuts on their stainless steel prices by 95,000 yen/mt from last month on stainless steel plate and sheet. Dow Jones is reporting that Hyundai Steel Co., Japan's second largest steelmaker, says it will "suspend production of stainless steel at its Incheon plant from Aug. 27-31 due to a sharp decline in orders."

  Chinese steel imports short in Europe - "The prices of flat products from China to southern EU are going to be increased from September due to supply decrease from China." - more here

  In a weekly poll of Chinese metals analysts for the Shanghai Nonferrous Metals, 32 responded. Of those, 5 (15%) expect the price of nickel to rise this week, 8 (25%) feel the price will basically stay the same, and 19 (59%) expect the price to fall this week.


2006 Steel Production from European Confederation of Iron and Steel Industries (EUROFER)



  U.S. Steel to Acquire Stelco - "U.S. Steel Corp. has agreed to pay roughly $1.1 billion in cash for Canadian steelmaker Stelco Inc. in a deal to strengthen its position as a supplier of flat-rolled steel products in North America." - more here

  Coking coal prices likely to rebound in 2008 - "Bloomberg reported that Coal used by steel makers might snap a three year slump in 2008 because of a decline in exports from China." - more here

  Machine North: imminent green light - "Joined together last weekend in Toronto, the leaders of the SMSP and Xstrata-Nickel (ex-Falconbridge) examined with the magnifying glass the ultimate grinding of the project of factory of North. Response in September." - poorly translated article here

  Base metals price bounce-back anticipated and gold demand positive - "The strength of Chinese industrial metals demand, coupled with declining exports, bodes well for a bounce back in base metal prices. Lead, tin and zinc have greatest upside potential." - more here

  Shanghai Jinchuan nickel closed at 257000-258000 RMB/t, minus 1,500.

Saturday, Sunday August 25, 26

  Mining banned after monks protest in sacred mountains - "Chinese authorities have banned mining on mountains sacred to Buddhists after monks protested that blasting was damaging ancient temples." - more here

  Crude steel China output in the first seven months of 2007 rose by 18.5% on year to 278.9 million tons.

  India becomes BHP's new growth zone - "BHP Billiton Ltd, the world's biggest mining company, said growth in sales to India is outpacing gains in China as the southern Asian nation requires more coal and nickel to meet rising demand." - more here

  Week in Review (different source used than daily updates) - Coming off the prior week that saw nickel gain 2%, many began aggressively looking for evidence that the cycle of demand destruction may be coming to an end. The clues would continue to mount throughout the week. Markets opened Monday at $11.87/lb, rose to $12.25/lb, fell to $11.69/lb (the low of the week), and ended at $11.88/lb. Tuesday would see a three day buying binge begin. Nickel opened Tuesday at $11.88/lb, slip to $11.75/lb before rising to $12.43/lb, and ending at $12.34/lb. Wednesday, bolstered by an enthusiastic report from BHP, markets opened at $12.29/lb, rose to $12.83/lb, after selling at a low of $12.24/lb, and ended the day at $12.81/lb. On Thursday, 3 month nickel opened at $12.84/lb, rose to $13.40/lb (the high for the week), fell to $12.61/lb, and closed at $12.77/lb. Friday, nickel opened at $12.67/lb, rose to $12.80/lb, fell to $12.27/lb, and ended the weeks trading at $12.77/lb. In a week that experienced a trading range of over $3700/tonne, after the dust had finally settled, nickel ended 8.3% higher than it did last Friday.   

  China's metals demand to grow even if US slows down: analysts - "Long-term believers in the China "stronger for longer" resource boom story wore smug smiles of satisfaction on Wednesday when BHP Billiton CEO Chip Goodyear said demand from China and India would more than cancel out any likely contraction in the US economy." - more here

  Do freight rates tell the true story? - "The focus has been on the credit crunch but the Baltic Index may give a better picture of the state of the world economy, writes Ambrose Evans-Pritchard" - more here

  Institute of Scrap Recycling Industries, Inc. Market Report - pdf here

  National Mining Association. Mining Weekly - pdf here

  Recycling International Market Analysis - pdf here (few weeks old)

  Value-adding is slowing India down, says BHP Value-adding is slowing India down, says BHP- "BHP Billiton yesterday issued a wake-up call to India's provincial authorities, warning that a preoccupation with linking mines to downstream steel mills and aluminium plant is holding back mine developments in the country with leases too small to be economic." - more here

  Regulators, mining firms to implement reportorial code - "Regulators and mining groups are set to implement standards for public reporting of mineral assets to avoid misleading investors and boost confidence in the local industry." - more here

  No country cousins: BHP as big as a nation - "When the Texan boss of Melbourne-based BHP Billiton, Charles "Chip" Goodyear, travels the world, there is no waving to dignitaries as he gets off the plane, no military guard to inspect and no parliamentary speech in his coat pocket. But he still brings with him the clout of a small country." - article here

  Industrial Metals, Miners Feel Squeeze - "While the recent heavy selling in industrial metals and mining stocks has slowed, volatility in the sector is expected to continue as investors' appetite for risk slowly returns and a troubled credit market shakes itself out." - more here

  Smog smothers Japan, experts point to China - "Smog is menacing Japanese cities for the first time in 30 years and cropping up in rural areas for the first time ever, alarming the government and prompting experts to point the finger at neighboring China." - more here

 This is an awesome view of a sunset over Hong Kong. Place your mouse at the top of the image, and then slowly move it down. The internet continues to amaze....image here 
Friday, August 24

  Today's official LME nickel closing prices - cash - $12.07/lb - 3 months buyer - $12.25/lb (94.8% higher than 1/1/07). Baltic Dry Index gained another 40 points to register 7,277. Inventories gained again today, but returned to giving clues of a turn-around. Two warehouses received and three shipped. Rotterdam, Netherlands, received 96 tonnes and shipped 48. Singapore received 60 tonnes and shipped 18. And Busan, South Korea, shipped 42 tonnes. Cancelled warrants returned to the 4 percentile range yesterday, and hung on for today's figures. For the week, LME nickel inventory grew by 822 tonnes, compared to 1500 tonnes last week. LME warehouses recorded 8 outbound shipments last week, while this week there were 13. Three month nickel ended the day and week at $12.56/lb ($27,700/tonne). (Dow Jones - pending) A reminder that LME markets are closed Monday. Have a safe and restful weekend!

  ScotiaBank Commodity Index - pdf here

  National Australia Bank - Base Metals Outlook - August 2007 - pdf here (about a week old)

  The (rising) cost of success - "HAS THE WORLD’S mining industry changed forever? Most analysts are prepared to say it has, though with some guarded qualifications." - more here

  Green group scores Atienza for opposing mining ban - "Environment Secretary Joselito Atienza is setting a “dangerous anti-environment precedent” by attempting to talk Puerto Princesa City Mayor Edward Hagedorn out of his plan to ban mining in the city, an environmental group said Friday." - more here

  Indications at 7:50 am CST show 3 month nickel selling down by $.57/lb . (Bloomberg - more)

  London Metal Exchange will be closed Monday, August 27th, for Summer Bank Holiday.

  (Thank you to a reader who sent this from China - very interesting) Sources of Chrome Ore Imports to China Jan thru June 2007 - pdf here

  CVRD, Baosteel to Build Steel Slab Plant - "Brazilian miner Companhia Vale do Rio Doce and China's Baosteel Group Corp. have agreed on a joint venture to build a steel slab plant in Brazil, according to CVRD." - more here

  India is the new China for BHP - "BHP Billiton Ltd./Plc, the world's biggest mining company, said it would seek to grow aggressively in India where volume growth is outstripping China, its other boom market." - more here and BHP says Indian growth outpacing China - "Major miner BHP Billiton Ltd says the rate of its sales growth to India has outpaced that of neighbour China, but the company has ruled out marketing uranium to the sub continent." - more here

  Updated Study Alleges Unfair Trade Advantages Conferred on China's Stainless Steel Producers - "International trading rules recognize that foreign governments subsidize industries when they provide financial assistance to benefit the production, manufacture or exportation of goods." - more here  study here in pdf

  Iron ore price negotiations next year, the situation grim - " The 2008 annual iron ore price negotiation is opened, but various signs show that China's iron and steel enterprises will face a severe situation." - poorly translated article here

  Global DRI production in July 2007 - "International Iron and Steel Institute have released the production figures for direct reduced iron for the month of July 2007. The global production of DRI in June 2007 was 4.200 million tonne almost flat YoY." - more here

  Inflation and the Base Metals - "As explained in the past, when it comes to the "commodity supercycle" we are definitely skeptics." - article here

  JFE Steel raises prices of stainless steel 400 series - "Japanese JFE Steel announced to increase price on stainless steel 400 series by ?20,000/mt." - more here

  Minara predicts nickel price volatility - "Minara Resources Ltd predicts volatility in the nickel market even though the fundamentals of this market remain sound, and posted a record interim profit." - more here

  "Goes" into 1.7 tons of nickel imports - "Shenzhen (Reporter Liu tat correspondent reported tenth of photography), the day before yesterday, the Shenzhen Special Zone checkpoints joint fight against smuggling and the Shenzhen Municipal Office in Shenzhen Luohu district Lo Wu Village destroyed a nickel imports hiding dens and seized the smuggled 1.7 tons of nickel imports, while imports of cigarettes seized 316, with a total value of nearly case 500,000 yuan." - poorly translated article here (there went 1/2 of the first 6 month deficit they reported yesterday)

  Today's beginning nickel inventory - plus 48 tons = 21,126 tonnes (4.06% - 858 tonnes cancelled warrants/ 20,268 net stock level) Shanghai Jinchuan nickel closed at 258000-260000 RMB/t, plus 3,500.
Thursday, August 23

  Today's official LME nickel closing prices - cash - $12.74/lb - 3 months buyer - $12.81/lb (103.7% higher than 1/1/06) Baltic Dry Index gained 26 points to read 7,237. Inventories gained big overnight. Inbound, Busan, South Korea, received 240 tonnes, Helsingborg, Sweden, received 300 tonnes, and Rotterdam, Netherlands, received 96 tonnes. Outbound, Rotterdam shipped 24 tonnes, and that was it. Today, was a reminder that the turnaround may not be as clear as the evidence of the last few days had implied. Markets started out strong for a third day this morning, but by mid afternoon, the enthusiasm fizzled and profit takers jumped in. At its highest point today, the price of 3 month nickel came within $500 of $30,000/tonne, and just shy of the 30 day moving average of $29,979. Cash and 15 month nickel both remained up on the day. But 3 month nickel ended the trading session at $12.61/lb ($27,800/tonne) (Dow Jones - more)

Still have not found the cancelled warrants figures for today, so it will be tomorrow morning when LME officially posts them, that we can catch up.

  TD Bank Weekly Commodity Price Report - pdf here

  (thanks to a reader in Indonesia who keeps us advised of local mining news and assists with translation) Merrill Lynch - Indonesia’s new mining law, due out by end-2007, will stipulate a ban on ore exports, according to Member of Parliament Airlangga Hartanto, who was involved in the ratification. We think ANTM’s existing contracts will be honored but renewal may not be possible. With 80% of ANTM’s ore contracts expiring in 2008, our gross profit forecast for that year is in jeopardy as 20% of it is based on ore exports."

  Sherritt, partners to invest $3.3-billion in Ambatovy - " Japanese trading company Sumitomo Corp. and three partners, including two major Canadian companies, plan to invest about $3.3-billion (U.S.) to develop a nickel project in Madagascar amid increasing worldwide demand for nonferrous metals, the company said Thursday." - more here

  New site for those interested in NAFTA steel trade figures - North American Steel Trade Committee - here

  Indications at 7:50 am CST show 3 month nickel selling up by $.02/lb , much lower than earlier. Cash nickel shows selling up by nearly $2,000/tonne today. None our numerous sources are showing cancelled warrants for nickel this morning, so we will update when we have. (Bloomberg - more)

  China's nickel ore importers suffer huge losses as prices plummet - "China's nickel ore imports skyrocketed in July this year despite shrinking demand, which as led to a significant drop in domestic prices. Domestic nickel ore importers are currently locked into long-term nickel ore purchase contracts signed earlier in the year when nickel ore prices were high, and as such are now forced to sell at a loss in the domestic market, industry analysts told Interfax today." - more here

  Nickel, Lead Push Complex Up; Equities Support - "Gains in lead and nickel are leading the London Metals Exchange base metals higher Thursday, with prices supported by rallies in the stock markets overnight, and market participants said the metals look ripe for a short-term spike." - more here

  Metal prices to decline over 12-18 months as supply increases - Fitch - "Fitch Ratings said it expects metal prices to decline with increased supply over the next 12-18 months but remain higher than long-term averages." - more here

  Funds find a haven in commodities - "Mohammed Syed, the chief executive of Axiom Funds, the world's best-performing investor in commodity hedge funds this year, says the stock market rout bolsters his view that grain, mining and oil beat equity." - more here

  Standard Bank: Weekly Commodity Research - pdf here

  China and India drive global dig - "China and India’s extraordinary appetite for raw materials is prompting the world’s mining companies to put their pith helmets back on. To meet the demand, they are not just expanding extraction, but getting back into exploration." - more here

   Chinese market situation likely to weaken iron ore price negotiation - "It is reported that iron ore concentrate prices in the North China have rocketed up over the recent month, with the past two weeks seeing rises every single day, concerted by purchase price of the steel makers. Iron ore prices in North China went straight up by CNY 135 per tonne (USD 18) on average within one month a 16.5% gain." - more here

  China, India growth to offset US woes - "Strong fundamental demand for raw materials out of China and India would eclipse any drop in US demand caused by the bad debt crisis, BHP Billiton chief executive Chip Goodyear told investors yesterday." - more here

  Sumitomo, Partners Raise Spending on Ambatovy Nickel - "Sumitomo Corp., Japan's third-biggest trading company, and its partners will spend about 32 percent more than planned to develop a nickel mine in Madagascar as prices for equipment, engineering, labor and fuel rise." - more here

  Stainless steel mills in South Korea continue to cut output - "After Posco decreased the output of 300 series stainless steel in August, the company is expected to cut production in September." - more here

  Courtesy/copyright Dow Jones - "LME nickel is in more positive territory but its still sluggish fundamentals will provide reigns for its current gains, says a London-based broker. A firmer tone to the base metals amid relative calm in the broader financial complex is adding temporary support, he notes. Adds that rising inventories and slowing demand from the stainless sector will weigh on prices going forward."

  According to Chinese media reports, ThyssenKrupp asked the European Commission to launch an anti-dumping investigation of stainless steel products against China on the 14th.

  China’s boom gives cautious miners new air of confidence - "The boom-and-bust cycle is so entrenched in the mining sector that executives have been wary of committing to new investment, despite five years of surging commodity prices." - more here

  Xstrata to double molybdenum capacity at Chilean smelter - "Xstrata Copper is studying plans to double the treatment capacity for molybdenum concentrates at its Altonorte smelter in northern Chile, executives said Wednesday." - more here

  Today's beginning nickel inventory - plus 612 tons = 21,078 tonnes (4.41% - 930 tonnes cancelled warrants/ 20,148 net stock level) Shanghai Jinchuan nickel closed at 254000-257000RMB/t, plus 9,500.

Wednesday, August 22

  Today's official LME nickel closing prices - cash - $12.60/lb - 3 months buyer - $12.70/lb (101% higher than 1/1/06). The Baltic Dry Index slipped again today, falling 32 points to 7,211. LME inventories were up, but just barely. The warehouse at Rotterdam, Netherlands, received another 138 tonnes of nickel, while they shipped 72 tonnes, as did Busan, South Korea, who shipped 54 tonnes. There is an old saying "Figures lie and liars figure". Today is one of those days that number crunchers love. We have listed below the import figures for China for July and year to date, released by China Customs this morning. The bullish news is that the country's imports of refined nickel continued to grow. The bearish news, and its bearish, is that imports of nickel ore continue to soar at a staggering rate. Pig nickel is definitely getting a larger piece of the pie. The bulls were happy with what they saw in BHP results today, while bears took note of the fact the profits were high primarily because of inflated nickel prices during the 2nd quarter. And the coup de grace today, was the report by the World Bureau of Metal Statistics that world nickel demand/supply remained in the deficit for the first 6 months of 2007, by 2,600 tonnes. We aren't your Harvard educated type's, so we don't claim to know their secret formula to arrive at these numbers. But we would like to note than on January 2nd, the first business day of the year, nickel inventories stored in LME warehouses amounted to 6,594 tonnes. On June 30th, they had grown to 10,458 tonnes. Deficit? You'll have to make it work, because we can't.

We said we would be surprised if nickel ended as high as it indicated this morning... and we are. We expected prices to hit bottom, but not to bounce so high, so fast. Either traders are betting inventories have maxed out and the market is getting interesting again, or we are witnessing a spurt of enthusiasm that will fizzle at the first hint of another large gain in inventories. For the third day in a row, the clues left by the inventory figures, hint at a potential turn around in the market. Another bullish day for nickel, which ended at $12.77/lb ($28,150/tonne), up over $2,000/tonne in as many days. (Dow Jones - more) (Reuters - more)

  (disclaimer - subject to correction - our Chinese translation stinks - the totals should be right, the growth percentiles may be attached to wrong figure) China refined nickel imports for July rose 20.2% in July (1,167 tonnes) and 36.6% for January thru July 2007 (62,527 tonnes) compared to the same period last year. Primary sources shown are Canada, Australia, Russia, and Norway. Imports of nickel ore rose 827.1% (2,277,956 tonnes) over last July, and for the year, have grown by 783.5% (9,299,963 tonnes). Primary sources are shown as the Philippines, Indonesia, and New Caledonia.   

  International Stainless Steel Forum releases 2006 figures - Foreign Trade Flow Stainless Steel Products in 2006 Exports here Foreign Trade Flow Stainless Steel Scrap in 2006 here

  Nickel Institute new articles

  • Japanese Club Promotes Stainless Steel Water Pipes - "There are many advantages of using stainless steel water pipes in countries where water resources are scarce and in countries such as Japan where water leakage is a problem." - more here
  • Big Plans Take Off on the Arabian Gulf - "When it is completed in 2009, the new international airport in Doha, Qatar will be the first airport designed specifically to accommodate the Airbus A380 super jumbo." - more here
  • Processing Perfect Poultry - "Stainless steels enable food processors to maintain hygienic conditions in long-lived equipment" - more here


  Copyright/courtesy China Business Daily News - "Shanxi Taigang Stainless Steel Co., Ltd., a listed subsidiary of Taiyuan Iron & Steel Group, reports a 299.10% year-on-year growth in the net profits in the first half of 2007, reaching CNY 2.74 billion, or CNY 0.7924 per share. The interim report says that its operational revenue in H1 hit CNY 40.1 billion, soaring 173.75% from a year earlier, and the overall gross profit margin was 13.64%."

  Copyright/courtesy Dow Jones - "LME nickel is seen averaging $28,300/ton  ($12.84/lb) in 3Q and and $30,000/ton ($13.61/lb) in 4Q, says Standard Chartered. Notes the recent selloff has been overdone and that nickel demand will pick up as destocking by the stainless steel industry comes to an end. There is already strong evidence that nickel pig iron producers have made significant cutbacks, which will help tighten supplies, Standard Chartered adds. Sees nickel averaging $27,000/ton ($12.25/lb) in '08.

  Copyright/courtesy AFX Financial - "Nickel consumption increased by 11% to 744,000 tonnes in the first six months of 2007, compared with the same period last year, leaving the market 2,600 tonnes in deficit, said the World Bureau of Metals Statistics (WBMS). Mine production for the same period increased by 8% to 760,200 tonnes, while refined production was 11.8% higher, stemming mainly from China, Finland and Canada."

  WMC makes BHP different - "BHP Billiton's profit growth slowed in the June half-year. But it was stopped from 'going down to Rio' by the fabulous profits on nickel." - more here

  BHP Says Credit Squeeze Won't Reduce Commodity Demand (Update4) - "BHP Billiton Ltd., the world's biggest mining company, said a global credit squeeze is unlikely to derail the five-year rally in commodity prices being driven by the emerging economies of China and India." - article here

  Hagedorn declares ‘total war’ on mining - "Shocked by the overwhelming number of mining applications covering almost every square inch of this 254,000-hectare newly-created city, Mayor Edward S. Hagedorn declared today a total ban on large-scale mining in this city." - more here

  Indications at 7:50 am CST show 3 month nickel selling up by $.40/lb . We'll be surprised if this ends this high. Today's news is a mixed bag of bearish and bullish news, and traders are forcing price up too quickly.  (Bloomberg - more) (Reuters - more)

  Global Nickel Mkt In 2,600 Ton Deficit In Jan-Jun 07 - WBMS - "The global nickel market recorded a deficit of 2,600 metric tons in the first six months of 2007, with reported stocks 5,700 tons lower, the World Bureau of Metal Statistics said Wednesday." - more here part 2

  Preliminary - Nickel imports to China rose 20% YOY in July - more later

  Copyright/courtesy Dow Jones Newswire - "Chinese customs data is bearish for LME nickel, says JP Morgan's Michael Jansen. He notes imports of nickel ore are a clear record at over 2 million metric tons, "implying that nickel in the pig iron sector remained broadly healthy in July and that talk of production cuts from this alternative source of nickel for stainless steel producers may remain a story for August/September." "Triland Metals notes nickel's rally surprised many in market, since other metals mostly weakened in Tuesday's session; technically, took out 10-day moving average, needs to break resistance at $27,500 to maintain upside momentum."

  BHP News

  • BHP Billiton will up 2008 nickel, copper output - "BHP BILLITON forecasts that its production of nickel, copper, iron ore and oil will show "significant volume growth" in 2008 after a year in which the leading commodity company posted record profits and production." - more here
  • BHP Billiton says outlook positive despite US debt crisis - "BHP Billiton is positive about the outlook for the diversified resources company despite the current sub-prime crisis in the United States as the industrialisation and urbanisation in India and China will continue to grow demand for its products." - more here
  • BHP profits as commodity demand soars - "BHP, the world's biggest miner, has reported a 19% jump in second-half earnings on surging sales of copper, iron ore and coal, and flagged future growth to strong Asian demand." - more here


  Is the fat lady still singing? - "Mining stocks have taken a severe beating during the recent equity markets sell off, falling, on average, by nearly one third from record highs, most of which were posted in the past few months." - more here

  EU Steel Prices Holding Up At Record Levels Despite Increased Imports -"Last year represented the onset of greater global competition as China became a substantial net exporter of steel." - more here

  PNG Study: Ramu Nickel Mine 'High Risk" - "An environmental impact study on Ramu nickel mine has described the project as a "high-risk operation with severe impacts on the environment and community." - more here

  Today's beginning nickel inventory - plus 12 tons = 20,466 tonnes (3.40% - 696 tonnes cancelled warrants/ 19,770 net stock level) Shanghai Jinchuan nickel closed at 245000-247000 RMB/t, plus 4,500.

Tuesday, August 21

  Today's official LME nickel closing prices - cash - $11.86/lb - 3 months buyer - $11.97/lb (90.4% higher than 1/1/07). Baltic Dry Index slipped again today, dropping 46 points to 7,243. So China raises interest rates for the 4th time this year (usually bearish), nickel inventories grew (almost always bearish), stock exchanges are in a wait and see attitude about what further repercussions, if any, the sub-prime problem will cause (potentially bearish), but nickel prices gained today. How come? Well, just saying the LME inventory levels rose again, doesn't tell a complete story. Here are the daily numbers. Rotterdam, Netherlands, received 366 tonnes. On the outbound, Rotterdam shipped 48 tonnes, Singapore shipped 24 tonnes, and Busan, South Korea, shipped 102 tonnes. So what? #1 In the last two days, nickel inventories have grown by 150 tonnes gross. But after considering cancelled warrants, which almost rose to 4% today, they have actually fallen by 24 tonnes. #2 Last week, during all 5 trading days, LME warehouses received 1896 tonnes for an average of 380 tonnes per day. This week, they have received 462 tonnes in 2 days, for an average of 231 tonnes per day. #3 Last week, over a 5 day period, 8 outbound shipments were made, totalling 372 tonnes. In the first two days of this week, 7 outbound shipments have already taken 300 tonnes. Two weeks ago, 12 shipments totalling 480 tonnes shipped. Have we turned a corner? Like yesterday, we aren't ready to say that yet, but the clues are starting to hint that change may be in the wind. The London markets apparently think something is up, as 3 month nickel ended the trading day at $12.34/lb   ($27,195/tonne) (Dow Jones - more)

Something else worth watching this week. Xstrata and SMSP meet Thursday to discuss the future of Koniambo. This is an interesting situation, from a few different perspectives. First, if Xstrata backs out, Eramet is chomping at the bit to get the mining rights to this area back. They were forced to relinquish it, by the French government, to SMSP years ago, and have been trying to get their hands on it ever since. Second, with news that Xstrata is doubling the size of their Raglan mine, it will be curious to see if they foresee future nickel demand justifying the potentially $3 billion dollar investment. Falconbridge wanted Koniambo bad... Xstrata has not sent the same signals thus far. And thirdly, the decision could send some signals to the nickel market as a whole. If they go, then obviously Xstrata is betting all the new mines coming online over the next few years, will not be enough to meet future demand requirements. If they back off, or continue to send mixed signals, it could imply that worldwide demand either doesn't justify construction of another mega-mine yet, or that Xstrata has better use for the required investment. Either way, it will be interesting to watch if any decision is announced. Speaking of new mines coming, the report below by Commonwealth Research has a nice list of nickel projects under construction.     

  South Korean firms sign Madagascar power plant deal - "A consortium of three South Korean firms said Tuesday it has entered into a US$180 million deal to build a power plant in Madagascar." - more here

  China raises interest rates 4th time in 2007 to curb inflation - "China's central bank raised the benchmark interest rates on Tuesday for the fourth time this year in an effort to prevent the economy from overheating and curb accelerating inflation." - more here

  Russian mining giant comes to Botswana - "Russia's leading mining and metallurgical company Norilsk Nickel has bought Tati Nickel Mine, the company's chief executive Mr Peter Breese has announced." - more here

  2005 Incomes, on Average, Still Below 2000 Peak - "Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year that they had to make ends meet with less money than at the peak of the last economic expansion, new government data shows." - more here

  Indications at 7:50 am CST show 3 month nickel selling up by $.05/lb .  (Bloomberg - more) (Reuters - more) (Forbes - more)

  (comment - would you believe $9/lb is now the reported break-even point for pig nickel production?)  The red soil nickel ore price falls, China contains the nickel pig iron to restore the production -  (quote from article) "So long as the nickel price maintains above 150,000 Yuan/tons (19,800 US dollars/tons), contains the nickel pig iron enterprise to be able to make money. " - poorly translated article here

  Rand Merchant Bank - Weekly Base Metal Report - pdf here

  Behre Dolbear - Global Mining News - pdf here

  Haywood Securities - Metals & Mining Weekly - pdf here

  Metal prices still strong, RBC says - "After the meltdown in metals and mining stocks this month, analysts are questioning whether the bleeding has finally stopped." - more here

  Global crude steel production in July up by 5.3% YoY - "International Iron and Steel Institute reported that the total crude steel production in July 2007 for the 67 countries is 109.9 million tonnes up by 5.3% YoY as compared to July 2006." - more here

  Copyright/courtesy Dow Jones Newswire - "Further slippage in nickel demand could "easily" see the negative aura that surrounded the base metals throughout most of last week reemerge, says JP Morgan analyst Michael Jansen. Adds fundamentals imply support on dips but chances of a recovery in prices and a retest of overhead resistance levels depends significantly on investor sentiment improving."

  Output Of Stainless Steel Products In Japan For June 2007 Had Slight Increase - "According to the steel statistics released on the 10th of August by the Ministry of Economy, Trade and Industry, the quantities of stainless steel products ( hot-rolled products ) produced at stainless steel mills of Japan in June of 2007 were as per the table attached hereto." - more here

  BHP Billiton, Rio Tinto bullish on Chinese demand for iron ore - "Officials from Anglo-Australian mining giants BHP Billiton (BHP.AU) and Rio Tinto (RIO.AU) said Monday that they see no imminent slowdown in China's rampant demand for iron ore." - more here

  Alvaro Vargas Llosa: Latin American firms becoming true global players - "Now if only the politicians could get their act together" - more here

  Today's beginning nickel inventory - plus 192 tons = 20,454 tonnes (3.99% - 816 tonnes cancelled warrants/ 19,638 net stock level) Shanghai Jinchuan nickel closed at 241000-242000 RMB/t, no change.

Monday, August 20 (On this day in 1913, Harry Brearley cast the first stainless steel in England)

  Today's official LME nickel closing prices - cash - $11.85/lb - 3 months buyer - $11.93/lb (89.7% higher than 1/1/07). Baltic Dry Index slipped again today, dropping 24 points to register 7,289. LME nickel inventories also slipped. Only Rotterdam, Netherlands was on the receiving end, gaining 96 tonnes. Outbound, Baltimore, U.S., shipped 24 tonnes, Busan, South Korea, shipped 60 tonnes, Singapore shipped 12 tonnes, and Rotterdam shipped 42 tonnes. Any drop in inventories will gain attention these days, but the fact 4 of the 5 recorded shipments were outbound, makes us think buyers might, and we say that with much hesitation, be getting active again. We read this weekend in Chinese media, that manganese buying was picking up again in China, which may also provide another clue. We will have to wait to see if this was another fluke, or the beginning of a re-established buying trend. Two things will give us the clues to this. First, inventory gains will become less obvious, in shipment size and arrival regularity, and outbound activity should pick up. The recent trend has been quite the opposite. Although nickel inventory gains last week were about 38% of what they were the week before, 4% more than two weeks prior. Not sure how much cancelled warrants, which remain flat, will mean in the future, as the LME rule change that sent nickel into its nose dive, may cloud its qualities as a market barometer. Hurricane Dean is getting meaner, and while oil suppliers are breathing easier, its route now puts it on track to come close to some major Mexican base metal mines, nickel excluded. This news helped keep all base metal prices, less aluminum, up today. Nickel started out in the green this morning, but any carry over enthusiasm from Friday dwindled by mid-afternoon, and the price ended up a few pennies per pound. 3 month nickel ended the day at $11.83/lb ($26,100/tonne) (Dow Jones - more) Quiet day as traders watch to see which way the sub-prime shaken world markets are going to turn.

  The Fed offers commodities some support - "On Friday afternoon it came as a surprise that the US central bank (the Fed) chose top lower its discount rate from 6.25% to 5.75%." - more here with pdf report at bottom

  Xstrata, SMSP jv to meet this week to review Koniambo costing - "Koniambo Nickel, a joint venture between Anglo-Swiss mining company Xstrata PLC and South Pacific mining company SMSP, said it will meet Thursday in Toronto to review a cost plan for the construction of a nickel mine at the Koniambo project." - more here

  Video's - how to get eight batteries out of a single 12 volt battery (and other hacks) - video's here

  National ammo shortage hits local law enforcement - "When the King County Sheriff's Office canceled a recent rifle-training class for their deputies, it blamed a national ammunition shortage." - more here

  OneSteel Ltd has purchased Fagersta Group, Australia's 4th largest stainless steel distributor. (more here)

  Indications at 7:50 am CST show 3 month nickel selling up by $.14/lb. World markets reacted to Friday's U.S. market optimism, by going green today. A second drop in nickel inventories within a week, gave traders an early morning morale boost. (Bloomberg - more) And in China, Shanghai Nonferrous Metals reports #1 Jinchuan nickel ended the day at 241,500 down 1500.

  Weekly poll of metal analysts for Shanghai Nonferrous Metals - of 29 responding - only 6 (20%) expected the price of nickel to rise this week, 10 (34%) felt the price should stay about the same, while 13 (44%) expect the price to fall.  

  Quantam Direct - Weekly Commodity Update - pdf here

  Copyright/courtesy Dow Jones - "LME nickel remains vulnerable to downside moves amid rising stocks and the threat of further market instability, says Triland's Michael Khosrowpour. Short-term direction will look to take cue from the rest of the complex, he notes."

  US imports of electrical and stainless steel plate up - "US electrical steel imports in May was around 47,000 tons, which has increased by almost 100 percent compared to the same period of last year." - more here

  March of the mines sees islanders facing loss of ancestral homeland: President's 'war on poverty' has multinationals eyeing mineral and metal reserves - "For farmers like Ramil Baldo, making a living has never been easy. Venturing out from his bamboo shack, which lacks electricity, running water and sanitation, he harvests whatever he can." - more here

  Today's beginning nickel inventory - minus 42 tons = 20,262 tonnes (3.29% - 666 tonnes cancelled warrants/ 19,596 net stock level)
Weekend Review, Saturday, Sunday, August 18-19

  Norilsk to Invest Big In Africa - "Norilsk Nickel will spend over 4.4 billion rands ($588.6 million) on two projects in Botswana and South Africa, it said Friday." - more here

  BHP casts eye over cheap targets - "WHILE mining investors have been left licking their wounds and chanting out the China growth story to make themselves feel better, BHP Billiton's chief executive officer-elect, Marius Kloppers, has probably been rubbing his hands together in quiet glee at the share price falls that have suddenly made acquisition targets so much cheaper." - more here

  Sub Prime Impact and other Economic Opinions
  • US credit crunch 'unbelievable' - Swiss central bank chief - "Swiss central bank chief Jean-Pierre Roth sharply criticised the US economic system in an interview published Sunday, after the home loans crisis that caused turmoil on world financial markets." - more here
  • China Central Bank Adviser: 'Optimistic' About Econ Situation - "China central bank adviser Fan Gang said Sunday he takes an "optimistic" view of the current situation in the domestic economy and expected the pace of economic growth shouldn't speed up much more going forward." - more here
  • Swiss SNB Warns Not To Underestimate Market Turbulence-Report - "Swiss National Bank Vice President Philipp Hildebrand warned not to underestimate the possible consequences of current financial market turbulence on economic growth, Swiss daily Tages-Anzeiger reported Saturday." - more here
  • Market turmoil 'set to continue' - "Global stock market turmoil will continue for some time, analysts have said, and may force the Federal Reserve to cut US interest rates imminently." - more here
  • Markets' Week of Living Dangerously - "The Federal Reserve made a dramatic move to shore up the US economy as it was rocked by financial turbulence, but Britain's chief banker is refusing, for now, to bail out the reckless." - article here
  • The Panic of 2007 - "End of the World or Muddle Through? This week I try to explain in simple terms the very complicated story of how we went from some bad mortgage loan practices in the US to the point of world credit markets freezing up." - more here


  Week In Review - (using different source than for daily updates) If you just looked at the weeks beginning nickel price of $12.09/lb and its end at $11.86/lb, you might think the week was a snoozer. But the price of nickel was a small piece of a much more complex puzzle of base metal extremes. Ask anyone that owned stock in a mining company, and they would probably tell you this is a week they would just as soon forget. Then again, those with the good fortune of selling and buying at that particular right moment, would tell you this was a nail biter, but very profitable week. On Monday, 3 month nickel opened at $12.09/lb, fell to $11.88/lb, rose to $12.47/lb, where it ended the day. On Tuesday, after LME inventories registered a decline, nickel opened at $12.45/lb, rose to $12.93/lb, fell to $12.13/lb, and ended at $12.15/lb. On Wednesday, the market opened at $12.27/lb, rose to $12.36/lb, fell to $11.77/lb, and ended at $12.04/lb. On Thursday, panic began to rear its ugly little head in world stock markets. Markets opened at $12.00/lb, rose to $12.02/lb, fell to $11.29/lb (below $25,000/tonne by $100), and ended at $11.39/lb. On Friday, Fed chairman Ben Bernanke played the white knight by surprising U.S. markets with news the Fed had cut discount rates. Nickel was already selling in the plus, and the U.S. news helped reinforce early morning optimism. Markets opened at $11.39/lb, rose to $11.95/lb, fell to $11.39/lb, and ended the week at $11.86/lb. For the week, three month nickel ended up by 2% over last weeks close, down 27.3% for the year, and 98% lower than its record high in May.   

  Scotia Capital China Update - posted on investors blog here (excerpt - "We also upgrade our call on nickel to “neutral” from “cautious,” as the recent sell-off has made a lot of high-cost unconventional supply, especially low-grade ore from the Philippines, uneconomical. ? With the above changes, we are now bullish on coking coal, iron ore, copper, zinc, aluminum, oil, and hardwood pulp sectors. We are neutral on grains, ethylene, potash, methanol, and nickel. We are cautious on steel, urea, and paper products on a relative basis from a China perspective.")

  Visa Steel, Baosteel to set up ferrochrome unit - "Kolkata-based Visa Steel Ltd, an emerging integrated special and stainless steel player, today entered into a joint venture with Baosteel Trading Co Ltd of China and a group company Visa Comtrade AG, Switzerland, for setting up a 100,000-tonnes-per-annum ferrochrome plant in Orissa." -  article here

  Quote from Credit Suisse Commodities Research Weekly - "China should start to import more base metals again toward the end of Q3, when the de-stocking cycle is likely to be completed."

  National Mining Association - Mining Week - pdf here

  Steel Buyers Forum - Monthly price survey - pdf here

  This land is mined - "Amay Bongkas has heard the stories many times before. Outsiders, some with guns and chainsaws, have been roaming their ancestral lands in the Anipahan range of southern Palawan, drilling strange-looking holes on the ground at least a square meter wide." - article here

  Behr Dolbear Global Mining News - pdf here

Friday, August 17

  Today's official LME nickel closing prices - cash - $11.56/lb - 3 months buyer -$11.66/lb (85.4% higher than 1/1/06). Baltic Dry Index backtracked 6 points to read 7,313. LME nickel inventory movements were limited to one warehouse yesterday. Rotterdam, Netherlands, shipped 48 tonnes, and received 600 tonnes. Nickel started out positive this morning, as did all LME traded base metals, after being thrashed yesterday. And except for tin, they all remained positive thru the day. Bernanke gave the stock markets a boost this morning, by unexpectedly cutting discount rates. While the initial shock euphoria has since worn down, the Dow remains positive. It's been a brutal week for those holding stock in metals related industries, non more so than holders of mining company stocks. Stainless steel producers, while delighted that nickel prices are down, are still waiting for some signal that a floor will be established, before they will get back into the game. Nickel producers are watching the price slump cut directly into their earnings, and share the hope a floor will be established also. This is starting to look like a tag team wrestling match. Nickel producers are taking a beating from nickel traders, but their partners, the stainless steel producers, won't take the relief tag. They just stand behind the rope, yawning and muttering "so you thought $23.50/lb was funny, eh!" You know it's a different kind of market when at $12/lb, a stainless producer, who was paying $3/lb just 5 years ago, writes us saying "It's nice to be in the driver's seat again." 3 month nickel ended the day and week at $11.79/lb ($26,000/tonne) (Dow Jones - more)

Here is a humorous video from Minyanville here. We hope you all have a safe and VERY relaxing weekend!

  Base metals bounce after Fed rate cut - "Industrial metals prices bounced on Friday in volatile trading after heavy losses in the previous session caused by a squeeze in credit markets." - more here

  Specialty Metals Industry Group Releases Four Month Market Data - pdf here

  LME Decline Likely Amid Investors Reallocations - "Several of the base metals are languishing at year-to-date lows and analysts said Friday a further reshuffling of asset allocations and priorities by investors could prompt extended price declines." - more here

  Interesting graph by Wall Street Journal - Global Correction here (notice how hard the mining countries have been hit)

  China bridge just rocks with no steel - "Investigators plodding through the debris of a bridge that collapsed killing 41 people in China have come up with an unexpected piece of evidence." - more here

  Norilsk invests 4.4 bln rand in Southern Africa nickel - "Russia's Norilsk Nickel will spend over 4.4 billion rands ($588.6 million) on two projects in Botswana and South Africa, it said on Friday." - more here

  Norilsk may build Activox plant to more than quadruple output at Nkomati - "World number-one nickel producer Norilsk Nickel could build a smelter/refinery, boasting its patented Activox technology,at its 50%-owned Nkomati mine in Mpumalanga, which would allow it to increase production from 5 000 t/y of the silvery metal to some 22 000 t/y in 2102, it said on Friday." - more here

  Clawing Metals in Siberia's Frozen Land - "Norilsk Nickel's company anthem praises its smelters as "the light in Russia's window," but even in summer the Arctic city sits wreathed in a gray cloud of pollution." - more here

  Total Investment in Fixed Assets Kept Increasing From January to July - "From January to July, urban investment in fixed assets hit 5,669.8 billion yuan, a rise of 26.6 percent year-on-year. Of the total, state -owned and state controlled enterprises invested 2,431.7 billion yuan, surging 16.5 percent; real estate development enterprises valued at 1,213.5 billion yuan, rose by 28.9 percent." - more here

  Value-added of Industry Kept Surging in July - "In July, the value-added of the industrial enterprises that above designated size (all state-owned enterprises and non-state-owned enterprises with an annual sales income over 5 million yuan) increased 18.0 percent year-on-year." - more here

  Courtesy Thomson Financial - "'Recent moves (in base metals) have not been driven by a change in fundamentals, with the market still generally very tight, but by a sell-off across various asset classes, which has been reflected in the very high correlation between the London Metal Exchange price index and the DJIA during the past few days,' said Michael Widmer, an analyst at Calyon, in a note."

  Update - 9:00 am CST - Base metals across the board go green after US Fed unexpectedly cuts discount rate 50 points. Is it a dose of penicillin to fight a fear virus? Or will it turn out to be just a drug induced euphoric rush? Too early to tell....but it's a shot in the arm, either way you look at it. 

  Asia's largest producer of nickel, Chinese Jinchuan Group drops factory price of Jinchuan Nickel  from 248,000 yuan/ton to 231,000 yuan / ton, down 17,000 yuan / ton.

  Indications  at  7:45 am CST show 3 month nickel selling up by $.45/lb . This was to be expected, as yesterday's collapse was more of a knee-jerk reaction to the panic sweeping thru world markets, than what we would classify movement thru normal nickel trading. Besides, the market fell thru the $25,000/tonne barrier yesterday, and it is natural for the market to recoil once a psychological barrier has been penetrated, as if to ponder if that is really the direction it wants to go. It will be curious to see which way US markets head today, after yesterday's brutally volatile day. Asian markets took another hammering overnight to end their week in the red, while European markets are showing less red this morning. Shanghai Nonferrous Metals reports Jinchuan nickel #1 fell 8000 to 242000-244000 RMB/t, a dramatic drop considering its recent trend. (Bloomberg - more)

  Base metals bounce as markets recover after losses - "Base metal prices bounced on Friday as most financial markets rebounded after heavy losses in the previous session on fears of a global economic slowdown." - more here

  Prepare For Opportunities In Commodities Sector - "As last night’s shakeout in precious metal prices highlights, commodity markets have been unable to avoid any impact from the current chaos in global markets but where there is uncertainty there is also opportunity according to Barclays Capital." - more here

  (from yesterday) LME Selloff Ongoing; Shorts To Cover Eventually - "The selloff in the base metals is continuing Thursday and is expected to be extended further in the days ahead, but brokers said the markets are now looking very short and a rebound is eventually inevitable." - more here

  Mincor's Jim Reeve dies - "West Perth-based nickel producer Mincor Resources NL's director of exploration Jim Reeve has died, the company announced today." - more here

  TD Bank Financial Group - Weekly Commodity Price report - pdf here

  ThyssenKrupp Materials acquires web retailer OnlineMetals.com - "ThyssenKrupp Materials NA, the parent company of ThyssenKrupp Services' materials services operations in the NAFTA region, is taking over US web-based retailer of metals and plastics OnlineMetals.com,  retroactively as of August 1, the company said Friday." - more here

  Japan's H1 SS output up by 15.4%YoY - "According to Japanese government data released recently, Japan's stainless steel output in January to June 2007 rose by 15.4%YoY to 1,854,749 million tonnes." - more here

  Driven by the fall of nickel price, South Korean stainless producers including Posco and BNG Steel have reduced constantly the output of 300 series stainless steel." - more here

  Independence could be ripe for a takeover - "The plunging price of nickel is causing headaches for producers of the stainless steel additive but it might just be the catalyst for AngloGold Ashanti Ltd's takeover of Independence Group Nl." - more here

  We’re still viable despite nickel price drop: BNC - "Bindura Nickel Corporation (BNC), the country’s main nickel producer, said yesterday that it was still viable despite a sharp price drop for the commodity on the international markets in the last two months." - more here

  Today's beginning nickel inventory - plus 552 tons = 20,304 tonnes (3.16% - 642 tonnes cancelled warrants/ 19,662 net stock level)

Thursday, August 16

  Today's official LME nickel closing prices - cash - $11.36/lb - 3 months buyer - $11.56/lb (83.8% higher than 1/1/07). The Baltic Dry Index set a new record today, gaining another 88 points to register 7,319. The BDI is an index covering dry bulk shipping rates, and an assessment of the price of moving the major raw materials by sea. Nickel inventories gained again overnight. Rotterdam, Netherlands received 336 tonnes and shipped out 42 tonnes. The rest of the LME warehouses were quiet. The talk among investors has now shifted to what kind of spill over this whole sub-prime debacle might have on the broader world market. This is discouraging if it pans out to be true, as stainless steel manufacturers, who have been waiting for nickel to find a bottom, may wait too long and find their marketplace remains in a rut, for entirely different reasons as they are now. Let's "all" hope they are wrong, and this turns out to be momentary market hysteria, and not the beginning of a world recession. Lot of news that would typically have made a difference in base metal trading today, but cash is king right now, and even many of the most bullish traders are on the sidelines, waiting for a signal to buy. But no one wants to grab onto a falling knife, and worldwide markets continue to tumble, dragging commodity stocks and base metals prices with them. It was another down day for all LME traded base metals, and nickel, was especially hard hit. A few weeks ago, the market hesitated before slipping below the $30,000/tonne mark. Today, the market pierced the $25,000/tonne mark. LME nickel ended the day at $11.39/lb ($25,100/tonne)  (Dow Jones - more

  Industrial metals drop on falling equities - "Industrial metals fell sharply on Thursday as sliding global equity markets dampened sentiment and investors liquidated positions to cover losses in other markets, analysts and traders said." - more here

  Thievery of 'Scrap' Metal on the Rise - "Thieves looking to profit from the sale of scrap metal are getting more numerous -- and perhaps a little dumber. With prices for metallic garbage rising, it's not just banks being knocked off any more." - more here

  Money invested in commodity funds still high - "Money invested in commodity funds is still high, but over the past few months there have been some withdrawals because the sector has under performed, investment bank Calyon said in a research note." - more here

  Copyright/courtesy Platts - "Two stainless steel mills in eastern Japan plan to cut productions of nickel-molybdenum stainless steel in the current quarter due to the volatility in nickel prices. "Customers say they want to wait until nickel prices settle. For us too, it is difficult to set a price of nickel-based stainless as nickel prices are always moving," a source at one mill said. He said his company's molybdenum consumption level had fallen to half of last year's."

  Industrial Output Increases 18%, Slowing Slightly - "Growth in China's industrial output slowed last month, but not enough to ease the pressure on monetary policy, analysts said." - article here

  Courtesy Reuters - "Credit market conditions are now analogous to a secondary banking crisis. Equity markets have moved to signal a global economic slowdown, driven by a worsening financial crisis. The equity markets appear to be expecting a much worse outcome for credit than the credit markets themselves are discounting," Tim Bond, the head of asset allocation at Barclays Capital said.

  A Zuni Legend - "One time Coyote met a turkey, and he ran and said, "Oh, the sky is falling." The turkey said, "How do you know?""A piece of the sky has fallen on my tail. I am looking for a hole to save myself." "May I go with you?" "Come along." As they went they met a rooster, and Coyote said, "Oh, the sky is falling." The rooster said, "How do you know?" "A piece of the sky has fallen on my tail. I am looking for a hole to save myself." "May I go with you?" "Come along." As they went they met a lamb, and Coyote One time Coyote met a turkey, and he ran and said, "Oh, the sky is falling." The lamb said, "How do you know?" "A piece of the sky has fallen on my tail. I am looking for a hole to save myself." "May I go with you?" "Come along." As they went they met a goose, and Coyote One time Coyote met a turkey, and he ran and said, "Oh, the sky is falling." The goose said, "How do you know?" "A piece of the sky has fallen on my tail. I am looking for a hole to save myself." "May I go with you?" "Come along." At last they came to a hole and, when they were in, Coyote turned and ate the goose. When he had eaten the goose he ate the lamb. When he had eaten the lamb he ate the rooster. When he had eaten the rooster he ate the turkey. He ate them all up and these animals never came out any more." from Native American Legends here

  Headlines say it all this morning. A torpedo of terror apparently found its mark, and nickel traders can't abandon the boat fast enough. Indications at 7:45 am CST show 3 month nickel down by $.64/lb . LME metals across the board this morning are in the red. And a glance at worldwide financial exchanges this morning tells more here.  (Bloomberg - more) Shanghai Nonferrous Metals reports Jinchuan nickel 1# closed 250000-252000 up 500.

  Metals - Risk aversion hammers base metals; nickel down more than 2 pct - "Equity market turbulence continued to hammer base metal prices, with nickel down more than 2 pct and copper lower despite supportive signs of tightening supply." - more here

  Metals - Nickel sinks to 11-month low amid rising fears of global credit crunch - "Nickel sank to its cheapest price since last September while aluminium hit a ten-month low amid rising fears of a global credit crunch and as overbearing risk aversion continued to weigh on sentiment." - more here

  Standard Bank: Weekly Commodity Research - pdf here

  Courtesy/copyright Dow Jones - "There is still value in selling puts in nickel at the back end of the LME price curve in order to build length on further price declines, says JP Morgan's Michael Jansen. Notes support at $25,000 a metric ton as this is the marginal cost of low-nickel pig iron, used as a substitute for refined nickel. But traders need to keep a close eye on refined nickel supplies from "conventional sources" as back end values over the long term will depend largely on "whether mine supply in its own right has the ability to balance demand," Jansen adds."

  Courtesy XFN - China finds major nickel deposit in northwestern Xinjiang - state media - "China has found a nickel deposit with proven reserves of over 900,000 tons at Hami, in northwestern Xinjiang region, the official China News Service said. The resource is estimated at over 15.8 mln tons, ranking second after Jinchuan, in northwestern Gansu province, it said. Nickel is mainly used for stainless steel and other corrosion-proof alloys."

  China mulls new curbs on coke export - "China, the world's biggest coke producer and exporter, is considering new curbs on overseas shipment of the fuel used to make steel, as part of its efforts to reduce pollution at home." - more here

  PNG Academic Calls for Review of Ramu Mine - "Calls have been made to the newly formed government to fast-track the review of an agreement of 2000 of the Ramu nickel mine." - more here

  (comment - we missed this one from the 1st but worth posting) Molybdenum Supply Forecasting - "The dramatic increase in molybdenum prices from the low of less than $2.50/lb in 1999 to more than $40/lb in 2005 has caught the attention of molybdenum mine owners and exploration project developers." - more here

  Mining pay rises spread - "Spiralling wages in the mining industry are beginning to be seen in other sectors, but only in Western Australia." - more here

  Today's beginning nickel inventory - plus 294 tons = 19,742 tonnes (3.07% - 606 tonnes cancelled warrants/ 19,136 net stock level)
Wednesday, August 15

  Where Should Your Money Be? - "Stocks? No. Bonds? No. Real estate? Not with a ten-foot pole, Preparing for the "mania stage" in commodities, A windfall of incendiary remarks and much more..." - more here

  Addendum - (comment - typically we don't follow Wall Street as their day-to-day actions usually have little bearing on base metals prices. But right now the two seemed joined at the hip. Besides 1/3 of our readers are investors and many of them are getting hurt.) Courtesy/copyright Marketwatch - "Part of the problem on Wall Street right now is that "there are so many confusing events," and the Fed "has the best of economists confused," says Tony Dwyer of FTN Midwest Securities. Dwyer says the market is behaving based on emotion, not on the facts, and when that happens, "you have to hold onto what you have knowing that you'll have further losses, but that those losses should be made up quickly." Courtesy/copyright Dow Jones - "Investors are seen returning to the base metals once the instability in the credit markets is over, says a London trader. Notes the intrinsic value in the LME metals, with a still-slow supply response and strong demand from emerging markets such as China and India, as well as in Eastern Europe and the CIS." Courtesy/copyright Dow Jones - "Sentiment towards the base metals is the key price driver Wednesday and traders said they're struggling to work out which direction the next piece of liquidity-related news will push prices....."The market outlook in the short term is almost exclusively a function of the ebb and flow in sentiment around the liquidity and credit deterioration," said JPMorgan's Michael Jansen. "U.S. data today - if solid - might calm markets but for the most part trading is likely to remain choppy as investors and traders pare back risk to growth leveraged assets," he added, noting this applies to metals in particular ..."Although global growth is strong now, there are clearly worries that the impact of this credit crunch will lower demand for industrial metals," said UBS analyst Robin Bhar. All base metals are vulnerable to further losses as longer-term support levels come under pressure, Bhar added. But on the flipside, analysts noted that consumption growth in China, the biggest consumer of commodities, remains strong and this will alleviate some of the pain the base metals may feel from an economic slowdown in the U.S.."  Courtesy/copyright Dow Jones - "Deutsche Bank metals analyst Michael Lewis said industrial metals, more than softs or energy, show the strongest correlations with equities, and are most likely to follow equity markets lower if they fail to recover. "Certainly, the metals' market is the most vulnerable in a period of equity market distress," Lewis said. With many metals such as nickel, lead, tin and copper trading at high levels on a historical basis, a fund-driven liquidation could shave a lot off the price, especially with price-sensitive buyers in China looking for much lower prices. "If funds start to withdraw, we could see some big drops," said a Hong Kong-based trader. "They're all vulnerable to a certain degree."

  Today's official LME nickel closing prices - cash - $12.02/lb - 3 months buyer - $12.16/lb (93.3% higher than 1/1/06). Base metal traders were in a bad mood today, after yesterday's momentary spurt of enthusiasm, with all LME metals ending in the red for a second day. The U.S. sub-prime problem continues to boil out of control, and has turned investors worldwide defensive, with momentary flashes of near panic. We hear it has gotten so bad, that the Almighty has temporarily stopped answering prayer requests, after the assets of the Eternal Heavenly Hedge Fund were frozen. Ok, sorry - we're trying. Until this issue is rectified and calms down, or investors decide the market has backtracked enough, trading will likely remain erratic and tense. Nickel inventories resumed their gaining ways yesterday, with multiple warehouses on the receiving end. Baltimore, U.S., received 156 tonnes, Chicago, U.S., received 36 tonnes, and Rotterdam, Netherlands, checked in 306 tonnes. Outbound, Rotterdam shipped 84 tonnes, and Busan, South Korea, shipped 42 tonnes. The Baltic Dry Index continues to break records, today up 88 points to 7,231. Three month nickel ended the day at $11.97/lb ($26,400/tonne). (Dow Jones - more)

  Nickel prices decline disrupts stainless steel market - "The collapse of world nickel prices to $12/lb this week—half what the alloying metal cost in May—has disrupted the global stainless steel marketplace" - more here

  Samuel Manu-Tech makes a downstream stainless steel acquisition - "Ontario-based Samuel Manu-Tech announced Tuesday that it has  acquired Northland Stainless, a leader in the production and supply of stainless steel pressure vessels, tank heads and components primarily to the ethanol, pharmaceutical and chemical industries in North America." - more here

  (possible problem for future pig nickel production?) China Works on Energy Consumption Standards of Non Ferrous Metals - "China is working on compulsory standards on energy consumption by nonferrous metal products, which are likely to put into effect next year." - more here

  Courtesy Kommersant - "Severstal, Russia's second-largest steel producer, has bought a 22% stake in Ireland's Celtic Resources. Severstal made the transaction to replenish its molybdenum reserves, while Celtic will have a chance to strengthen its foothold in Russia."

  Australian heavy metals 'blowing to NZ' - "New Zealand, known for its clean, green image, is becoming a dumping ground for heavy metals picked up in dust in eastern Australia and blown across the Tasman, a scientist says." - more here

  SAMSAA and Goliath: Province yet to recognize importance of cluster - "Sudbury is the luckiest city in Ontario. Not only does the community sit on top of the richest mineral deposit in North America – that will still be producing valuable metals for another 100 years – but is also home to the second or third largest cluster of mining supply and service (MS&S) companies in Canada." - more here

  Indications at 7:50 am CSt show 3 month nickel selling down by $.16/lb . Shanghai Nonferrous Metals reports Jinchuan nickel 1# closed at 250000-251000, no change from Tuesday. (Bloomberg - more)

  Base metals languish as slide in financial markets continues - "Base metals recorded losses across the board this morning as investors cut their exposure to the complex after signs the crisis in the global equity markets is not over yet." - more here

  Fortis Metals Monthly - August 2007 - pdf here

  Inflation and the Base Metals - "As explained in the past, when it comes to the "commodity supercycle" we are definitely skeptics." - more here

  Composite Steel Price - Latest Forecasts from MEPS - "The MEPS - Global all products price declined in July faster than we anticipated - mainly as a result of decreases in the EU and North American flat products categories." - more here

  China News
  • China's domestic crude output falls in July - "China's crude oil production fell 1.7 percent in July, pushing the country closer to the 50 percent threshold of oil import dependency, according to data from the National Statistics Bureau released today." - more here
  • China's base metal production up in first seven months - "China produced 1.86 million tons of refined copper in the first seven months of this year, growing 13.9 percent from the same period last year, while primary aluminum production surged 34.0 percent to 6.71 million tons, according to statistics released today by China's National Bureau of Statistics." - more here
  • China's industrial output up 18 pct year-on-year in July - NBS - "China's industrial output, the total profit from state enterprises and private enterprises with annual sales revenue of more than RMB $5 million ($659,000), rose 18 percent year-on-year in July, according to data released today by the National Bureau of Statistics." - more here
  • Latest forecast on steel consumption in China by 2010 from CISA - "A panel organized by China Iron & Steel Association observed and revised 2006 forecast on China's steel market consumption by 2010." - more here
  • The Xinjiang Hami verifies massive nickel ores reserves only Yu Niedu the Jinchuan - "today learned from the Xinjiang Hami area administrative office office that, this area has verified the nickel ore resources reserves 90 ten thousand metals tons, only Yu Niedu the Jinchuan, occupies Chinese second." - poorly translated article here


  Concerns over Ramu miner - "Concerns have been raised over the transparency of the operations of the Ramu nickel mine in Madang province." - more here

  Jindal Stainless to build $60 million plant in Russia - "India's Jindal Stainless Ltd. is at a "preliminary stage" of a $60 million investment for construction of a steel mill in Russia's north-western Leningrad region." - more here

  South Korean stainless steel makers to cut production - "Due to the demand stagnation and price falling, South Korean Hyundai Steel and BNG Steel have decided to cut their output again." - more here

  Today's beginning nickel inventory - plus 372 tons = 19,458 tonnes (3.02% - 588 tonnes cancelled warrants/ 18,870 net stock level)

Tuesday, August 14

  Today's official LME nickel prices - cash - $12.61/lb - 3 months buyer - $12.68/lb (101% higher than 1/1/06). Baltic Dry index broke another record, gaining 77 more points to read 7,143. Inventories shaved a little off the top today... yes, you read that right, they fell. In a warehouse getting accustomed to 400 plus tonne gains per day, the mere 18 tonnes that Rotterdam, Netherlands got in yesterday, must have had their warehouse crew looking for things to do. They didn't get the entire day off though, as Rotterdam shipped 24 tonnes, which went along with a 72 tonne shipment out of Helsingborg, Sweden, and a 60 tonne shipment from Busan, South Korea. Whether it was a fluke, or a signal of things to come, traders were happier than a pack of dogs at a fire hydrant convention. In early trading, nickel prices soared, and at one point, almost reached $28,500/tonne. In afternoon trading, the earlier exuberance disappeared, and the market gradually went into the red. We tend to think today's draw was another one of those one hit wonders that keeps the traders off of suicide hotline's, but that we have yet to peak out on the inventory build-up. Today, 3 month nickel ended the day at $12.32/lb  ($27,150/tonne) (Dow Jones - more) (Reuters - more)  

  Opinion - We received an e-mail from a reader that took issue with our weekend "forecast", that stated when nickel finally settled down, it might trade in the $12 - $16/lb range, and that we were very skeptical it would return to the $23.50/lb record high. We appreciate e-mails and this 'very courteous' writer wanted to remind us of our past statements, that what the world was witnessing in China was unprecedented and thus, any history of swings in nickel prices was useless. In our response, we noted that it was 'because of China' that we felt prices would rise to the aforementioned levels. If it were not for what was happening in China, and India, and the UAB, and elsewhere, our "forecast" would be based strictly on historical cycles and our forecast might have been that it was time to call the boom a bust. Throughout history, nickel has gone thru a normal cycle, similar to other metals. First there is a period of low prices, where mining companies, in their attempt to remain as profitable as possible for stockholders, cut back on exploration and construction of new mines. Then we enter a time of economic growth, and mines are caught flat footed, and can not keep up. They, and everyone with a shovel and pick axe, go exploring and open a new mine. Suddenly, we have a glut of nickel mines and ore, and prices plummet again. And the cycle is back to square one. But this time, the game is much different. We have the 'China factor' added to the equation. To define China as experiencing an economic boom period is an understatement, and we think, insults the degree of the historical precedence it is having. What we are witnessing, in a sense, is the birth of an new age, within the confines of a single nation. The "Industrial Revolution", as it is now called, began in the late 1700's. In 1750 the population of the entire planet was around 550 million people. China has over double that amount at 1.3 billion citizens. That is nearly 20% of the world's population. And never mind considering the slower modernization being experienced by another 17% of the world's population, next door in India. We could ramble on and on about what is happening in China and India, but suffice it to say, the strain they have, and will continue to place on all commodities, will not go away. The demand is here, and will continue to grow. Supply, on the other hand, has its own set of problems, but humans inevitably find a way. We have numerous mega mines coming online over the next three years, current mines are expanding, and the introduction of pig nickel has become the quiet equalizer. Substitution of ferritic stainless for austenitic has had a bigger impact than originally thought possible. This has become a game with a lot of curve balls being thrown recently.

We admitted to the writer, we are probably dead wrong, and this is why we tend to shy away from forecasts. There is an outside chance nickel could rise to new record levels before these new mega mines begin to come online, and yet there is a far less chance that nickel could fall to $6/lb on oversupply. We have two big negatives affecting the overall picture right now. The plummet in nickel prices has had a cause and effect reaction, which is feeding off itself. And now, we have this whole sub-prime problem that has shifted the market's attention away from the reality of the overall economic picture.  

Watching nickel trade every day, you soon learn, that price trends up or down, seem to be based as much on feeling, as they are on facts and fundamentals. And trying to determine how London traders are feeling from day to day, is an impossible task. The bears may be jumping for joy that the market is down, and the bears may be upset that nickel isn't selling in the $20 range any longer, but the news bulletin of the day might read - "Everyone started calling this a nickel bull market at $6/lb - when did $12 to $16/lb become bearish?". Ask a stainless steel producer what he or she thinks. We said awhile back that we thought they could live with $12/lb, we didn't say they would be happy about it. Thank you to all of our readers for their letters. As we typically do when sticking our neck in the noose, we remind our readers that opinion's are like armpits. We all have a couple and there is a multi-billion dollar industry out there trying to make everyone's smell a tad bit better to their neighbors.

  PMPA Materials Impact Report - pdf here

  US Jun Nickel Imports +0.5% From May, -25.5% From Yr Ago - "U.S. nickel imports rose 0.5% in June from last month, but was down 25.5% from the previous year, the Commerce Department reported Tuesday." - more here

  DJ US Jun Nickel Exports -12.3% From May, +112.2% From Yr Ago - "U.S. nickel exports fell 12.3% in June from the previous month, but was up 112.2% from the previous year, the Commerce Department reported Tuesday." - more here

  Nickel Mine uses 400 tonnes of stainless steel - "When Australian Stainless Steel Development Association Accredited Fabricator Nepean Engineering was awarded the tender for the manufacture of the stirring mechanisms for 10 thickeners for the Goro Nickel Mine in New Caledonia, they had no idea of the enormity of the venture." - more here

  Norilsk Nickel boots H1 revenue 57% - "MMC Norilsk Nickel (RTS: GMKN) boosted sales revenue to Russian accounting standards 57% year-on-year in the first half of 2007 to 151.5 billion rubles on the back of price growth in the world metals markets, the Arctic mining and smelting giant said in its quarterly financial report." - more here

  Indications at 7:50 am CST show 3 month nickel selling up by $.45/lb .  Like manna from heaven, the first substantial setback in LME nickel inventories in months has given nickel traders an unexpected boost. While prices should remain positive today, we feel this increase in price is overdone, considering its a first time in a long time event. Let's see if this is a turn of events, or a one hit wonder, before anyone starts counting eggs.  We expect it's the latter. (Bloomberg - more)

  Reuters Metal Weekly - pdf here

  Courtesy - Interfax - Ji'en Nickel Co. Ltd., the Shanghai-listed subsidiary of Ji'lin Haorong Nonferrous Metals Group (formerly known as Jilin Nickel Group), today reported net profits of RMB 325.87 million ($42.99 million) for the first half of this year, skyrocketing 261.42 percent from the same period of last year, due to a nickel price hike.

  Copyright/courtesy Dow Jones - "LME lead and nickel seem to be "back in favor" with the investment community and are making gains while the others metals stay in the doldrums, says a London trader. Nickel benefited from a 138-metric-ton decline in LME warehouse stocks while lead stocks fell 700 tons. Notes nickel restocking could take the market by surprise as demand returns in September."

  Global reach of the China effect - "When Bros Holding recently decided to raise export prices, little did the Chinese textile company realize that it was feeding a pressing global debate: is the "China price" pumping up world inflation?" - more here

  Merafe doubles revenue as demand soars - "Ferrochrome producer Merafe Resources expects ferrochrome prices to maintain their strong levels in the near future as the industry is working flat out to meet demand from Chinese stainless steel manufacturers." - more here

  US No1 scrap price up by $13.34/ton - "On August 6, the average price for No1 scrap in Pittsburgh, Chicago, and Philadelphia was at US$254.17/ton that is US$13.34/ton higher than last week." - more here

  Asian stainless steel mills cut output and price in July and August - "Nickel prices dramatically dropped in past few weeks, with around 10,000 tons available inventories, according to the LME." - more here

  China's steel consumption to top 520 million tons by 2010, experts - "Chinese experts predicted that China is likely to consume 425~450 million tons of crude steel and 400~420 million tons of rolled steel (recycle steel not included) in 2007." - more here

  Nickel output at Anglo Group down in Q2 - "The three subsidiaries of American Anglo Group, Loma de Niquel in Venezuela, Codemin in Brazil and Anglo Platinum in South Africa, reported the output of nickel...." - more here

  Japanese stainless steel totals 300,000 tons in June - "Japan’s stainless steel output totaled 300,839 tons in June, increasing by 0.7 percent compared to it was 298,582 tons last month..." - more here

  Today's beginning nickel inventory - minus 138 tons = 19,086 tonnes (3.36% - 642 tonnes cancelled warrants/ 18,444 net stock level)

Monday, August 13

  Today's official LME nickel closing prices - cash - $11.88/lb - 3 month buyer - $12.06/lb (91.73% higher than 1/1/06). The Baltic Dry Index is back to its record breaking trend, gaining 55 points to register 7,066. LME inventories grew again Friday, gaining another 420 tonnes. Busan, South Korea, received 270 tonnes, Chicago, U.S., received 78 tonnes, and Rotterdam, Netherlands received 96 tonnes. The shippers included Singapore, who shipped 6 tonnes, and St Louis, U.S., who shipped 18 tonnes. Nickel traders were bullish today, as were all of the metals traded on the LME, except tin. After falling early to $11.79/lb, the market rebounded and closed higher for the day. Seeing some more intense resistance when prices fall near the $26,000/tonne mark. Metals Insider is reporting the "London "street" is expecting the current (nickel) price implosion to level out somewhere in the $25,000 -$27,000 tonne area, not least because that is perceived to be a make-or-break area for China's producers of nickel pig-ron". Don't dismiss what the London street thinks. These are the guys and gals that live and breath metals and base metal trading, so there hunches are worth considering. ThyssenKrupp threw some more cold water on the market late Friday, by saying it will be at least the 4th quarter, before the stainless steel market will possibly pick back up. Their given reasons are legitimate, as surcharges that the stainless steel producers sell by, is a two month delayed process, so distributors know  that even if nickel prices froze in place today, it would be November before they started to see the best stainless steel price. For the first day of the trading week, 3 month nickel closed at $12.43/lb ($27,400/tonne). (Dow Jones - more)   

  Metals Insider - Week in Review - "Back to contango for collapsing nickel" - report here

  Iron & Steel Technology Steel Stats - pdf here

  Australia Australian nickel Allegiance in early Jinchuan Group to supply nickel ore - "Australia Allegiance Mining N.L. (AGM.AX : rates) Richardson, general manager (Paul Richardson) to accept an interview with Reuters, said the beginning of 2008 mining nickel concentrate to China's exports, but is strengthening exploration work." - more here

  ThyssenKrupp analysis - (excerpt) "However, the effects of the raw material cost trend on the ordering behavior of distributors were felt here too. In Asia, weaker market demand led to a decline in prices. Despite the production cutbacks announced and in some cases already implemented by the large Chinese producers, there is still significant oversupply and therefore continuing pressure to direct surplus capacities into exports. In the area of nickel alloys, customers are taking a wait-and-see approach in view of the still high raw material prices." - more here

  Brazil: the land of iron. And of nickel, of copper, of gold... - "With growing exports of iron ore and betting on other metals, such as copper, to attain self-sufficiency, Brazil is more and more proving its vocation to the mineral industry. From 2003 onwards, the Mineral Trade Surplus – exports and imports – has been positive. And the surplus is rising ever since." - more here

  (excerpt from Chinese article) "In 2007 the first half year taiyuan Steel Works stainless steel output nearly 900,000 tons, whole year hopefully achieved 2 million tons, also the austenite stainless steel ratio has fallen to 50%. This year the China ferritic stainless steel output increases quickly, whole year the output hopefully amounts to 2 million tons. The ferritic stainless steel increase on the one hand is because the nickel price stays at a high level for a long time, urges the stainless steel enterprise to develop the festival nickel and the non- nickel stainless steel, simultaneously the product performance also can approach 300 departments. Another factor contains the nickel pig iron, two since the nearly months countries content nickel pig iron production has received has appeared on the market directly to attack for the first time, at present in the market piles up seriously is some low-grade contains the nickel pig iron, some high grades ferro-nickel iron, its nickel content between 4-10%, the phosphorus content achieved below 20 ppm, the stainless steel mill comparison likes using, moreover this kind contains the nickel pig iron the use scope quite to be broad, 300 is, 200 departments may use, some also may export. 1-6 month of our country import nickel ore and the ore concentrate 7.02 million tons, in which uses in to produce contains the nickel pig iron the red soil nickel ore approximately 6.9 million tons. Estimated in 2007 our country will import the red soil nickel ore the quantity to achieve 10 million tons, will contain the nickel pig iron the amount of use to be able to achieve about 2 million tons, will account for the stainless steel profession nickel amount used 35%!" - poorly translated article here

  Indications at 7:55 am CST show 3 month nickel selling up by $.05/lb .  Markets appear to be quiet, encouraged by stock markets to the East, but nervously waiting for US markets to open. (Bloomberg - more)

  World commodity prices slump - "Global commodity prices slumped this week as speculators rushed to bank profits amid concern that demand for oil and metals will slide should the world economy dampen because of the US housing crisis." - more here

  Weekly poll of metals analysts for Shanghai Nonferrous Metals - Of 33 analysts responding, 25 (79%) felt the price of nickel would fall this week, 6 (18%) felt the price would rise, and 2 (6%) felt the price would stay basically the same.

  BMO Capital Markets - August issue of The Goods - pdf here

  Rand Merchant Bank Base Metals Monthly - pdf here

  ASA Materials Market Digest - August 2007 - pdf here

  Truck-jackings take a violent turn - "Highwaymen are making a comeback -- not the stagecoach robbers of old, but a violent new breed of road bandits that targets transport trucks." - more here

  Mining Boom Matures - "The National Australia Bank has warned that there are distinct signs the Australian resources boom is turning down." - more here

  Courtesy/copyright Dow Jones Newswire - "South Korea's Hyundai Steel Co. said Monday it will suspend production of stainless steel from Aug. 13-19 due to a steep decline in orders. Weaker prices of nickel - a raw material in stainless steel - resulted as large consumers started to cut production or to draw down stockpiles in order to limit their market exposure after the metal reached record-highs in May."

  Courtesy/copyright Dow Jones Newswire - "LME nickel remains under pressure, and support from pig iron prices will be gradually removed, says JP Morgan analyst Michael Jansen. The marginal cost of producing low nickel pig iron is $22,000 a metric ton to $25,000/ton of refined nickel equivalent, Jansen notes, but should steadily head under $20,000/ton in the next 6-18 months."

  S.Korea to launch $279 mln nickel mine fund in Oct - "South Korea plans to launch a 260 billion won ($279.1 million) fund in October to invest in a Madagascar nickel mine as its first move to raise seed money for the development of mines around the globe, the country's mining body said on Sunday." - more here

  Resources Sector - A Decade of Even Higher Prices - "Following a review of their commodity price assumptions a little over two months ago, Macquarie Research Equities (MRE) analysts have again reviewed these forecasts and returned with further conviction that the duration of higher prices is extended." - more here

  JinChuan seeks help in Nonoc bid - "Mining giant JinChuan Group Ltd. has sought the assistance of the Philippines in convincing Beijing to approve its proposed investment of at least $1 billion to revive the Nonoc nickel plant in Surigao. " - more here

  News from Russia
  • Russia's Jan-June Nickel Exports Down 5% On Year - Report - "Russia exported in January-June 113,200 metric tons of nickel, 5% less than in the corresponding period last year, the federal customs service reports Monday." - more here
  • Stalin's Arctic Mines Help Expansion - "Wearing fireproof coveralls, Ilya Dmitriyev plods past a smelter that belches smoke and gushes molten metal, the chief product of this gritty patch of Arctic tundra where the air tastes of sulfur and concrete apartment blocks crumble on the shifting permafrost." - more here
  • (from August 7) Illogically, Norilsk is Weathering Storm - "Take an oil company — cut the price of oil in half and it should not be hard to guess what happens to the stock. But when it comes to nickel, the same logic does not seem to apply." - more here
  • Norilsk Nickel might close plant in Kola Peninsula - "Mining and metallurgy giant Norilsk Nickel might end up closing its plant in the border town of Nikel." - more here
  • Stainless tubes and pipes in Russia - "In 2007 the trend for stainless steel production volumes increase remained although production growth speed significantly slowed comparing with 2006. The demand for stainless steels continues to be on high level." - more here


  Steel companies seek overseas iron ore - "More and more domestic iron and steel enterprises are seeking overseas iron ore resources, according to Capital Iron and Steel Group chairman Zhu Jimin, chinanews.com.cn reported today." - more here

  Davao Oriental governor holds granting of mining permits - "Davao Oriental Governor Corazon Malanyaon has suspended the granting of mining permits especially to small-scale miners following the controversies hounding the industry." - more here

  Powers Fasteners Responds To CA/T Collapse Indictment - "A Suffolk County (Mass.) Grand Jury indicted Powers Fasteners, Brewster, N.Y., Aug. 8 on a single count of involuntary manslaughter for the death of 38–year–old Melina Del Valle who died July 10, 2006, when 52,000 lb of concrete ceiling panels and hardware fell from the Interstate 90 tunnel ceiling onto her car." - more here

  Today's beginning nickel inventory - plus 420 tons = 19,224 tonnes (2.90% - 558 tonnes cancelled warrants/ 18,666 net stock level)

Weekend Review, August 11 & 12

  Week in Review - (using a different source than for daily updates) After falling 4.3% the prior week, LME nickel traders were hoping some positive news would hit the market. But it was not to be this week, as U.S. sub-prime problems hit European banks and worldwide markets reacted negatively. On Monday, 3 month nickel opened at $13.27/lb, rose to $13.43/lb, fell to $13.01/lb, and ended the days trading at $13.32/lb. Tuesday, the market was flat, opening and closing at $13.25/.lb, with a high of $13.45/lb and a low of $13.10/lb. On Wednesday, the market that had grown accustomed to large gains in LME inventory was stung with news of 1,152 tonnes being added overnight, and reacted as expected. Opening at $13.25/lb, also the high for the day, nickel fell as low as $12.63/lb, before ending the day at $12.84/lb. On Thursday, sub-prime problems began making big news in Europe, and the sentiment for base metals in general turned sour. Nickel opened at $12.77/lb, climbed to $12.85/lb, fell to $12.17/lb, and ended the day at $12.34/lb. On Friday, with markets scrambling to figure out the ramifications of what was going on with the sub-prime meltdown, markets opened at $12.18/lb, rose to $12.30/lb, before falling to $11.63/lb, and ended the trading week at $12.11/lb. Down 9.8% for the week, 24.7% lower for the year, but still 91% higher than it started 2006 at. It was a brutal week for all concerned, as investors saw recent gains in mining stock evaporate as nickel producers saw their expected 3rd quarter earnings fall farther. Users of nickel have seen the price fall by nearly 1/2 of its May highs, and are now sitting on inventory priced incredibly high for the market. Just last week we were watching a market hesitant about falling thru the $30,000/tonne mark, and this week. it fell thru the $25,000/tonne mark for a very short period on Friday.

How low will nickel fall? Well, if we knew, we would be in the business of trading the metal. If we thought we knew, we would become full time analysts and see how many would marvel at our 2 in 10 correct forecasts, as they seem to do so many others. We remain comfortable with bringing you what is actually going on, with occasional comments on what we see happening, and letting you decide what you think the market will do. We said months ago, we felt the nickel market could handle $12/lb nickel. And now that we are there, we can safely say, that as long as the market remains in a slide, it will be far more comfortable with a lesser price. We reiterate, "as long as the market remains in a slide". In our opinion, stainless steel producers are ready and willing to dive in, but they aren't going to jump into a whirlpool. The key to getting stainless steel producers to buy again is the market direction. Don't expect any producer worth its salt, to buy nickel that starts a week selling over $29,000/tonne and ends it selling over $26,000/tonne. You buy something on Monday at market price, and you don't get your hands on the material until Friday, you lost $3,000 per tonne multiplied by how ever many tonnes you bought. This would explain why so much nickel is entering the LME warehouses. As we explained earlier this week, we look at LME stocked inventory as market "surplus", that material not being shipped directly from producer to end-user. It is obvious that with less being sold to the stainless steel producers, nickel mines are shipping their extra nickel to the LME. Buying from warehouses by stainless producers also helps lessen some of that freight time loss risk, with delivery from a strategically placed LME warehouse much faster, than for example, a boat from Russia, Canada, or Australia. In the mean time, buyers of nickel will continue to wait on the sideline, until they feel the market has found some sort of stability, or at least a floor.

When the market does send some signals that it may have established a new base, we could see the market get very interesting. When this happens, it is very likely that we will see the trend in LME inventory gains stop, then start to slowly edge down, as producers test how solid the new floor really is. If it looks like it will stick, or the halt to warehouse increases actually causes the price of nickel to rise, it is possible we will see a rush of new orders and nickel inventory numbers fall faster. If this happens, we will could see the autumn of last year repeat itself, with falling inventories causing the price of nickel to rise, thus stainless producers buy even more to protect themselves from future price increases. Then again, we are talking about producers that have had their fingers burnt severely the last 3 months, and could react a lot more cautiously to rising prices than they did last fall. And there remains the great unknown - pig nickel. We have followed this closely from the start, as we always felt there was a lot more to this than those who dismissed it, and continue to dismiss it as a non-factor. Everybody has been looking to that magical dollar amount when it becomes uneconomical for Chinese factories to use this low content laterite ore. Two years ago, this grade of nickel was classified as waste material by most mines, now Chinese ports are full of it. What impact, if any, the pig nickel market will play is uncertain, but we feel comfortable saying, the mere fact it exists will keep the market price more honest in the future. And while there are still a few that feel the market could easily re-visit May's record highs by next spring, in our opinion, without some major catastrophe affecting the supply chain, we feel the days of $23.50/lb nickel are history.  If we were to take a shot at forecasting (which we don't because it holds the value of a grain of salt), we would guess that once nickel finds its footing again, it could spend the rest of the year trading somewhere in the $12/lb to $16/lb range. Where and when it will find its footing, is anyone's guess at this point? Earlier, we felt mid-August would be the turning point, but after coming off a week that saw a nearly 10% drop in the price, the next few weeks don't hold quite the appeal to us as they once did. A lot now depends, like it or not, on how the market reacts to the whole sub-prime ordeal. Stay tuned.              

  Metals keep shine, gloss off equity markets - "FINGERS crossed, but there has not been a meltdown in the metals markets to match what has happened on equity markets." - more here

  Junk debt crisis will take a while to settle down - "I HAVE a set of early Australian flora and fauna prints Banque Nationale de Paris handed out in 1981, when it stepped up its presence in this market, and a few years ago I asked an art dealer whether they were valuable. "Not very," he replied. "There's quite a few of them around." - more here

  Traders divided over metal prices - "Traders remained divided on the outlook of base metals last week. A section of the traders was of the view that copper would drive all base metals on the LME, while others doubted if the last week’s recovery might sustain for long amid the growing use of substitution. Plastic and other substitutes have been fast restricting use of metals in infrastructure and heavy engineering." - more here

  DJ Barron's Commodities Corner: Nickel's 15 Minutes Are Up - "The world's stainless-steel producers have rammed the notion that "the customer's always right" into the faces of their nickel suppliers. " - more here

  India enters perilous world of metal hedging - "Indian metal producers and consumers are flocking to commodity exchanges to hedge their exposure to volatile prices after government restrictions were relaxed." - more here  (and)  Hedging risks await metal traders - "Domestic metal producers and consumers are flocking to commodity exchanges to hedge their exposure to volatile prices after the government relaxed restrictions."  - more here

  Chinese metal imports decline in July - "Analysts at Dresdner Kleinwort say that recent data suggests that Chinese imports of base metals and related raw materials declined in July." - more here

  China's July Rolled Steel Exports Grow 66%; July Iron Ore Imports Up 36% - "China's rolled steel exports during July aggregated 5.94 million tons, up 66% from the similar period a year ago." - more here

  Anglo American CEO puts her new broom into action - "If ever evidence were required that new Anglo CEO Cynthia Carroll means business then the shock departure of Ralph Havenstein, CEO of the group’s 75% owned Anglo Platinum, is it. And writ in large letters." - more here

  Thousands of Filipinos flee homes ahead of Jolo offensive - "Thousands of people have fled their homes in Jolo as troops pursue Muslim militants blamed for killing more than 20 soldiers, officials said Saturday." - article here  (we follow because a lot of nickel, in particular,  pig-nickel shipped to China is mined in the Philippine islands)

  This land is mined - "Amay Bongkas has heard the stories many times before. Outsiders, some with guns and chainsaws, have been roaming their ancestral lands in the Anipahan range of southern Palawan, drilling strange-looking holes on the ground at least a square meter wide." - article here

  Hummers Versus Hybrids - "ear EarthTalk: I read that hybrid cars are actually less green-friendly than even Hummers, because they have two motors and very environmentally damaging batteries. Is this true? " - more here

  (comment - NGO's are spreading the word - in our opinion, Sky should let the government handle this and keep their own people far away from any action taken)  GUATEMALA: more forced evictions of indigenous peoples planned in benefit of Skye Resources - "Rights Action recently led an educational and activist delegation to Guatemala. We took our delegates to the Skye Resources nickel mining affected indigenous communities of eastern Guatemala. The Canadian Pension Plan (amongst many institutional investors) is an investor in Skye." - more here

Friday, August 10

  Today's official LME nickel closing prices - cash - $11.52/lb - 3 months buyer - $11.68/lb (86% higher than 1/1/06). Baltic Dry Index gained another 75 points to jump back over the 7,000 mark, showing a reading of 7,011. Inventories gained again overnight, adding more negative news to a market already soured over U.S. sub-prime financial problems. Rotterdam, Netherlands warehouse received 516 tonnes, while Busan, South Korea received 18 tonnes. Outbound, Baltimore, U.S., shipped 12 tonnes, Genoa, Italy shipped 18 tonnes, Helsingborg, Sweden, shipped 12 tonnes, and Rotterdam shipped 12 tonnes. Increase in number of outbound shipments, but the small size of each reflects buyers are only purchasing what they need. Nickel looked this morning like the bottom was falling out for a second day, with markets falling as low as $11.63/lb. By the afternoon, buyers jumped back in and by the fourth ring, nearly all of the day's losses had evaporated. In PM kerb trading, pessimism returned, but kept in check. By the end of the day, LME three month nickel ended at $12.07/lb ($26,600/tonne)  and 9.36% lower than last Friday's close. (Dow Jones - here)

  ThyssenKrupp register record profit - (from article) "Despite the slightly more bullish profit outlook, shares in ThyssenKrupp sank by 4.2 percent to 36.45 euros by 0734, amid another day of heavy selling in equity markets. And analysts said they were worried a large decline in stainless steel order volumes would hurt the division's robust profits going forward." -  (more here)

  Prokhorov won’t let go of NorNickel - "Mikhail Prokhorov is, it seems, planning to bolster his influence on the BoD of Norilsk Nickel where, until recently, he served as CEO." - more here

  (comment - good background article from Tuesday on the whole sub-prime issue) How Credit Got So Easy And Why It's Tightening - "An extraordinary credit boom that created many first-time homeowners and financed a wave of corporate takeovers seems to be waning. Home buyers with poor credit are having trouble borrowing." - more here

  (comment - now this is a "cold" war) Maybe Santa is a Russian - "After two aging Soviet-era mini-submarines dropped a Russian flag on the seabed below the North Pole last week to make a belligerent claim to Arctic waters, Foreign Minister Peter MacKay went into a funk." - more here

  Update - 10:15 am CST - nickel had a huge 4th ring - nickel now selling down by only $.05/lb.

  Indications at 7:50 am CST show nickel selling down by another $.45/lb . That  is over $1,000/tonne in a half day of trading - like yesterday. (Bloomberg - more) (Reuters - more) (Forbes - more)

  Behre Dolbear - Global Mining News - pdf here

  TD Bank Financial Group - Weekly Commodity Price report - pdf here

  Taiwan's stainless steel output falls 5.3% in January-May - "Taiwan's stainless steel sheets output in January-May 2007 fell 5.3% year on year to 1,444,971 mt, according to the Taiwan Steel and Iron Industries Association." - more here

  Allegiance Mining sets new Nickel concentration benchmark - "Allegiance Mining NL’s , Avebury mine is the world’s first ‘skarn’ nickel deposit." - more here

  New law on mining exports - "South African mining companies exporting products to the European Union will have to register with Registration, Evaluation and Authorisation of Chemicals (REACH) programme if they are to continue exporting to the EU, the Chamber of Mines has said." - more here

  Jinchuan cuts nickel price 6.4% as shortage eases - "Jinchuan Group Co, Asia`s biggest nickel maker, cut the price of the refined metal by 6.4% after supply shortages in China eased and global prices fell." - more here

  Posco to have another price reduction for domestic austenitic stainless steel - "After the previous price cut of KRW 300,000/ton in July, South Korea’s Posco announced again to lower the domestic price by KRW 350,000/tonne (US$379/t) for its austenitic HRC and CRC this week due to the falling of nickel prices." - more here

  Eramet resumes nickel exports from New Caledonia - "Eramet SA, operator of the world`s largest ferronickel plant, resumed exports on Friday from New Caledonia after delays caused by fire damage to a conveyor belt used to load ships." - more here

  Today's beginning nickel inventory - plus 480 tons = 18,804 tonnes (3.03% - 570 tonnes cancelled warrants/ 18,234 net stock level)
Thursday, August 9 (according to Citigroup report, as of Monday, nickel had averaged $19.42/lb for 2007) 

  Today's official LME nickel closing prices - cash - $12.15/lb - 3 months buyer - $12.28/lb (23% lower than 1/1/07 - 95% higher than 1/1/06 - tomorrow we switch to showing growth over 1/1/06) BDI returned to the plus side, adding 19 points to total 6,936. Another day, another inventory gain for nickel. While Busan, South Korea received a mere 6 tonnes, Rotterdam, Netherlands took in 570 tonnes. Rotterdam also shipped 78 tonnes, the only outbound shipment registered. Seeing a lot in the media that nickel is trading at a 10 month, or 10-1/2 month. Not sure what they are using to get these figures, but we can safely say that the last 12 months of price increases have evaporated. On 8/9/06, the official cash closing price was $12.73/lb and gaining. It would not close below this point again until today. Yesterday, official cash was at $12.83/lb and today, it fell to $12.15/lb. That is 12 months of trading gains that has now been erased. By the way, the inventory levels a year ago today, were 5,958 tonnes and edging down. By our estimations, today's LME inventory levels offer the world 4 days of back-up stock. We call it that, since the vast majority of nickel is sold directly from producer to consumer, and never sees the inside of an LME warehouse. So we classify what is being stocked by the LME as "extra stock". Four days cushion for world demand may not seem like much, but for an industry that spent many days during the last year with less than a day's back-up stock, it is a fair amount. That's not to say a gangbuster return by the stainless steel industry couldn't put us back in a slump. To put that in perspective, today's inventory levels are equal to those seen last May 31st, when nickel inventories were heading down. By the end of June 2006, a month later, they stood at a little over 10,000 tonnes. That said, those who trade nickel long, much prefer to see inventories heading south, and they showed their displeasure today by taking prices south instead. Today's trading ended at $12.25/lb ($27,000/tonne) (Dow Jones - more)

  Nickel Leads Metals Lower on Concern Subprime Losses May Spread - "Nickel fell to a 10-month low in London, leading other industrial metals lower, on concern investors will curb their demand for commodities as banks tighten lending following U.S. subprime mortgage losses." - article here  (Reuters - more)

  China exceeds steel export limit to EU: Macquarie Bank - "In its latest report, Macquarie Research Commodities suggested the China Iron and Steel Association (CISA) should be concerned over the amount of steel exports to the European Union, which reached 6.4 million mt in H1 2007, up by 139% on year, which exceeds the early verbally-agreed limit arrangement between CISA and Europe of 2.1 million mt." - more here

  Asian Average Stainless Steel Prices - Latest Forecasts from MEPS - Stainless selling values are forecast to slide again in August. Mills will remain obliged to concede the nickel decrease immediately to their customers in order to encourage orders from local buyers. Exports are still sluggish and expected to continue to be slow in the short term as the price in the west drops significantly due to alloy surcharge reductions." - more here

  LCH.Clearnet cuts LME nickel margins - "...Nickel margins would be reduced to $25,692 per six-tonne lot from $30,612.." - rest here

  Norilsk to re-elect board at co-owner's demand - "World No.1 nickel producer Norilsk Nickel said on Thursday that shareholders would vote Oct. 12 on re-electing the board, requested by billionaire Mikhail Prokhorov as he seeks to keep control of the firm." - more here

  Indications at 7:50 am CST show 3 month nickel selling down by $.59/lb  (Bloomberg - more) (Reuters - more)

  Standard Bank: Weekly Commodity Research - pdf here

  China may release energy consumption standards for nonferrous metals - "The Chinese government is considering releasing energy consumption standards for nonferrous metals next month in an attempt to curb heavy energy consumption in the nonferrous metals sector, an industrial official told Interfax today." - more here

  Undersea metals miners prepare to go in deep - "The mining of minerals from the deep ocean floor looks closer to becoming a reality after years of research as the first commercial exploration progresses, though the technology is far from proven." - more here

  National Australia Bank says base metal prices may have past peak - "National Australia Bank Ltd (NAB) said the record high base metal markets in May may prove to be the peak of prices in the current cycle." - more here

  Japanese spot ferromoly prices may be bottoming out: sources - "Japanese spot ferromolybdenum prices may be bottoming out this week after a month of trading amid soft sentiment, Japanese trade and consumer sources said Thursday." - more here

  EU steel makers call for trade barriers against Chinese steel import - "A spokesperson of ThyssenKrupp AG recently said that a group of European steel producers have requested that the European Commission start an antidumping procedure against cheap Chinese steel imports." - more here

  India revises 2006 steel production to become No 5 in the world - "India has moved up two places in global ranking to 5th place in production of crude steel." - more here

  Output of China's major coking firms rises 21 pct in H1 - "The output of China's energy-guzzling coke industry rose 21 percent on last year to 156.8 million tons in the first half, according to the latest figures from the China Coking Industry Association (CCIA)." - more here

  The CSTNC condemned to pour 20 million with the SLN - "Last week, the court of first authority of condemned the CSTNC to pay the sum record of 20 million franks to the SLN, following the general strike started in September 2006. An expert moreover was appointed to evaluate the damage of Nickel." - translated article here

  Today's beginning nickel inventory - plus 498 tons = 18,324 tonnes (2.95% - 540 tonnes cancelled warrants/ 17,784 net stock level)
Wednesday, August 8 (On this date next year, the 2008 Summer Olympics begin in Beijing)

  Today's official LME nickel closing prices - cash - $12.83/lb - 3 months buyer - $12.95/lb (16.6% lower than 1/1/07). Baltic Dry Index fell another 49 points today, to read 6,917. LME warehouses received a whooping 1153 additional tonnes of nickel overnight. Of the four warehouses receiving inventory, Busan, South Korea received 348 tonnes, Helsingborg, Sweden received 84 tonnes, Rotterdam, Netherlands received 492 tonnes, and Singapore received 300 tonnes. Outbound, Rotterdam shipped 48 tonnes, St Louis, US, shipped 6 tonnes and Busan shipped 18 tonnes. The news staggered an already reeling market, and nickel headed south from the bell. Today's official cash closing price is the lowest it has been since September 21st of last year. Standard Bank tried to remain optimistic in a note today "Although prices could drift over the remainder of the third quarter, we see good reason to remain cautiously bullish for the fourth quarter when stainless production and nickel demand are poised to rebound". Having lost 45% of its value since May 9th, the collapse in price is having an adverse effect on the entire downstream stainless steel market. End users demand immediate price relief from vendors who still have material manufactured from stainless purchased before the price of nickel began to fall. Warehouses worldwide are flushing their stock, not wanting to be caught with over priced inventory. Distributors refuse to invest in new inventory, knowing stainless steel prices will fall further. Stainless manufacturers are watching their demand dry up, and refuse to buy nickel for stock that may be over-priced tomorrow. So how will nickel find stability, when its largest demand base is hemoragging? Hard to tell. All eyes are on the London Metal Exchange, as many accuse it as being the villain that started this mess, and now look to it too become the white knight, who alone can bring some stability back to the market. Until the price stabilizes, do not look for stainless steel users to jump back in with both feet. And until they jump back in, we should see nickel inventory numbers continue to blossom, which in turn, adds more downward pressure on the trading price. It's a brutal cycle, with few winners, and many are hoping it comes to an end very soon. 3 month nickel ended today's trading at $12.76/lb ($28,100/tonne) (Dow Jones - more

The nickel bulls haven't had much to sing about lately, so we thought we would give you a video that is making the rounds. It's a little long, but be patient - it's worth watching. The motto? Never count out the bulls (or) And You Thought You Had a Bad Day! - video here   

  Courtesy Dow Jones Newswire - "Tycoons Vladimir Potanin and Mikhail Prokhorov seem to be moving farther away from an amicable divorce. Prokhorov, who owns a blocking stake in Norilsk Nickel, on Monday demanded the mining giant call an EGM to make changes on the board of directors. Analysts think Prokhorov wants to return to the board and may no longer want to sell his stake to Potanin (Kommersant, p. 1; Vedomosti)."

  Diggers and Dealers Mining Forum blog - Day 3 - here

  U.S. Report on Chinese Steel Industry Subsidies Called Into Question - "The China Iron and Steel Association has labelled the American Iron and Steel Institute's (AIS) report on government subsidies handed out by China to boost its steel industry as "completely groundless", according to a CISA statement released on its official website today." - more here

  Top 20 steel producers in the world according to IISI - #1 Arcelor Mittal, #2 Nippon Steel, #3 JFE, #4 POSCO, #5 Baosteel, #6 U.S. Steel, #7 Nucor, #8 Tangshan, #9 Corus Group, #10 Riva Group (followed by #11 ThyssenKrupp, #12 Evraz Holding, #13 Ansham, #14 Jiangsu Shagang Group, #15 Gerdau, #16 Wuhan, #17 Sumitomo, #18 SAIL, #19 Techint, and #20 Magnitogorsk) (source - pdf)

  Indications at 7:52 am CST show 3 month nickel selling down by $.32/lb . So much for any new floor theories, as LME has biggest receiving day this year, fueling more negative sentiment towards nickel.  (Bloomberg - more)  

  Haywood Securities - Metals & Mining Weekly - pdf here

  Australian Jubilee News

  • Australia's Jubilee seeing strong demand for nickel - "Australia's Jubilee Mines N.L. said it was in talks to renew a nickel supply agreement with the Inco division of Brazil's CVRD which expires next month, but said there had been fierce competition from other potential buyers." - more here
  • Jubilee to make WA announcement soon - "Nickel miner Jubilee Mines Nl says there has been fierce competition to secure the offtake from its operation in Western Australia, with a contract announcement expected within two weeks." - more here


  The Baoshan Steel Corporation denies stopped purchasing contains the nickel pig iron - "[ Peaceful and undisturbed branch on July 26 news ] recently some media reported stated, because the market slump, the Baoshan Steel Corporation stopped purchasing contains the nickel pig iron. Regarding this, the Baoshan Steel Corporation has given the denial." - poorly translated version here

  Macquarie: Diggers and Dealers 2007: Miners Remain Bullish - "The 15th annual Diggers and Dealers Conference is currently being held in Kalgoorlie, Western Australia. According to Macquarie Research Equities (MRE) analysts, who are attending the conference, recent volatility in global equity markets has done little to dampen the enthusiasm of Australia’s key mining industry representatives. Global metal majors and Australian juniors alike have lined up over the past two days to outline to conference delegates why they believe we are in the midst of what some have described as a truly generation-long commodities boom. The following summarises some of the key presentations so far." - article here

  South Korea's Posco News

  • Posco Cuts Stainless-Steel Prices for a Third Time This Year - "Posco, Asia's third-biggest steelmaker, cut prices of its stainless steel products for a third time this year after the cost of nickel, a key raw material, declined." - article here
  • Posco cuts hot-rolled stainless steel price by 8% in July - "South Korea's Posco ( said Wednesday it lowered the domestic price of its hot-rolled stainless steel products by 8% last month, due to falling nickel prices." - more here


  Xstrata's ambitious Mr. Davis - "Mick Davis, Xstrata plc’s 49-year-old boss, has the mark of ceaseless ambition writ large upon him." - more here

  Today's beginning nickel inventory - plus 1152 tons = 17,826 tonnes (2.83% - 504 tonnes cancelled warrants/ 17,322 net stock level)

Tuesday, August 7

  Today's official LME nickel closing prices - cash - $13.29/lb - 3 month buyer - $13.31/lb (13.4% lower than 1/1/07). BDI slumped for a second day, falling 24 points to read 6,966. LME inventories had another big gainer, after Rotterdam, Netherlands received 420 tonnes, and Helsingborg, Sweden checked in 432 tonnes. Today's figures look strikingly similar to yesterday's in and out receipts, with Rotterdam shipping 48 tonnes, and Busan, South Korea shipping 78 tonnes. Cancelled warrants fell below 3% for the first time this year. Surprisingly, nickel prices were up this morning, and gained as much as $.10/lb. Trying to figure out why the price would be up this morning, we found a sentence from a Dow Jones article that offered a clue "Another trader noted the start of the fund rolls Tuesday. 'Fresh fund allocations this month had to go somewhere.'" Is nickel trying to establish a new floor? We will have to wait and see if can pull it off, but it has stalled a few times since the correction began in May, only to resume falling after a few more days of large LME inventory gains. It all depends on the stainless steel producers, and we aren't seeing any signs they believe nickel has found its lowest point yet. The Fed makes a statement at 2:15 pm EST about U.S. interest rates, and in light of the markets volatility over the last few weeks, much of the world will be watching. Today, 3 month nickel ended the days trading at $13.09/lb ($28,850/tonne) (Dow Jones - more)

  Desjardins - Monthly Review of Prices of Commodities - pdf here

  Scotia Mocatta Metal Matters - August 2007 - pdf here

  World Crude Steel Production thru June - pdf here

  Stainless Steel Producer Talks Up Crowd at 2007 Fuel Ethanol Workshop - "In order to cover their full range of products and forms, stainless steel producer Outokumpu sent four people to staff their exhibition booth at the 2007 Fuel Ethanol Workshop & Expo (FEW) June 26-29 in St. Louis. “We were there so we could talk about all our products, but by the end of the conference it was a wonder we could still talk at all,” reported Dr. Ralph Davison, of TMR Stainless, Inc., a consultant to Outokumpu." - more here

  Eramet eyes resumption of Thio ore shipments - "French metals group Eramet plans to resume shipments of nickel ore from its Thio mine in New Caledonia to a nearby smelter, an official with one of the firm's subsidiaries said on Tuesday." - more here

  Diggers and Dealers Mining Forum blog - Day Two here

  Merafe News
  • Merafe ramps up production to cash in on record ferrochrome demand - "With the international ferrochrome market likely to remain in a supply deficit until 2010, and prices expected to remain at record levels, local producer Merafe Resources said it planned to beef up production and have all 20 furnaces operational by the year-end." - more here
  • Merafe seeks iron ore, ups ferrochrome output - "MERAFE Resources, the South African ferrochrome and coal empowerment company, is looking actively for an iron ore asset to add to its portfolio, management said on Tuesday." - more here
  • Space for ferrochrome consolidation in South Africa - "South African ferrochrome supplier Merafe says the benefit of a consolidated ferrochrome industry in South Africa would be more stability in price. Ferrochrome's strong demand is led by China which already has capacity to produce 10 million tonnes of stainless steel per year." - more here


  Costs Spiral for Miners - "Are rising costs the Achilles heel of the resources and mining sector? Classic Business Day talks with mining analyst Johann Pretorius from Nedcor Securities." - interview here

  FMG predicts its iron ore production may surpass BHP's - "The iron ore explorer Fortescue Metals Group has announced an ambitious plan to raise a billion dollars so it can expand its operations to become the second biggest iron ore exporter in Australia." - more here

  Prokhorov Seeks Norilsk Reshuffle - "Billionaire Mikhail Prokhorov has demanded the re-election of the board of world's No. 1 nickel producer Norilsk Nickel in order not to lose control of the giant, Prokhorov's fund said Monday." - article here

  Excerpt from yesterday's article "Metals bull run will last" - "He (Newmont Mining vice chairman Pierre Lassonde) also forecast that copper and molybdenum would not beat their recent record highs but the outlook for nickel, platinum, gold and oil would continue to rise." (Comment - This is an interesting, if not puzzling forecast. We have not heard the few molybdenum experts out there trumpeting this prediction, and in fact, we recently came across a Platt's report (7/19/07) that said Japanese steelmakers were quietly stockpiling moly, in anticipation of a possible shortage in 2008. After the gloomy forecasts and articles of earlier this summer, something is not adding up here. We will keep our eye on this as molybdenum is widely used in 316 and more exotic stainless steel's. In relation to his comment about nickel, we are not sure he meant to imply this, but by not saying nickel would not beat its recent record high, as he did about moly and copper, he is inferring nickel might get back up to the $23.50/lb it hit in May. While we do believe there is a very good chance nickel will find its footing in the not-so-distant future, without some supply disruption of epic proportions, we see no reason to believe it will make it back to record breaking territory for years. The nickel industry has far more to worry about than the current slump in price. The bull market is in no jeopardy of ending anytime soon, but nickel has lost a measurable amount of stainless steel market share to alternative less nickel bearing stainless grades, and the mysterious pig nickel production is now available to keep future price increases in check.) 

  Xstrata Notes on Nickel - Bloomberg - "Xstrata will provide an update on its Koniambo nickel project in New Caledonia in the last quarter. The company said in March the project may begin production by the end of 2010, reaching full annual capacity of 60,000 tons by 2012." - "Nickel production rose 3.5 percent to 24,886 tons and ferronickel output expanded to 14,749 tons, from 14,367 tons a year ago." - "The Raglan nickel mine in Canada will expand by 30 percent to 1.3 million tons per year by end-2008, Davis said." - Xstrata release - "After the expansion, Raglan will be one of the largest nickel mines in the world, with output approaching 50,000 tonnes of contained nickel in concentrate per annum, together with copper and platinum group metal byproducts."

  Philippines on the brink - "The southern Philippines could be on the brink of a new wave of violence. The Moro Islamic Liberation Front (MILF) and the government are preparing in case the four-year-old ceasefire breaks down." - more here

  (not stainless related but worth sharing with those who can't seem to live without that little plastic bottle of water) The secret is out -- bottler gets its water from the Missouri River - "Following pressure from activists, Pepsico disclosed last week that its Aquafina bottled water comes from the same source as tap water." - more here

  Indications  at 7:50 am CST show nickel selling up by $.10/lb . More than likely due to Xstrata's Ian Pierce comments that he is confident the nickel market will strengthen, after the current de-stocking by the stainless steel sector. Also reports on the company's "fact-finding" mission into China about pig nickel (see below) (Bloomberg - more)

  Rand Merchant Bank - Weekly Base Metals Report - pdf here

  Copyright/courtesy Dow Jones Newswire - "Nickel prices likely to continue to slide in August as demand remains weak, but lower prices will gradually start to limit marginal production of Chinese nickel pig iron, says Morgan Stanley. Notes poor demand from mills, service centers, which continue to de-stock; though announcements of cuts to stainless steel surcharges suggest demand could recover soon, hints at further cuts in September may delay return of buyers to market. However, Chinese nickel pig iron producers being hurt by higher energy costs, which make up more than half of their costs; estimates break-even costs close to $30,000/ton, more than current LME 3-month nickel."

  Stainless Producers Cut Nickel Use On High Prices - Xstrata - "Record high nickel prices combined with limited additional metal availability have resulted in numerous stainless producers increasing production of ferritic grades and reducing nickel-bearing austenitic material output, Anglo-Swiss miner Xstrata PLC (XTA.LN) said Tuesday." - more here

  China Use Of Nickel Pig Iron Entrepreneurial; To Fall-Xstrata - "China's use of nickel pig-iron in the production of stainless steel has been "very entrepreneurial," Xstrata PLC (XTA.LN) said Tuesday, but looks set to fall as metal prices decline." - more here

  Global Commodities Demand Strong, Led By China, India-Xstrata - "Global demand for commodities remains very strong, led by China and, increasingly, India, where imports of coal, iron ore and zinc are escalating on the back of ambitious plans to invest in infrastructure and industrial growth, Xstrata PLC (XTA.LN) said Tuesday." - more here

  Xstrata First-Half Net Doubles on Falconbridge, Metal Prices - "Xstrata Plc, the largest exporter of coal to power stations, said first-half profit more than doubled after its acquisition of Canada's Falconbridge Ltd. boosted nickel and copper production and metal prices increased." - more here

  Demand for stainless in EU remains low - "Although alloy surcharge has decreased to around €3,062/ton for August deliveries in European market, buyers are still unwilling to purchase new material." - more here

  Saudi Arabia, Egypt and UAE to dominate MEA steel markets - "According to a report by the Metal Bulletin Research, Saudi Arabia, Egypt and the UAE will dominate steel demand in the Middle East region. The report said that by the year 2010, Saudi Arabia will have an added capacity expansion of 5 million tonnes followed by Egypt with nearly 2 million tonnes and the UAE with 1.5 million tonnes." - more here

  Base metals likely to slump next year: Natixis - "Base metals are likely to enter negative territory next year after a healthy 2007, according to a report published last week by Natixis Commodity Markets, a London-based research firm." - more here

  Today's beginning nickel inventory - plus 726 tons = 16,674 tonnes (2.957% - 492 tonnes cancelled warrants/ 16,182 net stock level)

Monday, August 6

  Today's official LME nickel closing prices - cash - $13.26/lb - 3 month buyer - $13.25/lb (14% lower than 1/1/07). BDI slipped for the first time in awhile, breaking its run of record high's. Slipped 17 points to register 6,990. LME warehouses recorded a huge influx Friday, with Helsingborg, Sweden receiving 480 tonnes, and Rotterdam receiving 480 tonnes. On the outbound, Rotterdam shipped 72 tonnes and Busan, South Korea shipped 78 tonnes. Nickel spent most of the day in the negative range, although only slightly, and crawled back to where it started by the end of the day. Three month nickel ended the first day of this week's trading at $13.20/lb (flat) ($29,100/tonne) (Dow Jones - more)

The Diggers and Dealers Forum is meeting in Australia, and is usually good for some metals news. Not sure how regular the reports are, but ABC Goldfields-Esperance is broadcasting live from the forum - live radio here (just remember that noon CST in the States, is midnight there) Michelle Wiese Bockmann, editor with Mining Journal, has a report on Day 1 here. And Australian Business ran a report here. So far the reports seem to be quiet on nickel, although Metal Bulletin ran a headline "Nickel's long term outlook rosy, prices won't fall through $25,000/t". We don't subscribe so not sure who or what is behind this statement, but maybe we will have some more for you tomorrow. Teck Cominco Executive Vice President Peter Kukielski told a Reuters reporter at the conference "We love nickel, we love iron ore and we love uranium. We are actively looking in those areas". Can we expect more takeover's? Most likely. Vedanta Resources is facing a difficult situation in India, where it wants to mine bauxite from a mountain the locals worship as their God (more here). Maybe hard for westerners to understand, but if BHP discovered gold in the hills outside of Jerusalem, especially one known as Calvary, we might relate. Building mines in indigenous areas continues to be one of the most difficult scenario's a mining company will face.

  Metals Insider - Week in Review - "Nickel falls through key $30,000/t level" - report here

  Nickel Prices to Remain Close to $30,000 Per Tonne - Norilsk Nickel - "The cost of nickel could hover around $30,000 per tonne in the medium-term, Viktor Tomenko, head of Norilsk Nickel's Arctic branch, said on Thursday." - more here

  Rusina says direct nickel shipping continues - "West Perth-based nickel company Rusina Mining NL has confirmed its plans to ship laterite ores this quarter, telling the market today it remained on schedule." - more here

  Indications at 7:52 am CST show nickel selling down by $.04/lb  (Bloomberg - more) (AFX - more)

  In the weekly poll of China Shanghai NonFerrous Metals analysts, of 32 responding, 30 (93%) felt the price of nickel would fall this week, while only 2 (7%) expected it to stay the same. Non felt an increase was in store.

  Reuters Metal Weekly - pdf here

  Behre Dolbear - Global Mining News - pdf here  (now taking a week to post online so this is the 7/30 issue)

  The 15th Diggers & Dealers Forum is being held in Kalgoorlie, Australia over the next 3 days.

  Oriel starts second high-carbon ferrochrome furnace in Russia - "Oriel Resources, the London-based chrome and nickel mining and processing company, Monday announced the commissioning of its second high-carbon ferrochrome furnace in the Tikhvin smelter plant in Russia." - more here

  Courtesy Interfax - "China imported 54,170 tons of refined nickel during the first six months of this year, up 18.1 percent when compared to the same period last year, according to statistics released by the country's General Administration of Customs."

  European austenitic stainless surcharges drop again - "European alloy surcharges of austenitic flat rolled stainless steel dropped significantly for September shipment, because LME nickel price slid down a lot in June and July. " - more here

  AK Steel Announces September 2007 Surcharges for Electrical and Stainless Steels - stainless surcharge here in pdf

  Jinchuan Upgrades Nickel Price Again - "On August 1, Jinchuan Group Limited (JNMC), Asia's largest nickel manufacturer, upgraded the factory price of its nickel products from CNY 261,000 to CNY 265,000 per ton. It is the first time for Jinchuan to adjust upward its nickel price after downgrading for five times." - more here

  Norilsk Ex-CEO Prokhorov Calls EGM To Elect New Board - "The Onexim group of Russian financier Mikhail Prokhorov has asked to convene an extraordinary shareholder meeting of mining giant OAO Norilsk Nickel (GMKN.RS), Norilsk said in a statement Monday." - more here (and) Investment fund demands dismissal of Norilsk Nickel Board - more here

  Today's beginning nickel inventory - plus 810 tons = 15,948 tonnes (3.57% - 570 tonnes cancelled warrants/ 15,378 net stock level)

Saturday/Sunday August 4 & 5

  Japanese stainless mill Nippon Steel & Sumikin Stainless Steel agrees to 3rd quarter 2007 high carbon ferrochrome price with 50% chrome content, at $1.08/lb, up from $.90/lb in 2nd quarter, with South African suppliers. (spot ferrochrome price chart since 1/1/07 here)

  Trends Shaping the Future of the Steel Industry and Implications for Manganese - (June 2007) - pdf here

  Week in Review - (use a different source for prices than daily updates) Monday, 3 month nickel opened trading at $13.86/lb, rose to $13.97/lb, fell to $13.77/lb, and ended trading at $13.79/lb. Tuesday, the market opened at $13.87/lb, rose to $14.56/lb, saw a low of $13.78/lb, and ended at $14.24/lb, the only day of the week that nickel ended on the plus side. Wednesday, nickel opened at $14.27/lb, rose to $14.29/lb, fell to $13.83/lb, and ended at $13.96/lb. On Thursday, the market opened at $13.99/lb, rose to $14.03/lb, fell to $13.43/lb, and ended at $13.56/lb. On Friday, markets opened at $13.61/lb, also the high for the day, fell to $13.04/lb, and ended the week at $13.29/lb. 3 month nickel fell another 4.3% this week, and for the year, nickel has fallen 13.6%. Since January of 2006, prices remain up by 111%. AK Steel published its September stainless surcharges on Friday, and listed the following average cash costs for July, compared to June. Nickel - $15.16/lb , Chrome - $1.3538/lb , Molybdenum - $31.531/lb , and Iron - $285/GT (same)

  Mining group pulls flotation amid fears that debt turmoil is affecting new issues - "A mining company backed by Benny Steinmetz, the Israeli diamond tycoon, sent a tremor through the stock market yesterday by scrapping plans for a $2.3 billion (£1.2 billion) float on the day that its shares were to begin trading." - more here

  Copyright/courtesy Dow Jones Newswire - "Goldman Sachs cuts LME nickel price forecast to $27,500/ton for the end of 07 from $35,000 ton, and raises it to $37,500/ton for the end of 08, from $35,00/ton. Notes nickel prices are -58% from the May 8 high of $53,200/tons. "With substantial ferronickel supply continuing in China and ongoing substitution by end-use consumers, we put nickel at the bottom of our preference ordering for the balance of 07 and into 08," the bank says."

  Quote from 8/3 Forbes article - 'Most analysts conclude that the nickel price level where it's cheaper to use refined nickel over nickel pig iron falls somewhere between 25,000 usd and 27,000 usd,' noted Alex Heath, head of base metals at RBC Capital Markets."

  Inco upbeat about meeting output target despite plant shutdown - " Despite a plan to temporarily shut down its main furnace in the third quarter, PT International Nickel Indonesia (Inco) Tbk is optimistic about reaching its annual production target." - more here

  Commission gives mining company green light - "About 120 people listened in silence to the Coos County Planning Commission members Thursday night, as they approved chromite mining on forest lands by Oregon Resources Corp." - more here

  Eramet eyes fix for New Caledonia nickel mine - "French metals group Eramet said on Friday it may have found a way to ship nickel ore to a nearby smelter despite a fire at its Thio mine in New Caledonia." - more here  and  'The SLN puts the mouthfuls double in Thio - "In spite of the fire which destroyed the underground conveyor last weekend, the teams of the SLN make very to be ready to charge an ore tanker as of Monday." - translated article here

  Glencore lifts veil of secrecy in attempt to issue debt to secure commodities - "The two truckloads of metal that rolled out of Glencore International's Mopani Copper Mines in Zambia in February never made it to their destination at the Durban port last week." - more here

  Aborigines’ demands ‘blackmailing’ miners - "Aborigines are “blackmailing” miners with escalating demands for “ridiculous”payments to explore or mine vast tracts of remote Australian land, according to the country’s Association of Mining and Exploration Companies (AMEC)." - more here

  Mining Company Versus Mining Companies [opinion] - "Ever since mining started in Ghana, the story of individuals who have suffered perniciously in the hands of mining companies have neither changed nor ever been solved." - more here

  Loren wants mining firms to plant trees - "Mining concessionaires in the country, many of them multinational corporations, should be required to build forest parks, schools and hospitals in the communities around them, Sen. Loren Legarda said in Butuan City Sunday." - article here

  South Africa: Mining Law Will Hit Investment -- Lawyer - "The mining industry stood to lose out on investment if an amendment to legislation was passed by Parliament, a lawyer warned yesterday." - article here
Friday, August 3  Canadian Markets in Ontario closed on Monday for Civic Day, most of Canada off for various Provincial holidays

  Today's official LME nickel closing prices - cash - $13.34/lb - 3 months buyer - $13.31/lb (13.4% lower than 1/1/07). BDI gained 7 points to register 7,007, continuing to set new records daily. Inventories gained again, but Rotterdam wasn't the receiver today. Helsingborg, Sweden, received 360 tonnes, while Genoa, Italy shipped 6 tonnes, Rotterdam, Netherlands, shipped 18 tonnes, and Singapore shipped 6 tonnes. London Metal Exchange reports average price of cash nickel for a buyer was $15.11/lb in July, while the 3 month buyer average was $15.11/lb. These numbers are 25% and 23% lower than June averages, and put the average price of nickel for July 2007 somewhere between November and December 2006 average prices. And we were wrong on something we said earlier this week. We really figured the market would eventually show some reaction to the news out of New Caledonia about an Eramet fire suffered over the last weekend, and not only did they not care, but a reported rupture later in the week didn't cause any concern among traders either. Investors seemed to be in a generally foul mood this week, and with nickel being the ugly stepchild well before the mood turned sour, it didn't stand a chance. It was beginning to look like the bottom was falling out for nickel in early trading, with nickel falling as low as $28,550/tonne at one point, before it struggled to regain some of the lost ground. It ended the day and week at $13.20/lb ($29,100/tonne) (Dow Jones - more)  We hope you all have a restful and safe weekend!!

(In light of the tragedy in Minnesota, we are reminded of this 2001 article from CNN, published 6 months before 9/11 changed everything) Report: $1.3 trillion needed to rebuild the nation's infrastructure - "Structurally deficient bridges, unsafe dams and overcrowded and outdated school buildings are some of the problems cited in a report from an engineering group on the infrastructure of the United States, and it says it will cost $1.3 trillion to fix them." - 2001 article here

  Desjardins Group - Monthly Review of Prices of Commodities - pdf here

  Nickel Magazine June 2007 online - here 

  Eramet says New Caledonia mine accident won't affect nickel output before 2008 - "Mining company Eramet said the rupture of a concrete cylinder at its Tiebaghi nickel mine in New Caledonia earlier this week will not affect output before 2008, and the extent of the impact then is still being evaluated." - (more here)  Eramet: Accident May Affect Start-up Of Tiebaghi Nickel Plant - "French non-ferrous metals producer Eramet SA (13175.FR) said Friday a recent accident will push back the start-up of its new nickel ore enrichment plant at Tiebaghi, New Caledonia, but said current production at its ferro-nickel facility at Doniambo won't be affected." - (more here)

  News Notes

  • Platts is reporting Japanese stainless steelmaker Nisshin Seiko has announced a 30% production cut in chrome and nickel stainless steel thru August and September.
  • Chinese media suggests 25% increase forecast for next years iron ore price is entirely speculative, but admit they are negotiating with three major companies, Australia's Rio Tinto, Brazil's CVRD, and Australia BHP Billiton, who not only control around 75% of the world's iron ore production, but work as a team during the negotiations.  
  • The Albanian nickel ore industry, which has been in a deep sleep for the last 15 years, is expected to export 350,000 tons of nickel ore this year - Chinese media.


  (comment - we debated whether to post this as the translation is so bad, but felt it was important to at least give you the opportunity to try to read. Here are more warning signs to those who are still pooh-poohing the whole pig nickel production capability in China. This article was posted last Tuesday, and explains how easy it is for producers of other types of metals to switch to producing pig nickel, when their main line product sales are flat. It also provides some troubling numbers. Good luck with the translation.) -  The nickel price soars impels the ferro-nickel iron project to start in abundance - "Since last year, the international nickel price crazy rise, London metal exchange (LME) in March nickel forward price most has reached as high as to this May to 51,350 US dollars/tons. In under the nickel price impetus, the domestic factory starts in abundance the ferro-nickel iron project, original somewhat produce the ferroalloy the enterprise and the small steel and iron also in abundance produces a different product the ferro-nickel iron." - poorly translated article here

  Updates on nickel mines under construction from recent statements/quarterly reports - Ambatovy (Madagascar) - Sherritt announces on schedule for early 2010 production / Mirabela reports Santa Rita mine project (Brazil) on schedule for second quarter 2009 / BHP reports Ravensthorpe (Australia) will begin production first quarter of 2008/ CVRD reports production at Goro (New Caledonia) may begin as early as the third quarter of 2008 / CVRD, in quarterly report, shows Onca Puma (Brazil) scheduled to be commissioned in 4th quarter of 2008.

  Indications at 7:50 am CST show 3 month nickel selling down by $.28/lb  (Bloomberg - more) (AFX - more)

  TD Bank - Weekly Commodity Price Report - pdf here

  Commodities exchange to be established in St. Petersburg - "Deputy Economic and Trade minister Kirill Androsov said that the international commodities exchange in St. Petersburg will be registered in September or October 2007." - more here

  Acesita sees short downturn in stainless steel market - Brazil - "International stainless steel markets are due to experience a short downturn that "shouldn't be prolonged" and will return to stable conditions quickly, according to Sérgio Mendes, commercial director at Brazilian specialty steelmaker Acesita." - more here

  Yes Virginia, there is a commodity super-cycle - "Sometimes when it looks, sounds and walks like a duck…then it is duck! The continuing decline in the price of some metals including nickel has many analysts clucking that this mining boom is over." - more here

  Base Metals Mkt Conditions Still Supportive -Anglo - "Anglo American PLC is "bullish on everything" it's in, Chief Executive Cynthia Carroll said Friday, and she singled out base metals and iron ore for special mention." - more here

  Stainless steel prices expected to remain firm - "Although the current price of stainless steel has weakened, it is said that the stainless steel price in Asia, including Malaysia, will keep stable and increase further." - more here

  Taiwan's stainless steel mills to slash stainless steel output - "Taiwan’s main stainless steel manufactures, including Yusco has announced to reduce the August production by 50 percent, after the reduction in July. Tang Eng said it also will cut 50 percent of production due to the furnace maintenance." - more here

  Jindal Stainless mulls plant in Russia - "Jindal Stainless is planning a foray into the Russian market by setting up a greenfield facility in the north-western Leningrad region. In the first phase, Jindal Stainless may invest up to $60 million in an integrated stainless steel facility in Leningrad." - more here

  Black week for the SLN - "The first private company of the country has accumulated for eleven months the technical and social difficulties. Yesterday, it is the highly strategic building site of the treatment unit of the ore of Tiebaghi which was the theatre of a major incident." - translated article here

  Barcap increases commodities appetite - "Investment bank Barclays Capital has sharply increased its appetite for risk-taking in the first half of 2007, with all the new risk being taken in the commodities segment, according to Barcap reports." - more here

  Market jitters fail to halt mining merger drive - "The recent volatility in the debt market has made investors more risk-averse, leaving a number of deals balanced on a knife edge because of doubts about how the transactions will be financed." - more here

  Investing in Africa the final frontier for adventurous investors - "Africa is a financial wild west that could prove very lucrative for adventurous investors looking to cash in on emerging markets - as long as that investment recognizes the dangers that exist on the continent." - more here

  Today's beginning nickel inventory - plus 330 tons = 15,138 tonnes (4.52% - 684 tonnes cancelled warrants/ 14,454 net stock level)

Thursday, August 2

  Today's official LME nickel closing prices - cash - $13.86/lb - 3 months buyer - $13.88/lb (8.8% lower than 1/1/07). The Baltic Dry Index gained 7 points to hit an even 7,000, and another record high reading. Inventories gained yet again Wednesday, with Rotterdam receiving an additional 480 tonnes and Singapore receiving 12 tonnes. Outbound, Rotterdam was the loner shipper, at 96 tonnes. Nickel fell below the psychological $30,000 tonne barrier today, and news of further problems in New Caledonia appeared to be dismissed. When a factory spokesman refers to a rupture as causing colossal damage, you would think it would draw some attention. If it did, you couldn't tell with the trading curve today. Antam also lowered its ferronickel production forecast by 25%, which is generally the type of news the bullish traders jump all over. But not today. The world's third largest miner, Rio Tinto reported their second quarter earnings today, and they were dismal compared to their competition. Apparently they need a little more nickel in their portfolio. For the day, nickel ended trading at $13.54/lb ($29,850/tonne ) (Dow Jones - pending

  Global iron-ore output rose 12% in 2006 - study - "World iron-ore production grew by 12% in 2006, to reach 1,5-billion tons, the United Nations Conference on Trade and Development (Unctad) said in its yearly iron-ore review, distributed on Wednesday night." - more here

  Dealwatch: Miners - "As the contest for the world's largest mining deal wages on, investors and onlookers are anticipating BHP Billiton Ltd.'s next move." - more here

  Fire halts ore supplies to Eramet nickel smelter - "Fire has severely damaged a conveyor belt at the Thio nickel mine of French non-ferrous metals firm Eramet , halting all ore shipments to its Doniambo smelter in New Caledonia, officials said on Thursday." - more here (finally, somebody else picked up the story)

  World's largest steelmaker announced 2nd quarter results yesterday. From stainless side, the following news - "(Reuters)Quarter on quarter operations improved in all business segments except in stainless steel where the operating result declined due to a write-down in the value of inventory, as a result of the recent decline in nickel prices." - "(Dow Jones)The only cloud on the company's horizon is the market for stainless steel, which is expected to keep weakening through the end of the year." - (RTT) The Stainless Steel segment generated sales of $2.7 billion, compared to $2.3 billion for the three months ended on March 31, 2007. The sequential decrease in the segment's sales was principally due to a write-down in the value of inventory, as a result of the recent decline in nickel prices, partially offset by improved volumes. Total steel shipments in the Stainless Steel segment rose to 544 thousand metric tonnes from 498 thousand metric tonnes in the previous quarter.

  Courtesy/copyright Dow Jones - "LME nickel slipped through the $30,000/ton level to hit an 8-month low amid muted trade in the summer slowdown period, says an LME broker." - (indications at 10:30 am CST show nickel is selling below the $30,000/tonne mark)

  For updated news reports on the tragic Minnesota bridge collapse -  KSTP(live coverage)  KARE(live coverage)  WCCO-TV  Star Tribune  

  Indications at 7:50 am CST show 3 month nickel selling down by $.29/lb   (Bloomberg - more)

  Standard Bank Commodities Research - Commodities Weekly - pdf here

  Eramet nickel mine hit by accident; no injuries - "A concrete cylinder ruptured last night at the Tiebaghi nickel mine in northern New Caledonia owned by Eramet unit Societe Le Nickel, management at the subsidiary said." - more here

  Jindal Stainless to build steel mill in Leningrad - "Jindal Stainless Ltd is planning to build a 400-metric tonne steel mill to manufacture stainless steel sheets at an investment of $60-million in Leningrad, reports Itar-Tass." - more here

  Nickel price slide will cut stainless prices, soon - "The first question isn’t “whether nickel is getting cheaper?” but “how low will nickel’s price fall?” And that brings up the second buyer-vexing question of “when will stainless steel start its slide?” After all, two-thirds of all processed nickel goes into stainless steel." - more here

  China close to turning point - "AUSTRALIA'S most influential economist, Ross Garnaut, forecasts in a report that China is at an historic economic and social turning point that will lead to an even bigger appetite for resources at higher prices." - article here

  Eramet flies away thanks to nickel calédonie - "Eramet sold for 85,6 billion nickel at the first half of 2007. Drawn by this result, the sales turnover of the group increases by 21%." - translated article here

  US stainless imports up in June - "US stainless steel imports in June rose by 23 percent to 108,500 tons in comparison with the corresponding 2006 period , and the figure was 107,700 tons in May." - more here

  Posco may reduce stainless steel price - "It is reported that South Korean Posco plans to cut stainless steel price by some US$380/ton, mainly due to nickel slump. China’s Tisco has also announced to reduce stainless steel price in September." - article here

  Indonesia's Inco Q2 nickel output up a third - "The Indonesian unit of Inco Ltd said on Thursday its nickel in matte output rose 33 percent in the second quarter to 46.5 million pounds, or 21,100 tonnes, from a year ago." - article here

  Non-ferrous metal output rises 24% in 1st half - "Non-ferrous metal output in China, the world's top metal producer since 2002, grew by almost one-fourth in the first half of this year as a result of strong demand and prices." - article here

  China’s new rules to hit metal imports - "China’s new rules may hit imports of metals from countries like India." - more here

  Indonesian Unit of CVRD Inco to Build 2 New Nickel Plants on Sulawesi Island for $2.5 Billion - "Canadian nickel miner Inco's Indonesia unit plans to build two new nickel plants on Sulawesi island." - article here

  Antam's FeNi III smelter to resume operations Sep after repairs - "Indonesian ferronickel major PT Antam's third smelter in southeast Sulawesi, FeNi III, will resume operations in September following repairs, the company said late Wednesday." - article here

  NDRC: China no steel mill for the world - "The government would further curb steel exports and meanwhile improve energy efficiency and reduce emission, said the country's top planner in its newly released analysis report on the steel industry of the first half year." - article here

  Today's beginning nickel inventory - plus 396 tons = 14,808 tonnes (3.44% - 510 tonnes cancelled warrants/ 14,290 net stock level)
Wednesday, August 1

  Today's LME nickel official closing prices - cash - $13.95/lb - 3 months buyer - $13.95/lb (8.2% lower than 1/1/107). Baltic Dry Index increased again, adding 26 points to register another record high at 6,993. After taking a breather yesterday, inventories gained again Tuesday. Rotterdam took in an influx of 480 tonnes, and shipped out 24 tonnes, while St. Louis, in the U.S., shipped out 24 tonnes. And with this news, the markets fell back into the retreat mood. Still not sure what yesterday was all about. Seeing some reasons in the press fresh out of the recently published book for analysts "Believable Reasons to Give To The Media When You Don't Know Why the Market Did What It Did". And we wonder sometimes why they don't like us? Oh well, it's all meant in fun. We pick on them for their forecasting prices only because we don't dare put our own head on that chopping block. Besides, we pick on everyone, including ourselves. We figure our readers have enough stress in their daily lives, so if we can bring out a smile, we made the news easier to swallow. We'll stick to our bare bones and unscientifically formulated theory that the market is extremely apprehensive about falling thru the $30,000/tone barrier. Received an e-mail from a reader advising they were seeing Shanghai Metal Prices increasing over the last few days. Haven't had a chance to investigate this thoroughly, but after watching this market for months, we had decided it was primarily reactionary to the LME. But a quick glance over the past week's numbers prove we may need to keep a closer eye on it, as it does appear to be moving opposite the LME trend. What does this mean? Well we haven't got our copy of the new book yet, so we'll get back to you. Thanks to the reader for bringing this to our attention and readers can find a link to the Shanghai daily price in the right hand column of this page. Nickel spent the day in the red and ended the first day of the month at $13.96/lb ($30,770/tonne) (Dow Jones - more)        

  Rand Merchant Bank - Base Metals Report - pdf here

  Base Metals 2007 - Learning to live with volatility - "Even such a short period as the past quarter has seen some remarkable changes in base metals prices – both up and down" - more here

  Goldman Sachs sees limited fallout for commodities from US credit crunch - "The current credit problems in the US are going to further impede the economic recovery in the world's biggest economy, but the impact on commodities will likely be limited, according to investment bank Goldman Sachs." - more here

  Credit gloom seeps through to commodities - "Copper, gold and oil prices all slid on Wednesday as investors retreated on uncertainty about the damage to economic growth and demand from the growing tally of casualties in credit markets." - more here

  Norilsk Nickel ups Q2 nickel production by 16 pct to 71,000 tonnes - "JSC MMC Norilsk Nickel increased nickel production in the second quarter by 16 pct to 71,000 tonnes from 61,000 a year earlier thanks to acquisitions, Interfax reported." - more here

  The Gross Output Value of Construction Increased in the First Half Year - "In the first half year of 2007, all the construction enterprises in China (refers to those construction enterprises having overall or professional contracting qualification, excluding those sub-contractors in labor services, same as follows) achieved construction output value of 1,821.3 billion yuan, a year-on-year increase of 22.0 percent." - more here

  Reuters Metal Weekly - pdf here


Nice chart published by BHP in a recent report


  Stainless Steel Prices in Turmoil after Collapse of Nickel on LME - "Western stainless steel producers of strip mill products have temporarily abandoned their traditional basis plus surcharge mechanism for selling their material. Most EU and US mills are now quoting only transaction (effective) figures. This is, principally, to disguise the discounts necessary to obtain orders after the fall in the price of nickel since early June." - more here

  Stainless Steel and Nickel Price Forecasts from MEPS - "EU Average Stainless Steel transaction prices have now entered the path to the abyss. Basis figures have been sacrificed in a month (July) which has seen most deals concluded using only the effective price. This could continue in the short term as alloy surcharges remain at the mercy of nickel price fluctuations." - more here

  China July manufacturing PMI 53.3 vs 54.5 in June - CFLP - "The purchasing manager's index (PMI) for the manufacturing sector fell to 53.3 points in July from 54.5 in June, the China Federation of Logistics and Purchasing (CFLP) said." - article here

  '4 Manhattans a year' - "This city of high-concept glass office towers and fancy apartment blocks didn't exist 25 years ago. Turn back time and the city of Shenzhen was a quiet village of a few thousand inhabitants, mostly fishermen and their families, nestled at the neck of the peninsula that extends southward to Hong Kong." - article with video

  Cutifani leaving Inco for AngloGold Ashanti - "Mark Cutifani is leaving his position as chief operating officer (COO) at CVRD Inco to become chief executive officer (CEO) of AngloGold Ashanti." - more here

  Aggressive Swiss Giant Rides Resources Boom - "When the fugitive commodities dealer Marc Rich sold his trading firm 13 years ago, it was best known for doing business with pariah nations." - article here

  Indications at 7:50 am CST show 3 month nickel selling down by $.29/lb . After taking a one day breather, inventories gained again, bringing negative sentiment back to the market. A follow-up article from New Caledonia (posted below) about the weekend fire, shows nickel production will most likely be affected, but we can find no other metals sites, or metals analysts even talking about it. If the news ever makes its way to London, we may see some trading reaction. (Bloomberg - more)  (Reuters - more)

  ScotiaBank Commodity Price Index - pdf here

  Courtesy/Copyright Dow Jones Newswire - "Nickel prices should remain within a trading range of $30,000 to $35,000 a metric ton for the time being, says Commerzbank. Adds if it drops through $30,000/ton a retreat to a low of $25,000/ton would then be likely." - "LME nickel looks unlikely to stage a return to its former highs with any upside expected to be short-lived, says Triland's Michael Khosrowpour. The exception is if a move to 35,000/ton is realized, "forcing a technical re-assessment," he notes. More likely is a period of consolidation with a break lower going forward, Khosrowpour adds."

  CVRD Q2 net soars 50% - "CVRD, the world's largest iron ore miner, on Tuesday reported record second-quarter net profits driven by high nickel prices and a nearly 10 per cent jump in iron ore contract prices." - more here

  New Bites

  • China's nickel ore imports reach 7.02 mln tons in H1
  • Chinese Stainless Mills Planning August Price Cuts


  The fire the Thio one takes the SLN with the throat - "The fire which destroyed the tunnel of edge of sea of the mine will have major consequences on the provisioning and the production of the SLN. Several solutions are being studied." - translated article here

  Indonesia's Int'l Nickel logs 232 pct surge in sales - "PT International Nickel Indonesia TBK (PT Inco) on Wednesday reported unaudited sales of US$859.0 million in the second quarter of 2007, a 232 per cent increase from US$258.6 million in the same quarter last year." - more here (Bloomberg - more)

  A little piece of nostalgia courtesy an old American Metal Market magazine article - August 24, 1994 - "Nickel stocks soared on the London Metal Exchange to an all-time high yesterday on the heels of large expected shipments of Russian nickel and solid Western production, sources said. LME nickel holdings were reported as 138,192 metric tons yesterday morning, up 762 tons from last Friday. The nickel spot bid also increased on the LME yesterday morning to $2.61 per pound, up 3 cents from Monday's rings." (these inventory levels came after the collapse of the Soviet Union and the market was flooded with Russian nickel) 

  Today's beginning nickel inventory - plus 432 tons = 14,412 tonnes (3.62% - 522 tonnes cancelled warrants/ 13,890 net stock level)


July Archives


Daily Comparison         (* = per lb) or (+ = per tonne)

Date

LME Stock Level +

Cancelled Warrants

Net Stock Level

Official Cash Close *

Official 3 months close *

Day's Ending *

8-31

24,126

4.50%

23,040

$13.70

$13.68

$13.51

8-30

23,286

3.76%

22,410

$12.59

$12.70

$12.84

8-29

23,436

3.61%

22,590

$12.32

$12.47

$12.60

8-28

23,106

3.22%

22,362

$12.42

$12.41

$12.56

8-24

21,126

4.06%

20,268

$12.07

$12.25

$12.56

8-23

21,078

4.41%

20,148

$12.74

$12.81

$12.61

8-22

20,466

3.40%

19,770

$12.60

$12.70

$12.77

8-21

20,454

3.99%

19,638

$11.86

$11.97

$12.34

8-20

20,262

3.29%

19,596

$11.85

$11.93

$11.83

8-17

20,304

3.16%

19,662

$11.56

$11.66

$11.79

8-16

19,752

3.07%

19,136

$11.36

$11.56

$11.39

8-15

19,458

3.02%

18,870

$12.02

$12.16

$11.97

8-14

19,086

3.36%

18,444

$12.61

$12.68

$12.32

8-13

19,224

2.90%

18,666

$11.88

$12.06

$12.43

8-10

18,804

3.03%

18,234

$11.52

$11.68

$12.07

8-9

18,324

2.95%

17,784

$12.15

$12.28

$12.25

8-8

17,826

2.72%

17,322

$12.83

$12.95

$12.76

8-7

16,674

2.95%

16,182

$13.29

$13.31

$13.09

8-6

15,948

3.57%

15,378

$13.26

$13.25

$13.20

8-3

15,138

4.52%

14,454

$13.34

$13.31

$13.20

8-2

14,808

3.44%

14,290

$13.86

$13.88

$13.54

8-1

14,412

3.62%

13,890

$13.95

$13.95

$13.96

3 month nickel averaged $11.01/lb for all of 2006, $6.69/lb in 2005 - Cancelled warrants are goods sold


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All prices, unless marked official closing prices, are indications only of LME 3 month buyer traded prices and courtesy newswire services. To understand what our prices mean, see "A Guide To LME Trading"...pdf here or "The ABCs of a Metals Exchange" ...pdf here (Molybdenum prices are for molybdenum oxide, an ingredient and major price factor in 316 stainless) (all ton listings are metric tons = 2204.6 pounds ) Updated daily before 8 am CST and before 1 pm CST weekdays, with some weekend updates - Disclaimer Original content and opinions copyright www.estainlesssteel.com

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