Updated twice daily M-F before 8:00 am CST and by 1 pm CST

• Official LME nickel closing prices - cash - $11.70/lb 3 month buyer - $11.79/lb (22% lower than 1/1/07)
• Baltic Dry Index - unchanged since 12/24. (chart)
• LME nickel inventories - plus 60 tonnes into Rotterdam, Netherlands warehouse, minus 138 tonnes from Rotterdam warehouse, minus 12 tonnes from Singapore warehouse, plus 96 tonnes into Baltimore, MD, USA warehouse, minus 6 tonnes from Vlissingen, Netherlands warehouse
• Quiet day on the LME with nickel trickling slightly downwards. For the year, three month nickel ended at $11.91/lb ($26,250/tonne). That puts the price of three month nickel down 21.1% for the year, and after a 55.6% gain earlier in the year.   
• Closing Metals Report - more
• Markets are closed tomorrow for New Year Holiday. See you next year!!

  The year 2007 has been a roller coaster ride for the base metals complex. The first quarter saw an appreciation in prices for example Nickel which made new highs. - more

  China exported steel to 207 countries, but South Korea accounted for 18.2% of the volumes. The country wise details are as under - more

  The ANSA news agency reported that a seventh steelworker died on Sunday from serious burns sustained in a fire more than three weeks ago at German steelmaker ThyssenKrupp's Turin based mill in northern Italy. He was the last injured worker still undergoing treatment. - more

  IRON ore has made a lot of people a lot of money. It has earned Andrew "Twiggy" Forrest the moniker of the richest man in the country - even if it is only on paper - and it has caused untold acrimony between other iron ore wannabes trying to get a slice of options and cash. - more

  Morning Briefing (8:00 AM CST is 2 PM in London)

• Indications at 7:55 am CST show 3 month nickel selling down by $.05/lb . It's the last trading day for 2007 and markets have been quiet so far.
• Bloomberg - more

  Nickel will lead a decline in industrial metals next year as stockpiles expand and demand slows with the U.S. housing market, a survey of analysts showed. Nickel for immediate delivery will average $29,500 a metric ton ($13.38/lb) next year on the London Metal Exchange, according to the median of 19 analysts surveyed by Bloomberg News this month.  - more

  ABARE Economics - Australian Commodity Statistics - December 2007 - pdf here

  Beginning LME nickel inventory/overnight Shanghai closing price

•   London Metal Exchange - plus 0 tons = 47,946 tonnes (1.31% - 630 tonnes cancelled warrants/ 47,316 net stock level) (charts)
•   Shanghai Jinchuan nickel - market closed for holiday (charts)

  Courtesy Gulf Times - "Tropical cyclone Melanie, a category two storm with winds of up to 120kph, was nearing Australia’s remote northwest coast yesterday, prompting meteorologists to issue cyclone warnings for coastal regions. Tropical cyclone Melanie was estimated to be 410km north of Port Hedland, a key terminal for the shipment of iron ore, and 465km northeast of oil producing region Karratha, the Bureau of Meteorology (BOM) said. The cyclone was moving south about 11kph. Melanie is the first storm of the November-to-April season to form in Australia’s “cyclone alley”, which is also home to the world’s biggest iron ore deposits and major oil and gas fields. Normally the area sees about five storms each season."

  The Chinese government will adjust the import and export duties on some products from January 1 to save domestic resources and ensure better trade balance. - more

  Courtesy  Philippine Inquirer - "With at least P6 billion in natural gas royalty expected over the next three years, which can double if it wins ownership of the Camago Malampaya oil and gas reserves in the Supreme Court, Palawan is going easy on mining investments....During the mining summit, Reyes announced that Palawan would impose a moratorium on exploration activities in the nickel and manganese-rich area of Mt. Mantalingahan, which is set to be declared a protected landscape. He said small-scale mining operations in the southern areas would be scrutinized after these had come under fire from environmental groups for violations of the law. “What would the province really get from them?” Reyes said in Filipino, referring to the tax exemptions allowed by mining laws to small-scale operations."

  In March 2008, International Quality Steel LLC (United Arab Emirates) will start production of stainless billet in their new 90,000tpy steelmaking shop.

  12/27 - Bus carrying 43 Filipino workers from Goro nickel plant under construction to the airport slides across roadway on curve, and strikes oncoming Peugeot, killing 27 year old Anthony Dujeu. None of the Goro workers were injured.

  Courtesy Rusmet - " The increase in iron and steel production and the production of finished metal products in January-November 2007 amounted to 101.8% of the corresponding period of 2006...... Dynamics of nickel in January-November 2007 amounted to 97.1% of the corresponding period of 2006. In doing so, enterprises MMC Norilsk Nickel nickel production fell by 4.9% in OAO Kombinat "Yuzhuralnikel" - increased by 19.2%, in OAO Ufaleynikel "- at 1.9 percent." "According to the related statistics, Russia exported 146,489 tons of stainless steel scrap (Ni>8%) from January to September, decreasing by 20 percent than 183,122 tons in the same time of last year. Finland has become the main country of Russia’s scrap exports which contributes 58,576 tons in the first 9 months of this year, followed by Netherlands and Germany."

  Courtesy Business Standard - "While the first half of 2008 is expected to remain subdued for base metals globally, prices are likely to pick up in the second half. The slowdown, which started in 2007, is set to spill over into the new year as base metals are estimated to slump further by 8%. But a recovery should follow towards the end of the first half as Chinese traders will jump into the market with fresh bookings. Although, China’s actual consumption may not be as high as it was in 2006 and 2007 as infrastructure development for Olympic Games might be over, the ongoing development plan, bolstered by a robust 11.7 per cent growth in gross domestic product (GDP), will continue. Therefore, the demand for base metals would continue, albeit with at slower pace, said Raghavan Sundararajan, an analyst with Kotak Commodities Services."

  Sudip Bandyopadhyay, CEO of Reliance Money, to The Economic Times - "The fundamental outlook is reasonably sound for base metals," says Mr Bandyopadhyay. Despite the current turmoil, the US will avoid recession and global economic growth will still be near 5-7% in 2008. This, together with the destocking/ re-stocking effect, suggests that LME metals demand growth could even pick up in 2008. "The supply side should limit the downside for copper and aluminum, whereas it points to further hefty losses for zinc and over the longer term, nickel," he says."

  BHP BILLITON has quietly advanced plans to start building a $US2 billion-plus ($2.2 billion-plus) nickel laterite project in Indonesia within three years, even though the project falls outside its main development pipeline presented to investors this month. - more

  (excerpt) Chrome is fetching about $US500 a tonne, against $US26,550/tonne for nickel, so we are not surprised to hear that stainless-steel producers are putting more chrome and less nickel in their end product. - more

  Just for fun...
Most common media headline on days when reporters have no idea
On days when nickel price drops

• Nickel Price in Consolidation Mode
• Metal Prices Fall on Housing Concerns
• Metals Volatility Continues

On days when nickel price increases

• Metal Prices Increase on Chinese Demand
• Metal Prices Increase on Renewed Investor Interest
• Metals Volatility Continues

Headlines we would like to see from honest reporters

• Nickel Bear Removed from Endangered Species List
• Fickle Nickel in a Price Pickle
• Nickel Bull 'Testicle Festival' Opens Today
• LME? Is that Short for 'Leggo of My Eggo'?
• Quite on Que, and we have no Clue
• Deadline for a Headline - and what the heck is nickel?

  Chinese media carried a story this past week about the difficulties the Chinese fastener industry is facing. According to the article, Haiyan China is the largest fastener production base in the world, with 70% of production exported to over 60 countries. The article reports that more than 200 small-sized fastener manufacturers in Haiyan have closed recently. Quote from the article - "A lot of fastener enterprises in Haiyan operate under this hidden rule: The price can be as low as possible as long as they can make profits. As a result, journalist here associates the "tragedy of the commons" frequently referred in western economics: When the land belongs to the whole public, everyone will contend for development, as the land development will create benefits. Therefore, the land will be destroyed. When the grassland belongs to the public, everyone has his/her rights to graze, so he/she will graze for one's own benefits. To maximize personal interests, everyone will compare with each other and increase the number of the livestock. As a result, the number of the sheep greatly exceeds the capacity of this grassland. If everyone goes on like this, the land will become desertification. It is the real fact of Haiyan fastener industry that the enterprises just consider one's own benefits, regardless of the common interests of the whole industry." (the analogy the author uses applies far beyond the Chinese fastener industry) 

  Fortis Metals Monthly - pdf here

  Scotiabank Commodity Price Index - pdf here

  (from Societe General report 12/14/07)

  Base Metals Stockpiles & Prices 3 - more here

  Courtesy/copyright Dow Jones - "LME nickel slips as consumers sit on the sidelines and investment interest remains noticably absent, says a trader. While demand from the stainless sector is expected to pick up in '08, the outlook to year-end is for "much of the same," he adds, with prices set to drift."

  Dow Jones - Brazilian mining and metals group Vale is due to plant 346mn trees in countries where it operates by 2015, covering an area of 300,000ha, the company said on its website.

  Copyright The Financial Times Limited - "Global Smelters Ltd is increasing the capacity of stainless steel plant to 4 lakh tonnes per annum (tpa) from 1 lakh tpa now in Hamirpur, Uttar Pradesh. The plant will come up on 35 acres of land with an investment of Rs150 crore. ...Around 15 percent of work is complete and the remaining would be over by Dec 2008."

  Copyright The Financial Times Limited - "Varun Industries ...is the largest exporter of stainless steel kitchenware and house ware products in India. The company has 80 suppliers and exports its products to North America, South America, Central America, the European Union, the Middle East, the Far East, Africa and Australia. Recently, the company set up a manufacturing and warehousing facility in Vasai (E), in Thane district, near Mumbai with an investment of Rs55 crore. The plant will manufacture a wide variety of stainless steel kitchenware and house ware. The company has plans to diversify into other businesses like oil and gas drilling, iron ore mining, wind and hydropower generation and agro product exports."

  According to the related information, Russia exported ferro-chrome about 250,966 tonnes from January to September 2007, up by 10.1%YoY as compared to 227,935 tonnes in same period last year. - more

  Imports Rise 13% in October from September Still Down Significantly for the Year - more

• Official LME nickel closing prices - cash - $11.95/lb 3 month buyer - $12.10/lb (19.9% lower than 1/1/07)
• Baltic Dry Index - not updated since 12/24 currently at 9,143 (chart)
• LME nickel inventories - plus 798 tonnes into Rotterdam, Netherlands warehouse, minus 66 tonnes from Rotterdam warehouse, minus 186 tonnes from Singapore warehouse, plus 216 tonnes into Vlissingen, Netherlands warehouse
• It has been a long year for those involved in stainless steel production and distribution. For most of the first half of the year, the price of nickel seemed to have no limit, with stainless steel prices carried along for the ride. But, the limit was to be reached in May, at the $50,000/tonne level. None dared forecast such a level earlier, and for those who had been predicting a major correction since earlier the prior year, their time to shine and finally be right, was at hand. The summer months saw nickel in a nose dive, losing 1/2 of its value. In return, stainless steel sellers and users, stocked with inventory that was over-priced overnight, turned from 'get-it-before-it-goes-higher' buyers to 'cheaper-tomorrow?' non-buyers. Stainless steel production, which had been growing at phenomenal rates in past years, suddenly looks to end the year flat. Nickel production, which just months earlier had struggled to keep up with demand, continued to increase. In the mean time, producers and consumers, tired of being held hostage to London based traders, began to look at alternative sources. The interest in 200 and 400 series stainless steel increased, while Chinese suppliers discovered a process to smelt low grade laterite ore, which had been discarded and stockpiled by nickel miners for years as worthless. Originally pooh-poohed by most, substitution and 'pig nickel' have both become legitimate threats to the nickel industry. As 2007 ends, there are many concerns facing the future of the stainless steel and nickel industry's. Stainless steel producers demand the price of nickel show some stability, while nickel traders appear to play the market as if volatility were the only way to make money. And thus the stand off and tug-of-war of the last few months continues. Nickel producers, apparently convinced that the slowdown in stainless steel production of 2007, will not repeat itself in years to come, continue to invest billions into new nickel mining ventures, with large scale mines scheduled to come on board in 2008. And probably the most concerning, at least in our opinion, is the phenomenal growth in China's stainless steel production, that has fueled this entire boom. While there is no reason to believe domestic use of Chinese stainless steel will wain anytime soon, their export market is starting to look bruised. More and more countries are yelling foul and examining the option of placing anti-dumping duties on Chinese made stainless. The EU, South Korea and Russia are the most recent, but it is only a matter of time before the US, under a new administration, will look seriously at the situation. This will accelerate problems for an industry that, according to their own government, is already saturated with over-production. And while there is little evidence the boom will go bust anytime soon, there are warning signs evident that advice all interested parties to stay alert. 2007 proved to be an interesting year, and 2008 is shaping up to be equally, if not even more, challenging.
• Three month nickel ended 2006 at $15.10/lb, with LME nickel inventories at 6,648 tonnes. For the final trading day of this year, those same warehouses hold 47,946 tonnes of nickel, and the trading price ended at $11.93/lb ($26,300/tonne). The history books will show nickel ended 21% lower for the year, but if they fail to remind their readers that the price had grown by 55.6% earlier in the year, they will only tell half of the story.                   
• Closing Metals Report - more
• We want to take this opportunity to thank you for being a reader, and a special thank you to the sponsors, that make this daily news site possible. It is our deepest hopes that 2007 was one of your best years yet, and that 2008 will prove even better. The Happiest of New Years to you all!!
• (And please drive carefully this weekend. Just because you are responsible and don't drink and drive, doesn't mean the driver in the oncoming lane, or approaching the stop light against the red...hasn't had a few.)  

  (excerpt) 'I am astonished this has taken so long,' Mr Stopford remarked. 'In some months [of 2007] China has exported as much steel as Japan produces.' - more

  Morning Briefing (8:00 AM CST is 2 PM in London)

• Indications at 7:50 am CST show 3 month nickel selling down by $.18/lb . The addition of 570 tonnes of nickel recorded overnight, apparently served as a reminder to traders that the market is what it is and their recent attempts to drive the price higher is not justified by the fundamentals.   
• Bloomberg - more

  Under the approval of the State Council, China will further readjust its import and export tariffs as of January 1st 2008. Detailed list of goods subject to export tax imposition as of Jan 1st 2008 is as under. - more  US traders said that export tax increases due to come into effect on a wide range of Chinese ferroalloy exports on January 1 would help drive prices up in the US, even though there was some uncertainty about the precise details of which commodities were affected. - more

 Ore and coal deposits in East Siberia can well be compared with those of Australia. According to geological prospecting data, the Siberian ores and coals are of a high quality and can be in great demand on both the domestic and world markets. - more

  Kazakhstan Today - As a result China increased ferrochrome import from Kazakhstan, and Japan supply with low-carbon and medium-carbon ferrochrome grew up by 11% or up to 72 thousand of tones.

  The past year will go down as one of numerous mergers in the base metals sector, however it will also be remembered for a messy divorce between the co-owners of MMC Norilsk Nickel which looks, nonetheless, to have sparked off the creation of one of the world's largest diversified mining and metals companies. - more

  Due to the short supply caused by reduction of stainless steel, the price of China’s cold rolled stainless steel is expected to rebound from February. - more

  According to the preliminary data issued by US Census Bureau, US stainless steel imports dropped from 75,300 tons in October to 73,725 tons in November, a 2 percent down. - more

  Prices of both steel hot-rolled coil and steel cold-rolled coil in the US market increased sharply Thursday, based on a smattering of transactions reported since late last Friday. - more

  China produced 7,671 tons of refined nickel in November, the lowest monthly production level this year but still up 14.88% YOY, the China Nonferrous Metals Industry Association (CNMIA) said Wednesday.

  Chinese National Development & Reform Commission announced that China has eliminated 29.4 million tonnes of outdated iron smelting capacity and 15.21 million tonnes of outdated steel smelting capacity by the end of November 2007. - more

  The Central Government of China has supplemented as of the 19th of December two molybdenum producers to the approved molybdenum exporters, having totaled to 34 Chinese companies as the producers admitted by the Government to export molybdenum products from China. - more

  CVRD Inco has confirmed a new ore resource that could add almost 30 years to the 104-year old Creighton Mine in Lively, Ontario and approximately $800 million to the local economy if it is brought into production. - more

  Inspectors from the Russian Technical Control Authority (Rostekhnadzor) confirm that mining and metallurgy major Norilsk Nickel will be forced to pay more for its extensive pollution. - more

  Beginning LME nickel inventory/overnight Shanghai closing price

•   London Metal Exchange - plus 762 tons = 47,946 tonnes (1.54% - 738 tonnes cancelled warrants/ 47,208 net stock level) (charts)
•   Shanghai Jinchuan nickel - 237000-247000 RMB/t, minus 1500 (charts)

• Today's official LME nickel closing prices - cash - $12.25/lb 3 month buyer - $12.38/lb (18.1% lower than 1/1/07)
• Baltic Dry Index - minus 93 to 9,143. (chart)
• LME nickel inventories - plus 60 tonnes into Gothenburg, Netherlands warehouse, minus 30 tonnes from Rotterdam warehouse, minus 155 tonnes from Singapore warehouse
• Nickel spent much of the morning moving nowhere, and then shot up by nearly $800/tonne in early afternoon trading. The rest of the afternoon, it spent retreating. It finished the day slightly up at $12.28/lb ($27,075/tonne)
• Closing Metals Report - more

  The current slowdown set to spill over into the new year. While the first half of 2008 is expected to remain subdued for base metals globally, prices are likely to pick up in the second half. - more

  Morning Briefing (8:00 AM CST is 2 PM in London)

• Indications at 7:55 am CST show 3 month nickel selling up by $.15/lb but sliding. After rising earlier by nearly $800/tonne, nickel traders have apparently lost momentum. If predictions by analysts prove true, the next four weeks of trading could be very volatile, with major up and down price swings. In the mean time, stainless steel production in China continues to take a hit, with production cuts of 40% announced thru January.   
• Bloomberg - more

  Behre Dolbear's Weekly Newsletter for the Mining Industry - pdf here

  ThyssenKrupp. Sales Force Briefing ThyssenKrupp, December 2007 - 39 page pdf here (submitted by CO)

  Sprott Asset Management Molybdenum Market Outlook December 2007 - pdf here (submitted by CO)  also Barron's - Talk To An Expert: The Case for Resources and Molybdenum, by Eric Sprott & Maria Smirnova - pdf here

  Steel wire rod prices continued to creep upward in December to a marketplace average of $593, up 19% for the year, but still a little below the $600 sought by such mills as Keystone Steel &Wire in Peoria, Ill.; Gerdau Ameristeel in Tampa, and ArcelorMittal Long Carbon North America in Chicago. - more

  Universal Stainless & Alloy Products Inc. on Wednesday named Dennis M. Oates president and CEO, replacing Clarence McAninch, who will remain chairman. - more

  Chinese media briefs - China imports 9,812 tons of refined nickel in November, down 6.9%YOY / China will close down and eliminate an accumulated 49.31 million of iron smelting capacity and 36.1 million tons of steel production capacity by 2010, announced the National Development and Reform Commission on Dec. 27. A total of 573 iron and steel enterprises will be involved.

  12/24 - Baltic Dry Index - minus 93 to 9143 

  China will raise export tariffs on various steel products effective January 1, 2008, in a bid to control exports from energy-intensive, high polluting industries, the country's Ministry of Finance said in a statement on its website Thursday.- more

  LME nickel inventory/overnight Shanghai ending price

•   London Metal Exchange - minus 126 tons = 47,184 tonnes (2.03% - 960 tonnes cancelled warrants/ 46,224 net stock level) (charts)
•   Shanghai Jinchuan nickel - 240000-247000 RMB/t, plus 2000 (charts)

  Do people really care which company dug up the iron ore that was used to make their dental braces, trumpets, or the Ferris wheels they love to ride? - more

  Japanese stainless steel output at the main 7 steelmakers in November was 486,600 tons, increasing by 5.4% over last month. The crude steel output was 198 million tons from January to November, increasing by 3.4% than the same time of last year. And stainless steel crude steel output increased by 2.2% over the same time of last year.

  China's major stainless steel mills have agreed to cut production in January by 40 percent in an effort to stabilize stainless steel prices, an official with a stainless steel mill told Interfax today. - more

  Preliminary figures released by the International Stainless Steel Forum show that stainless steel crude steel production in the first three quarters of 2007 was by 20.9 million tonnes up by 0.4%YoY. Total production for the first nine months of 2007 is just 90,000 tonnes higher than for the same period of 2006. - more

  SMM Weekly Forecast - in the weekly poll of Chinese metal analysts, 29 responded this week. Of those, 21 (72%) felt the price of nickel would rise this week, while the remaining 8 (27%) felt the price of nickel would stay the same. Suprisingly, none felt the price would fall during the remainder of 2007 trading.

  12/26 - Shanghai Jinchuan nickel - 238000-245000 RMB/t, plus 2500 (charts)

  Background on Rusal Aluminum and its owner - just about guaranteeing more drama to come from the Russian metals industry and Norilsk Nickel in 2008 - here here here search for more

  12/25 - Shanghai Jinchuan nickel - 235000-243000 RMB/t, plus 2000 (charts)

  12/24 - Shanghai Jinchuan nickel - 233000-241000 RMB/t, plus 1750 (charts)

  (excerpt) "So you're convinced that commodities still have a long way to go? Absolutely. There will be corrections, of course. Nickel is correcting right now. But the commodities bull market still has years to go." - more

  Copyright/courtesy TNN - " Mr Chatterjee says: “Copper prices are likely to remain range-bound in the short term despite signs of easing economic concerns in US and recovering Chinese demand due to lower prices. Zinc and Nickel prices are expected to be extremely volatile in January 2008 due to restructuring of Dow Jones Commodity Index and one could see sharp price fluctuations in due course.”.... Zinc in the DJ AIG Commodity Index will next year account for more than 3% of the allocation, up from 1.4% as calculated at current prices. Nickel will rise to 2.8% from 1.7%. If prices rise between now and January 8, the amount of nickel and zinc that the index needs to buy will be lower..... According to Angel Commodity Broking’s Harmit Virvadia: “2008 will begin on an average note for nickel and prices could range between $25,000 and $35,000. European demand could pick up. As far as copper goes, we are bearish for the first two months. After March, it will have to be seen how much copper China re-stocks. Zinc continues to look bearish.”

   Chinese commentary - "This week, the ferrochrome market was stable....In domestic market, since cost of ferrochrome production did not decrease and price of chrome ore did not slide, it is impossible for ferrochrome price to fall. Currently, stainless steel industry is weak due to the decrease in nickel price. However, influenced by the booming ferrochrome market demand abroad, domestic ferrochrome price should stay high for some time."

  Metals prices have fallen substantially in the past few weeks despite inventories that are mostly near-all time lows. These developments appear to be proving right those who predicted that this is just the beginning and the U.S. will slip into a recession or worse, says Octagon Capital’s Hendrik Visagie. - more

  The following are tables of import and export data for copper, nickel, aluminum, alumina, bauxite, lead, zinc, tin, and antimony as well as the leading importing and exporting countries in November and from January to November. (All figures in metric tons unless otherwise stated.) - more

  Copyright/courtesy Dow Jones - "After taking its main underground crusher out of service for mechanical problems for one week in December, First Nickel Inc. lowered its year-end production view to about 125,000 metric tons, or about 3.3 million pounds of payable nickel. In September, First Nickel projected year-end production of 136,000 tons or about 3.9 million pounds of payable nickel. The company said the outage won't affect its production plans in 2008."

  Times have never been better for the mining industry. Driven by insatiable demand from an industrialising China, the industry is awash in unprecedented billions. Yet the flip side of the boom is that every nook and cranny of the infrastructure, after years of under-investment, is groaning under the strain of the round-the-clock race to dig up everything from iron ore to coal to gold and diamonds destined for ports around the world. - more

  Snapshot - "ArcelorMittal, the world's largest steel company, has announced the acquisition of Cínter S.A., an important stainless steel tube producer located in Uruguay. The purchase forms part of the strategy of ArcelorMittal to strengthen its stainless steel business in South America." - more

  "Japan's Fair Trade Commission, worried about a BHP Billiton takeover of Rio Tinto, has begun talks with counterparts in Europe and Australia about a possible investigation, the Asahi newspaper reported on Saturday." - more

  Opponents of a new nickel and copper mine in Michigan's Upper Peninsula that won approval from state environmental regulators are taking steps to halt the project. - more

  China has sanctioned state-owned companies to examine three possible strategies to block BHP Billiton's proposed takeover of mining giant Rio Tinto, a report said Monday. - more

  Oleg Deripaska's United Company RusAl on Friday won its battle to grab a 25 percent blocking stake in Norilsk Nickel, the first step toward acquiring control of the company. - more

  China has expressed its keenness to enter into long-term iron ore contracts with Indian suppliers in a bid to offset soaring prices of the mineral caused by rising ocean freight and surging oil prices. - more

  The much-awaited National Mineral Policy is unlikely to address the contentious issue of banning iron ore exports with the Mines Ministry putting the onus of taking a decision on finance and commerce ministries. - more

  Flat-rolled steel prices will need to increase by $110/mt during 2008 to cover the expected escalation in steelmaking costs -- compared to an estimate of $60-65/mt only a few weeks ago -- according to an ArcelorMittal commercial executive, in an interview with Platts. - more

  Call it steelflation. That's the story in the US steel market in recent days. One major East Coast trader likened current business activity to stagflation. "Steel product prices are rising in the US, but demand is weak throughout the supply chain and business is stagnant," he said, "that's stagflation." - more

  After the announcement by Chinese government of further tightening of steel exports starting from January 1st 2007, China Iron & Steel Association has predicted that Chinese steel exports are likely to fall by 20 million tonnes in 2008. - more

• Today's official LME nickel closing prices - cash - $12.02/lb 3 month buyer - $12.18/lb (19.4% lower than 1/1/07)
• Baltic Dry Index - minus 156 to 9,236. (chart)
• LME nickel inventories - plus 96 tonnes into Baltimore, MD, USA warehouse, minus 216 tonnes from Rotterdam, Netherlands warehouse
• Last week the market treated the $26,000/tonne level as if it were resistance/support, and today it was the $27,000/tonne level. Not sure what the market got all bullish about, but the price of nickel is up on the week. With only two trading days left, three month nickel ended the day and week at $12.20/lb ($26,900/tonne)  
• Closing Metals Report - more
• Have a restful weekend and a great holiday! We will leave you with a bunch of comedy routine's with ventriloquist Jeff Dunham. Part 1 Part 2 Part 3 and Ahmed - The Dead Terrorist
• And here is what your neighbor might be planning to do to you next Christmas - here  Merry Christmas to you all!!

  Molybdenum is used in stainless steel and alloys for its strength, hardness and corrosion resistance properties. It also has uses in the chemicals industry, with a major use being pipelines and drilling tubes for the oil and gas business due to its unique properties. Three countries account for almost 80% of global supply, principally the USA, followed by Chile with 25% and China with 20%. The Molybdenum price historically has averaged around US$10/lb since 1950, in real dollar terms. Current demand is estimated at around 440mlbs, with demand predictions varying from 4%pa growth to 7%pa growth. Should strong steel demand continue, provided molybdenum usage keeps pace, then the price could well hold up well above the historical average.....A recent analysis (Loensby, 2007) forecast that an additional 100mlbs will be required in the next five years, based on assumed high growth in demand, however over 300mlbs is classified with potential to come onto the market by 2014. Clearly there is a first mover advantage here, and those companies who are already into construction or due to commence soon will benefit most. - more

  The State Commission on the stocks of minerals Rosnedra in December 2007 approved the stocks belonging to the "Bugdainskoe" deposit located in the Chita region, currently licensed to Norilsk Nickel. Stock deposits approved by category b + C1 at: ore - 436.2 million tonnes of molybdenum - 347.5 thousand tonnes of gold - 11.2 tonnes of silver - 193.5 tonnes of lead. For C2 - 376.3 million tonnes of molybdenum .

  Morning Indicator (8:00 AM CST is 2 PM in London)

• Indications at 7:50 am CST show 3 month nickel selling up by $.29/lb . The media appears to be giving plenty of attention and space to the analysts and forecasters who have now officially determined that the sub-prime issue is a nightmare of the past, and that all will be well in 2008. We aren't buying into that theory, anymore than an overnight dip of 120 tons of nickel in LME warehouses, somehow erases the few thousand tonnes that have been gained over the last few weeks. Maybe it's that magical $26,000/tonne level again that has driven the price of nickel up this morning, or should we say, $27,000/tonne now? 
• Bloomberg - more
• Reuters - more
• AFX - more

  After a solid start, stainless steel production collapsed during the latter part of 2007. The catalyst was a significant drop in the LME nickel price. - more

  Interros general director Andrey Klishas told journalists his holding company will not purchase a 25 pct plus one share stake in mining giant JSC MMC Norilsk Nickel from Mikhail Prokhorov's Onexim Group, Interfax reported. - more (and) Russia's United Company RUSAL will buy a strategic stake in Norilsk Nickel from Mikhail Prokhorov's Onexim Group as it seeks to build a globally competitive Russian metals and mining major. - more (and) Vladimir Potanin, billionaire and co-owner of Norilsk Nickel, says he will not buy his partner Mikhail Prokhorov's 25% stake in the company. - more

  Preliminary figures released by the International Stainless Steel Forum (ISSF) show that stainless steel crude steel production in the first three quarters of 2007 was by 20.9 million metric tons (mmt). This is just 0.4% higher than for the first nine months of 2006. Total production for the first nine months of 2007 is just 90,000 tons higher than for the same period of 2006. - more

  Interfax - China will lift the export tax on steel products on Jan. 1 next year, the Ministry of Finance (MOF) announced today. - more

  Sumitomo Metal Industries, Ltd. has decided to raise the domestic price of seamless stainless steel pipes. - more

  The price of South African charge chrome for shipments in the next quarter ( January - March of 2008 ) is in the direction of being settled in an early stage by a rise of 21 US-Cents per lb. of Cr. Samancor Chrome has already conducted a grand campaign by emphasizing the necessity to rise price of charge chrome by more than 30 US-Cents per lb. - more

  The International Stainless Steel Forum (ISSF) and the Yale School of Forestry and Environmental Studies have joined forces to undertake a pilot study into the current applications for stainless steel. In 2006, more than 28 million metric tons (mmt) of stainless steel were produced. The study aims to find out what it was used to make. - more

  Metals service centers’ shipments of steel and aluminum declined in November, according to the Metals Service Center Institute’s monthly survey of its members, and inventory levels continued the decline they have pursued through most of 2007. The Institute indicated that its members are reluctant to restock and have delayed most new orders until seasonally low demand subsides. - more

  Sinosteel Corporation has acquired 67 percent stake in Zimbabwe's leading ferrochrome producer and exporter Zimasco Holdings for an undisclosed amount, becoming the majority shareholder, A Zimbabwean newspaper said on Thursday. - more

  World crude steel production for the 67 countries reporting to the International Iron and Steel Institute was 109 million tonnes in November 2007 up by 4% YoY as compared to November 2006. Total world production is 1211 million tonnes for the first eleven months of 2007 up by 7.7% YoY over the same period of 2006. - more

  Resources-poor Japan will use its foreign aid to help private firms win rights to industrial materials in Africa as it competes with giant neighbour China for limited supply, the government said Friday. - more

  Today's beginning nickel inventory

•   London Metal Exchange - minus 120 tons = 47,310 tonnes (2.09% - 990 tonnes cancelled warrants/ 46,320 net stock level) (charts)
•   Shanghai Jinchuan nickel - 230500-240000 RMB/t, minus 750 (charts)

• Today's official LME nickel closing prices - cash - $11.91/lb 3 month buyer - $12.09/lb (20% lower than 1/1/07)
• Baltic Dry Index - minus 199 to 9,392. (chart)
• LME nickel inventories - plus 240 tonnes into Rotterdam, Netherlands warehouse, minus 66 tonnes from Rotterdam warehouse, minus 156 tonnes from Singapore warehouse
• Nickel continued its bullish trend from yesterday early, then the motor sputtered to a stop and the market fell. Climbing as high as $27.250/tonne at one point, the market slid by nearly $1000/tonne, then recovered some. For the day, three month nickel ended at $11.95/lb ($26,350/tonne)
• Closing Metals Report - more

  Preliminary figures released by the International Stainless Steel Forum (ISSF) show that stainless steel crude steel production in the first three quarters of 2007 was by 20.9 million metric tons (mmt). This is just 0.4% higher than for the first nine months of 2006. Total production for the first nine months of 2007 is just 90,000 tons higher than for the same period of 2006. - more

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

  Russia's largest miner, Norilsk Nickel, is poised to slip out of the hands of Russian steel billionaire Vladimir Potanin, and into the clutches of the Kremlin. - more  OAO GMK Norilsk Nickel, Russia's biggest mining company, rose for a third day in London trading as investors bet billionaire Oleg Deripaska will acquire a stake and eventually make a takeover bid. - more

  Morning Indicator (8:00 AM CST is 2 PM in London)

• Indications at 7:40 am CST show 3 month nickel selling down by $.01/lb . When reading the wires this morning, we were a little surprised to see nickel reportedly selling up, after China announced 40% cuts in stainless production thru January (see Rusmet article below). A 40% cut isn't exactly bullish, in fact, it's down right bearish. But when checking on LME trading for the day, nickel had risen earlier in the session to around $27,250/tonne, but has since nose-dived back to just a tad below where it started.
• Bloomberg - more
• Reuters - more

  Damstahl Stainless Steel Report - December 2007 - pdf here

  The stainless steel base price in EU and USA may stay at a steady level for next few months till summer due to mills’ increasing demand and the stock supplementing at distributors.- more

  Chinese stainless mills are planning to slash production by 40 percent and drop prices at the start of 2008 to prop up a limp market, according to market participants. - more

  The People's Bank of China, the country's central bank, today announced that it will raise interest rates by 27 basis points on Dec. 21, marking the sixth rise in interest rates since the start of this year.

  The market tendency by item on imports of ferro-alloys into Japan at the 14th December of 2007 is as follows - more

  China announces mandatory energy consumption quota's on various industries effective June 1, 2008 including the following - crude steel production, coal fire generated electricity, copper smelting, zinc smelting, lead smelting, and nickel smelting.  (source)

  (excerpt) The problems under investigation, several yard workers told the Daily Press, were caused by pipe fitters who tacked pipes together using the nickel-copper compound instead of stronger stainless steel filler prescribed for the job. - more

  The year 2007 has been a roller-coaster ride for base metals. While the beginning of the year saw metals ride a bullish wave, the second half of the year spelt a lull with the sub-prime concerns and housing market recession in the US taking markets by storm. - more

  Courtesy Dow Jones - "LCH.Clearnet, which clears trades for the London Metal Exchange, has lowered its initial margins for nickel and lead, as well as for North American aluminum alloy, or NASAAC, the London-based clearing house said Wednesday.   For nickel, initial margins fell from $21,000 a lot to $18,786/lot, while initial margins for lead were cut to $9,325/lot from $10,000/lot."

  World crude steel production for the 67 countries reporting to the International Iron and Steel Institute was 109.0 million metric tons (mmt) in November. - more  (China, the world's largest steelmaker, produced 36.4 % of global crude steel in November)

  Today's beginning nickel inventory

•   London Metal Exchange - plus 18 tons = 47,430 tonnes (2.21% - 1050 tonnes cancelled warrants/ 46,380 net stock level) (charts)
•   Shanghai Jinchuan nickel - 232000-240000 RMB/t, plus 1000 (charts)

• Today's official LME nickel closing prices - cash - $11.78/lb 3 month buyer - $11.88/lb (21.3% lower than 1/1/07)
• Baltic Dry Index - minus 160 to 9,591. (chart)
• LME nickel inventories - plus 498 tonnes into Rotterdam, Netherlands warehouse, minus 24 tonnes from Rotterdam warehouse, minus 18 tonnes from Singapore warehouse
• After a quiet morning session, that saw nickel in the green by a slim margin, nickel fell below the - yes, you guessed it, $26,000 tonne mark for a moment, then took off. As in going green. Since we aren't in London, and saw nothing in the news to justify any jump like this, we would guess that this is another one of those 'technical' buys - a nice way of saying we really have no idea why, but the computers told traders they should buy. And since everyone seems to agree that the fundamentals were, are, and look to be dismal, this would probably mean traders can't make money unless the market moves one way or the other - so today they decided to take it up. Guess what that means in the coming days? Three month nickel ended the day at $12.10/lb  ($26,675/tonne) 
• Closing Metals Report - more

  The World Bureau of Metal Statistics reported worldwide nickel in  a 5.7kt surplus for the first 10 months of 2007. Here is a summary of some of their reports this year. For February, WBMS reported the 12th consecutive month of a deficit market, at 19kt for Jan and Feb '07. For Jan thru May, the figure was lowered to a 8.7kt deficit. Jan thru June, 2.6kt deficit. Jan thru July, up to 13kt deficit. WBMS began to count low grade ferronickel shipping into China (pig nickel) in August.  And for Jan thru August, they raised the deficit to 14kt. And January thru September, a tiny surplus was recorded. In the mean time, inventories stored in LME warehouses have gone from the 3-4,000/tonne range in Feb/March 2007, to 36,000/tonnes at the end of October.  

  OAO GMK Norilsk Nickel investors Mikhail Prokhorov and Vladimir Potanin agreed to sell 24.5 billion rubles ($990 million) of their jointly held shares in the world's biggest nickel miner. - more

  Did you see that the annual negotiations for the contract iron ore price began this week in Shanghai? In the blue corner are the big three: BHP, Rio, and Vale. They represent 70% of the sea-borne iron ore supply. - more

  Producer's Soaring Raw Material Costs Driving Global Steel Prices Higher - more

  Morning Indicator (8:00 AM CST is 2 PM in London)

• Indications at 7:50 am CST show 3 month nickel selling up by $.28/lb . Copyright Bloomberg " Nickel gained on speculation stainless-steel makers, the biggest users, may rebuild their depleted inventories after prices dropped by half since May. ...ArcelorMittal Chief Executive Officer Lakshmi Mittal said last month that producers of stainless steel were using their own inventories, or ``destocking'' after nickel prices plunged....Nickel ``won't rally because you've still got a lot of inventories in the system. Destocking in stainless steel seems to be coming to an end,'' Keen said. ''- comment - We went thru this speculation period before - if you look at any annual price graph for nickel, you will see traders 'guessed' stainless producers were going to start buying starting in mid September, and giving up in mid November. Stainless Steel World ran a story this morning announcing "Zhejiang Yougjin Stainless Co. will lift up 60% of its capacity of cold rolled stainless precision strip to 50,000 tpy in 2008. ...Zhejiang has doubled the capacity of cold rolled stainless strip to 30,000 tpy in 2007" While the article stated the factory was expanding its capacity, not its production, apparently the market will take whatever they can get. We don't expect this little rally to last.
• Bloomberg - more
• Reuters -  more

  World Bureau of Metal Statistics - January to October 2007 Metals Balances - pdf here

  Copyright/courtesy Scotia Capital China Update - "Laterite ore stockpiles at seven major Chinese ports reached 5.74 million tons on December 7, up 610,000 tons MOM, according to a recent Umetal survey. Over the past few months, the Chinese producers are quickly improving their know-how and technology in using laterite ore. Increasingly, the higher-grade Indonesian and New Caledonian ore is processed through electric furnaces to produce what we called basis stainless steel feed, which contains 6%-8% nickel, and low-grade ferronickel (10% to 15% nickel content). These products are suitable for 300-series stainless steel production. The majority of the lower-grade Philippines ore is still processed through blast furnaces to generate low-grade nickel pig iron containing 1.5%-1.7% nickel, which is still used for 200-series stainless steel production. Our impression is that in China, there is almost no bottleneck in using laterite ore, in terms of both supply and technology. In addition, as the technology improves, the breakeven point for using laterite ore is getting lower. In our opinion, for the higher-grade New Caledonian ore, an LME nickel price as low as US$8.50/lb can justify its use in China. For the lowest-grade Philippines ore, an LME nickel price of US$15/lb is still needed."

  Copyright/courtesy Fitch Ratings - "Demand for molybdenum, driven by pipeline projects and oil and gas drilling as well as China’s stainless steel demand, grows at about 4% annually, while production is expected to decline 5% or 20 million pounds this year on declining ore grade and maintenance shutdowns. Total global supply is estimated at 400 million pounds for 2007." (according to Fitch report, quoting Bloomberg, analyst's forecast for molybdenum is $22.50/lb median for 2008. Price drops to $20.00/lb in 2009, and $10.90/lb for 2010. )

  The global nickel market was in a surplus of 5,700 metric tons in the first ten months of the year, the World Bureau For Metal Statistics said Wednesday. - more

  It is expected that the duties to impose on imports of high carbon ferro-chrome into Japan will be completely abolished. - more

  Industrial metals including copper and aluminum have peaked and probably will decline as supplies gain in the next 12 to 18 months, Fitch Ratings said. - more

  Shares in Philippine nickel miner Oriental Peninsula rose 23 percent in the market debut of its 804 million peso ($19 million) initial public offering, the first local - more

  Indebted by almost $240 million, the Rapu-Rapu group of companies operating a copper and zinc mine in Rapu-Rapu island town in Albay will seek court protection from creditors even as it denied claims by anti-mining groups that the mine firm has gone bankrupt. - more

  Xstrata today admitted it is in talks with a potential suitor, which could conclude in an offer for the world's fifth largest mining group - more

  Today's beginning nickel inventory

•   London Metal Exchange - plus 456 tons = 47,412 tonnes (2.42% - 1146 tonnes cancelled warrants/ 46,266 net stock level) (charts)
•   Shanghai Jinchuan nickel -230000-240000 RMB/t, plus/minus 0 (charts)

• Today's official LME nickel closing prices - cash - $11.63/lb 3 month buyer - $11.70/lb (22.6% lower than 1/1/07)
• Baltic Dry Index - minus 97 to 9,751. (chart)
• LME nickel inventories - plus 402 tonnes into Rotterdam, Netherlands warehouse, minus 54 tonnes from Rotterdam warehouse, minus 78 tonnes from Singapore warehouse
• Posco gave a boost to the molybdenum market by investing in a 20% stake in General Moly. We have yet to see to many predictions for moly prices into 2008, but those we have published, have put the price range at half what it currently is (which would still be 5 times higher than it was in 2001), to even higher than what it currently is. Nickel trading on the LME was mostly quiet in morning trading, only slightly up as official prices for the day were determined. Then they took a bounce, shortly after U.S. housing statistics were announced. U.S. housing starts fell again, but not nearly as bad as expected, while new permits fell to a 14 year low. The effect of housing starts, while obvious to metals such as copper, is less so for nickel. We did find some interesting statistics from the appliance industry in the U.S., reflecting the effect of the housing downturn on their industry here. Since stainless appliances were the hot item in the U.S. earlier this year and last, it makes you wonder. We learned our lesson last week, and did not call the demise to the $26,000/tonne mark again yesterday. It was a good thing, because the market again treated that mark as if it were approaching a resistance level, breaking above, then falling back, and repeating itself. For the day, three month nickel ended trading at $11.75/lb (25,900/tonne)        
• Closing Metals Report - more

  Statement of the day - "“Hindsight is always 20-20, but it’s clear the Fed should have acted earlier. Financial innovation is great, but you have to have some basic rules. One of the most basic rules is that a borrower should have the ability to repay.” from Sheila C. Bair,chairman of the Federal Deposit Insurance Corporation (chronology of sub prime debacle by NY Times - image here)

  Copyright/courtesy MetalTorq - "According to analysts, the reduction in prices of nickel blame rising stocks and uncertainty in maintaining economic growth worldwide. "We expect recovery in the nickel price in the middle of January or in February, when European traders will begin to order metal for the next quarter," analyst said Angel Broking. In his view, nickel resold, with no significant reason for any movement in prices as purchases for the first quarter of 2008, have been completed, while the second, has not yet begun."

  Three quarters of the 50,000 hectares surface area of Ruvubu National Park has been allocated as a mining concession through a presidential decree to the South African Company, Dun Land, granting the company mining rights to extract nickel from within protected areas. - more

  A spokesman said commissioning was on schedule to produce nickel metal at Yabulu from the West Australian Ravensthorpe mine's mixed nickel/cobalt hydroxide product during the first quarter of calendar 2008. - more

  For investors and those following the moly market closely - here is some clips from the Desjardins Materials Conference from a few weeks ago here

  Frequently asked questions about stainless steel. Why does stainless steel rust? Why is some stainless steel magnetic? Is stainless steel harmful to our health? answers here  and more on Stainless Steel - Magnetic Properties - pdf here

  Morning Indicator (8:00 AM CST is 2 PM in London)

• Indications at 7:50 am CST show 3 month nickel selling up by $.19/lb .
• Bloomberg - more
• Reuters - more

  Behre Dolbear's Global Mining News - pdf here

  TD Bank Weekly Commodity Price report - pdf here

  Canada Commodity Price Update - pdf here

  Copyright/courtesy Dow Jones - "LME nickel needs to move above the $30,000 a metric ton level in order to improve the market's immediate tone, says Triland's Michael Khosrowpour. But notes there is "heavy resistance" in this area from several key mid-term moving averages, which will look to cap any advances toward this region."

  courtesy Shanghai Nonferrous Weekly Review and Forecast - "In Shanghai market, price differences between domestic produced nickel and imported nickel became larger. Imported nickel reduced their selling price to in line with the falling trend of LME nickel price, traded at RMB 232,000 from previous 240,000 per tonne, fell over 3 percent. At the same time, this week supply of imported nickel is ample and suppliers want to get cash, price might fall below RMB 230,000 per tonne. While price of Jinchuan nickel seems stronger, as its supply is limited in Shanghai market, the quotation is about RMB 240,000-242,000, but only few transactions at such high price."

  South Korea's Public Procurement Service, a state-run body that manages strategic commodities, bought 3,000 metric tons of copper cathodes and 200 tons of nickel at tenders today. - more

  According to the preliminary report from Taiwan Customs, the import of stainless steel coils and sheets in November totaled 21,791 tons, increased by 7% from last month. - more

  POSCO, the world's fourth-largest steel maker, said on Tuesday two of its units would invest $170 million in a 20 percent stake in a molybdenum mine owned by General Moly, a U.S.-based mining company. - more

  Blurb - "Japan's finance ministry is proposing abolishing the 5.37 percent import duty on high carbon ferro-chrome as stainless steel producers struggle to cope with soaring raw material costs."

  Codelco of Chile is anticipated to produce 60 million lbs. of molybdenum in molybdenum concentrates in the calendar year (January - December) of 2007, having a decline from 68 million lbs. produced in the preceding year of 2006. - more

  Publicly-listed mining company PT Aneka Tambang and China's Tsingshan Holding Group will start exploitation of nickel deposit on the island of Obi in North Maluku, a company official said. - more

  Courtesy AISI - "In the week ending December 15, 2007, domestic raw steel production was 2,057,000 net tons while the capability utilization rate was 86.2 percent. Production was 1,733,000 tons in the week ending December 15, 2006, while the capability utilization then was 75.0 percent. The current week production represents an 18.6 percent increase from the same period in the previous year. Production for the week ending December 15, 2007 is down 0.3 percent from the previous week ending December 8, 2007 when production was 2,064,000 tons and the rate of capability utilization was 86.5 percent. Adjusted year-to-date production through December 15, 2007 was 102,351,000 tons, at a capability utilization rate of 86.0 percent. That is a 2.3 percent decrease from the 104,787,000 tons during the same period last year, when the capability utilization rate was 87.5 percent."

  Today's beginning nickel inventory

•   London Metal Exchange - plus 270 tons = 46,956 tonnes (2.07% - 972 tonnes cancelled warrants/ 45,984 net stock level) (charts)
•   Shanghai Jinchuan nickel - 230000-240000 RMB/t, minus 2000 (charts)

• Today's official LME nickel closing prices - cash - $11.57/lb 3 month buyer - $11.68/lb (22.7% lower than 1/1/07)
• Baltic Dry Index - minus 31 to 9,918. (chart)
• LME nickel inventories - plus 504 tonnes into Rotterdam, Netherlands warehouse, minus 132 tonnes from Rotterdam warehouse
• Metals traded on the London Metal Exchange took a whooping today, across the board, and nickel must have been first in line to enter the ring, because it took the brunt. Dollar continues to gain against the Euro, adding downward pressure to already nervous traders. It's the time of year when the analysts begin to make forecasts for 2008, and give their reasons why. It's a mixed bag so far, and we keep an up-to-date list of the ones we find on our nickel forecast page here. News remains bearish and the much sought after rebound in stainless steel production, which never materialized in this quarter, may not come as soon as some had hoped, on the news that Japan’s Nippon Steel was cutting production thru the first quarter of 2008. Activity at LME warehouse's was limited to Rotterdam, which took in 372 more tons than it shipped. We are seeing others now starting to agree with our assertion that that problem in China isn't so much a slowing market, but over production and the increase in use of "pig nickel". We did report on ann article we read in China over the weekend that surprised us. At least one Chinese metals analyst is forecasting the the share of 300 series stainless in China stainless steel production will drop in China this year (not surprising), 400 series will increase (not surprising), and that the share of 200 series stainless steel will also fall (surprising). We will be curious to see if this forecast proves true, and if so, why. Zinifex Ltd., the world's third- largest zinc mining company, announced a hostile cash offer of $US669 million for Australia's Allegiance Mining, which has an agreement to supply China's Jinchuan with about $3 billion dollars worth of nickel. And in response to stockholders who felt they missed the boat on high nickel prices this year, Rio Tinto announced it would invest $300 million in a new nickel mine in the US(Michigan). We see this as a risky move by Tinto. For the day, three month nickel ended trading at  $11.63/lb ($25,650/tonne) 
• Closing Metals Report - more

  (We get a lot of requests to post more on ferrochrome and when we can find it, we post it. Here is a forecast) The contract price for ferrochrome, a raw material used to make stainless steel, will gain 21 percent in the first quarter on higher demand and production costs, International Ferro Metals Ltd. said. - more

  Contract ferro chrome prices in Europe for the first quarter of 2008 have been set at a record of $1.21 a pound as consumers rush to secure supplies of the material used to make stainless steel, traders said on Monday. - more

  Rio Tinto Group, the mining company that BHP Billiton Ltd. wants to buy, will spend almost $1.3 billion to mine nickel for the first time and expand coal output to meet rising demand from Chinese steelmakers. - more

   Copyright/courtesy Reuters - "...Michael Lewis, at Deutsche Bank said in a report. Industrial metals were the worst performing sector, against precious metals and energy, in terms of spot price performance last week, Lewis said.".... "The metals market was still taking direction from the global equity markets, traders and analysts said. "Asian stocks were lower, hence the poorer metals," analyst Leon Westgate at Standard Bank said."..... "Today the miners will be down again because of fears of growth and the imminent cuts to consensus earnings for fourth quarter 2007 due to the current weakness in copper and nickel," analyst Jeremy Gray at Credit Suisse said in a note."

  Morning Indicator (8:00 AM CST is 2 PM in London)

• Indications at 7:55 am CST show 3 month nickel selling down by $.28/lb . In reference to our pondering of why $26,000/tonne seemed to be so important to LME traders last week, considering it was not a charted support or resistance level, we received an e-mail from someone who stated there is a rumor floating around that there are some rather large orders pending with US stainless steel producers, that kick in when nickel hits $25,000/tonne.
• Bloomberg - more
• Reuters - more

  Haywood Securities Metals & Mining Weekly - pdf here

  BMO Capital Markets - The Goods - pdf here

  Copyright/courtesy Dow Jones - "Macquarie expects demand, supply of stainless steel to recover steadily in 1H08, could rebalance nickel market. But given "chronic" overcapacity of stainless steel in China another bout of overproduction possible. Big issue for nickel is still level of new production in China from so-called nickel pig iron. "Conventional" producers still dismiss nickel pig iron as a temporary stop-gap before next wave of investment from higher-capital conventional production comes in. "This may well be true, but this will only be the case once nickel prices settle again below $6/lb in the long run."

  SMM Specialist Weekly Forecast - Of 36 metals analysts responding, 3 (8%) felt the price of nickel would rise this week, 10 (29%) felt the price of nickel would stay about the same, and 23 (63%) felt the price of nickel would fall.

  Copyright/courtesy GIFA - "As part of an on-going undertaking to deal with increasing volumes of low-priced seamless stainless steel tubing from China, the U.S. producers which comprise the Seamless Stainless Tube Trade Action Committee (SSTTAC) expressed their growing concern with the rapidly expanding Chinese presence in the U.S. market. David A. Hartquist, the SSTTAC's legal counsel, said, "As the U.S. Census Bureau's most recently released data underscore, China's exports of seamless stainless steel tubing to the United States are surging. China is now the largest foreign supplier overall of this tubing to the United States, at prices that are notably depressed. Even in categories in which it presently is not the largest supplier, such as high-nickel seamless tubing, it can be expected that China will soon overtake the current largest foreign supplier, Germany."

  THE zinc producer Zinifex has a fight on its hands in its attempt to diversify its commodity exposure through a hostile $775 million takeover bid for the soon-to-be Tasmanian nickel producer Allegiance Mining, a move that is being closely watched by China's biggest nickel producer, Jinchuan. - (more)   Zinifex Ltd. (ZFX.AU) Monday said it is still assessing possible multi-billion dollar acquisitions and will look at the assets being put up for sale by Rio Tinto Ltd. - (more)

  New Caledonia is expected to ask France for more money and for tax exemptions for the Goro Nickel project on Thursday. - more

  Japanese stainless steel output totaled 268,000 tons in October 2007, up by 3.7 percent from that of last month. - more

  Rio Tinto said Monday that it is to invest $300 million in the development of Eagle, a high-grade nickel and copper mine in Michigan, USA. - more

  Today's beginning nickel inventory

•   London Metal Exchange - plus 372 tons = 46,686 tonnes (2.00% - 936 tonnes cancelled warrants/ 45,750 net stock level) (charts)
•   Shanghai Jinchuan nickel - 233000-241000 RMB/t, plus 1000 (charts)

  The term “supercycle” has been batted around the commodities world for a couple of years now. To be honest, the term just reminded me of the dot-com days when we invented new terms and valuation techniques like price-to-eyeballs that allowed us to justify valuations that we now realize were completely absurd. - more  (or) Peak oil, peak metals, and this year peak food. Every bookshop has a corner warning that mankind will soon outrun the basic resources of the globe. - more

  Brazilian mining company Vale yesterday announced the opening of its Middle East office in Oman. - more

  New Caledonian officials will ask the government for tax breaks to be extended in the Goro Nickel project being developed by Brazilian group Companhia Vale do Rio Doce (CVRD). - more (CVRD is now named Vale)

  On Thursday, Chinese media published a metals forecast from Southwest Negotiable Securities. Generally any of these reports turn out to be mere duplications of more well known metals analysts, so if this appears familiar, please let us know and we will correct the credit. In the article the author forecasts stainless steel production in China for 2007 to be as follows - 400 series stainless production will account for 29% of Chinese production, an increase of 7%, 200 series stainless production will account for 26%, a reduction of 3%, and 300 series stainless will account for 45% of China's stainless steel production, a reduction of 4%. (If true, the overall reduction in 200 series stainless steel production is surprising) The forecast goes on to give many reasons why the price if nickel will fall in 2008, mostly from the supply side angle, but ends by forecasting nickel will average $15.42/lb. Another analyst states imports of low grade laterite ore (pig nickel) is slow due to the slowdown in stainless production , high shipping costs, and high ore cost. Some importers advised they did not expect to resume shipments of nickel ore until after the Spring Festival, which begins on Feb 7, 2008.

  China's Shanxi Province reported import and export figures for November (this province only) - Stainless steel plate exports total 334,300 tons, an increase of 104.89% YOY, with an increase in value during the same period of 259.49% to $1.437 billion US dollars. Also during November, this province imported 16,300 tons of nickel, a growth rate of 230.10%, with the value amounting to $589 million US dollars, an increase of 431.72%. Chromium ore imports totalled 1.3337 million tons during November, a 33.50% increase, and an increase in value of 54.75%. Imports of manganese ore totalled 610,200 tons,  a decrease of 36.06%, although still showing an overall increase in value of $139 million US dollars, an increase of 45.67%.

  South Korea's Posco (Pohang Iron & Steel Co.) announced production cuts in stainless steel for December by 130,000 tons. Considering the annual production is approximately 2 million tons, the reduction is significant. Posco also announced it was lowering the price of stainless steel by approximately $431.60/ton effective tomorrow.

  From The Economist Intelligence Unit 'The World in 2008'...."global demand for nickel will grow by 7.4% in 2008, but the market will remain tight as output increases by only 7.3%. If Chinese demand for stainless steel is greater than expected, rationing may be necessary." (unknown when published but probably much earlier in the year) - pdf here

  Oct 7, 2007  - Jürgen Fechter Chairman of the Executive Board of ThyssenKrupp Stainless AG - "According to statistics of the industry association EUROFER, imports from Asia to Europe multiplied from around 10,000 tons per month up to mid-2006 to over 50,000 tons per month from late 2006. These high imports of stainless steel are an increasing problem for the European producers. The cause of this is the drifting apart of supply and demand due to the unbridled construction of new capacities in China. Producers there are trying to operate their mills to capacity and are offloading surplus quantities to distributors and service centers in Europe at below-cost prices. The trend reversal in the nickel price that began in early June caused stockholding distributors to reduce their high inventories as quickly as possible, which resulted in a collapse in prices and the cancellation of orders from producers. In response to this situation, most European producers sharply reduced their production, particularly in the 3rd calendar quarter. To stabilize the market the Stainless group cut back production significantly in its European plants. This cutback mainly affected the chrome-nickel grades and in the 2nd half of the fiscal year just ended amounted to around 400,000 tons of crude steel output, or almost 30% of our European capacity. Our competitors also made similar production cutbacks....We support free world trade, but not under these conditions. For this reason the European stainless producers now plan to move against imports from China." (addendum - EUROFER has since filed an anti-dumping complaint)

  Vale Inco will not be engaging in its annual maintenance shut-down in 2008. Instead, it will postpone the shut-down until May 2009, just a month before the company's contract with workers belonging to Steelworkers Local 6500 expires. - more

  Base metals, led by copper, are likely to recover this week on speculation that sporadic buying from China may bring a fresh lease of life ahead of the new year. At present, base metals are oversold and no fresh sales are being offered by stockists. - more

  Quotes from the week

• Copyright AP - Monday, 12/10 - "China's central bank said it will raise the reserve requirement ratio for banks by a full percentage point to 14.5 percent, the highest since the mid-1980s. When banks are made to hold larger reserves, it curbs lending and can rein in business growth as a result...."This move is unambiguously bearish for LME metals: China is the one bright spot on the demand side of the base metal equation at present," said BNP Paribas analyst David Thurtell, in a report. "Another tightening - on top of nine 0.5 percent previous hikes this year - will hurt economic activity and hence metal demand."
• Copyright Reuters - Thursday - 12/13 - "I don't think you are going to see anything significant happening in base metals now on this side of Christmas," analyst Kevin Norrish at Barclays Capital said. "People in these markets aren't prepared to take any sizable positions either way really until we get a bit more clarity about the economic outlook," he said.....Analysts said zinc and nickel are expected to experience wild price swings in January as a commodity index buys metals. Between January 8 and 14, the Dow Jones AIG commodity index .DJAIG will adjust the weighting of many commodities."

  The European Union launched an investigation yesterday into whether China is dumping steel and hurting steel makers like ArcelorMittal and ThyssenKrupp. - more

  Opinion favourable for the two authorizations to exploit deposited by Goro Nickel. But the investigators imposed two new conditions: implementation of procedures of environmental monitoring independent and constitution of guarantee funds intended to mitigate a possible failure of the owner. - translated article here

  "Companies investing in Chinese real estate or heavily polluting industries, including some foreign companies, have been told by bankers that they cannot access credit before the end of the year because of a government order to freeze lending.....Executives working at locally incorporated foreign banks said they had not received formal orders from authorities. But in quarterly meetings and regular phone conversations they have been “advised” not to lend to the real estate projects or polluting industries."

  Citigroup in their December issue of M/Metals Prospects forecast nickel prices to average $10/lb in 2008, $8/lb in 2009, $6/lb in 2010. Forecast molybdenum to average $30/lb in 2008, $20/lb in 2009, and $10/lb in 2010. Another forecast made this week include Goldman Sachs who predicted nickel prices would average $12.85/lb in 2008.    

  Arcelor Mittal, the world's largest steelmaker, announced on Wednesday that it has increased it investment by US$500 million to US$1.5 billion after it passed a vote of confidence in government of President Ellen Johnson-Sirleaf. - more

  ISM Steel Buyers Forum Monthly Survey - pdf here

  Scrap Specifications Circular 2007 - First published in 1919, ISRI's Scrap Specifications have become the universal language for scrap buyers and sellers in domestic and international trades. The online version essentially makes the specifications a "living document" that can be updated more frequently than the printed circular. - pdf here

  Copyright/courtesy Sogra - " At this point Corporation Haotyan produces 5500 tons/yr low temperature nickel and 600 t/d of high-nickel. To ensure their needs company imports about 1 billion t/y of nickel ore from the Philippines, Indonesia and Papua New Guinea. Has already started construction of the mill potrooms nickel production capacity of 5000 t/d, to be put into operation in August 2008. Thus, the Chinese titanium sector increases the pace of development, and plans to intensify the production of nickel in sight desire to reduce China's dependence on imports of Russian nickel and reduce its volume.

  "Let the man who seeks revenge," the old Chinese proverb warns, "remember to dig two graves." - more

  Vale Inco plans record production levels next year for its Sudbury operations, Ontario president Fred Stanford told members of the mining community Friday. - more

  Michigan will see its first new mine in decades -- a controversial copper and nickel mine in the Upper Peninsula -- after state regulators issued permits Friday. - more

  A super-large ore carrier "Brasil Maru" (327,180 dwt) of Nippon Steel Corp (NSC) was completed and launched on December 7 at Chiba Works of Mitsui Engineering and Shipbuilding Co., Ltd. (MES). - more

  National Mining Association Mining Weekly - pdf here

• Today's official LME nickel closing prices - cash - $11.75/lb 3 month buyer - $11.84/lb (21.6% lower than 1/1/07)
• Baltic Dry Index - minus 31 to 9,918. (chart)
• LME nickel inventories - plus 600 tonnes into Rotterdam, Netherlands warehouse, minus 168  tonnes from Rotterdam warehouse, minus 288 tonnes from Singapore warehouse, plus 66 tonnes into Gothenburg, Sweden warehouse
• We are finding no nickel charts that are calling the $26,000/tonne level a support, or resistance level. But the market appears to be treating it as both. For days now, the market has treated it as a support level, and as soon as the price slumped below it, it would rebound. Then yesterday, when the price fell below the level and failed to rebound, the market crumpled and we announced the level had finally been beaten. Today however, the market appeared to want that number back, and after fish-tailing around where it opened for most of the morning, the price got enthusiastic and headed back towards the 26 mark. Upon breaking it, the trading price retreated, climbed over, retreated, then climbed over again. It was like watching the market try to punch thru a resistance level. We are not sure what the significance of this $26,000 level is, but the market has apparently placed some importance in it - at least for this week. Three month nickel ended the day and week at $12.00/lb ($26,450/tonne)   
• Closing Metals Report - more
• Weekend update is questionableas we are expecting a snow storm and our sole access to the internet, will be HughesNet Satellite, which offers poor service in the best of weather. So we expect to lose access to the internet as soon as the first flake appears. We wish you all a restful and safe weekend!!

Copyright/courtesy Dow Jones - "LME nickel is looking very resilient despite the spate of bearish news affecting the market, says JP Morgan analyst Michael Jansen. Notes further stainless production cuts and rising LME inventories are weighing on sentiment, leaving it likely that a more convincing test of $25,000 a metric ton support is pending. But adds the nickel market is "exceptionally" short, which will provide some support. "

  China domestic prices over last few months - Foshan, China courtesy Rusmet. (CR 304 2B 2 mm)

• Sept 07 - 35000 - 35300 RMB/ton
• Oct 07 - 32900 - 33000 RMB/ton
• Nov 07 - 32800 - 33000 RMB/ton
• Dec 07 - 31200 - 31400 RMB/ton
• Jan 08 - 30500 - 31000 RMB/ton

  Morning Indicator (8:00 AM CST is 2 PM in London)