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

• Official LME nickel closing prices - cash - $14.29/lb 3 month buyer - $14.38/lb (20.74% higher than 12/31/07) (chart)
• Baltic Dry Index - plus 281 to 7,613. (chart)
• LME nickel inventories - plus 84 tonnes into Rotterdam, Netherlands warehouse, minus 132 tonnes from Rotterdam warehouse, plus 66 tonnes from Gothenburg, Sweden warehouse, minus 12 tonnes from Gothenburg warehouse
• Anytime metals get a general bull run, there are going to be days when some traders decide the market has moved up too fast for its own good, and decide to take profits. Most all base metals traded on the LME felt that pinch today, and in late trading, even nickel finally took a breather. But not enough to nickel into the red, like most of the others witnessed. For the day, three month nickel ended the day, week, and second trading month of 2008 at $14.26/lb ($31,450/tonne). That puts nickel up 10.89% on the week, 14.72% higher for the month, and 19.73% higher on the year.
• Closing Metals Report - more
• Have a safe and enjoyable weekend!! We leave you with some pretty cool pictures, not related to metals? Photo's here

  Nickel Rallies on Steelmaker Buying, Strike; Copper, Tin Drop

• Nickel rose to the highest in more than three months in London on expectations of increased buying by stainless-steel makers and as workers at a Colombian mine owned by BHP Billiton Ltd. went on strike. - more

  Copyright/courtesy Dow Jones

• "Buyers of LME nickel should surface on pull backs toward $30,000/ton, as sentiment has been bolstered by a strike at the Cerromatoso plant, says UBS. The metal is also bolstered by gains in other metals as it looks to play catch up. While abundant supply and high LME stocks suggest the upside should be limited to $32,000/ton "a spike toward $35,000-36,000/t is possible," he says."
• "Since copper and the rest of the industrial metals complex were punished last quarter following bearish US data, it appears there has been a fundamental shift in sentiment toward commodities, says Deutsche Bank. "This phenomenon also points to a rise in popularity of commodities as an asset class among the investment community as many seek out hard assets to park funds." Sees outlook for the remainder of 1Q as positive, with "signals of robust demand supporting copper and the rest of the industrial metals."
• "Nickel pig iron continues to act as a very strong cap to refined nickel use in China, says analyst Michael Jansen of JP Morgan. Notes that China January trade data show low quality ore imports remained very high, "implying still solid growth in low nickel content pig iron production." ...."suggesting that there is enough capacity growth in stainless (sector) within China to draw on global nickel inventories as well as acting to supplant nickel use through nickel pig iron."
• "If this mine and smelter (Cerro Matoso) stays down for a protracted period of time it could affect the global supply and demand balance, especially if the South African byproduct output is affected materially by power strikes, said JP Morgan analyst Michael Jansen."

  Colombia's Cerro Matoso ferronickel mine paralyzed

• Labor negotiations at Colombia's Cerro Matoso ferronickel mine were at a standstill on Friday as a strike by workers stretched into a third day, union and company officials said. - more

  Chinese ferromoly market bullish on good demand from steel mills

• China's domestic trade on ferromolybdenum is active this week due to rising domestic demand from domestic steel mills in China, according to industry sources. - more

  The Annual PDAC Convention Begins on Sunday - Stan Sudol

• The annual Prospectors and Developers Association of Canada (PDAC) convention starts this Sunday in Toronto, Canada. - more

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

• Indications at 7:50 am CST show 3 month nickel selling up by $.36/lb . Nickel broke thru the $31,000/tonne resistance yesterday, and has so far, kept its upward momentum. We have added a running total to the top of the page on the potential loss in nickel production the strike in Colombia could have, just to keep the loss in perspective.  There are two ways of looking at this situation. First in late 2006, the fall strike in New Caledonia was basically pooh-poohed by nickel traders, with far less LME inventory. This wouldn't be such a big consideration, except that Cerro Matoso supplies 4% of the world's nickel, while Eramet's New Caledonia operation supplies 6%. Counter-point. New Caledonia operations never fully shut down, while reports from Cerro are that the operation is completely closed. If this strike does last a long time, not even as long as the New Caledonia strike, we could start to see noticeable drops in LME inventory - and if that starts to happen, look back to the first five months of 2007 and you can see the potential implications. One thing is for sure - until this strike is settled and for weeks after, all eyes will be watching the all important LME inventory numbers. Yesterday - LME gained 276 tonnes - strike cost us 199. Today LME gains only 6, and strike cost us another 199 - minus 116 tonnes to date. 
• Bloomberg - more

  Base metal markets look to ‘decoupling’

• Base metals have swept higher in recent weeks, helping push copper and aluminium prices to within striking distance of all-time highs and driving tin to a record......Debate is intense among analysts and investors over whether the commodity supercycle can be sustained. - more

• List of top Chinese steel makers in 2007
• As a sign that consolidation is making some headway, China's top 20 steelmakers accounted for 250 million tonnes in 2007 out of total production of 489 million tonnes a little more than half of the country's total output, compared with less than 50% in 2006. - list here
• Chinese CRC export price continues to rise
• It is reported that Chinese CR steel coil export prices are up substantially this week, reflecting the strong rise in home market prices. - more

  Communities want bigger share of nickel profits

• Community leaders in Puvirnituq, Salluit and Kangiqsujuaq want a larger share of profit from the Nunavik Nickel Mine development, which will see new open pit mines, more roads, another airport and other mine infrastructure built near their communities.- more

  BHP Billiton to invest 2.5 bln usd in two nickel projects in Indonesia - report

• Anglo-Australian mining giant BHP Billiton is set to invest more than 2.5 billion dollars to develop two nickel mining projects in Halmahera, Maluku province and West Papua in Indonesia, the Jakarta Post reported Friday. - more

  Metals Outlook Bullish for Investors With Faith in Emerging Markets

• Investors looking to cash in on the increasingly bullish outlook for metals and mining should carefully consider what a slowdown in the U.S. economy will mean for the sector. Gavin Graham, director of investments at Guardian Group of Funds, says his outlook for metal is ''strongly bullish'' and predicts continued strength into the future despite a possible U.S. recession. - more

  This week's "I'd give the old boy a tear if I weren't laughing so hard" story

• (One of world's wealthiest men, who has built his fortune by mocking those who have cried "NIMBY(Not in my backyard)" to his expansion plans - now learns the tune himself) - Steel tycoon Lakshmi N Mittal is selling his sprawling 40-million-pound (nearly $61-million) house in London in protest against plans to build an apartment block next door, British newspapers reported on Friday. - more

  Job cuts at mines unavoidable (unions have threatened to strike if mining jobs are lost. Major source of ferrochrome, which is already way up)

• South African Minister of Minerals and Energy Buyelwa Sonjica has confirmed that job losses at South African mines are unavoidable, the South African Broadcasting Corporation reported on Friday. - more

  Beginning LME nickel inventory / Overnight Shanghai closing price

•   London Metal Exchange - plus 6 tonnes = 47,874 tonnes (1.28% - 612 tonnes cancelled warrants/ 47,262 net stock level) (charts)
•   Shanghai Jinchuan nickel - 255000-257000 RMB/t, plus  9000 (charts)

• Official LME nickel closing prices - cash - $13.74/lb 3 month buyer - $13.79/lb (16.96% higher than 12/31/07) (chart) (note - official prices reflect market moved into contango, if only momentarily.)
• Baltic Dry Index - plus 33 to 7,332. (chart)
• LME nickel inventories - plus 558 tonnes into Rotterdam, Netherlands warehouse, minus 252 tonnes from Rotterdam warehouse, minus 24 tonnes from Vlissingen, Netherlands warehouse
• We mentioned on Monday that "There is good reason when looking at 'trading' charts and looking at upcoming reports this week, to believe there is a good chance we may see more increases in the price of nickel this week. Fundamentally, from the supply/demand perspective there is no reason to believe the price of nickel will do much of anything, except possibly take back of some of last weeks gains. So which will win? Market fundamentals? Or trading fundamentals?" Trading fundamentals had led the market higher thru yesterday, and then the fundamental equation waivered today. Tony Warwick-Ching, a nickel analyst at CRU in London, said it best to Bloomberg this morning, ``The bull is looking for a reason for nickel to join the rally.'' We might have worded that to "the bull has been looking" for a reason. As one trader put it, today's market was a "knee jerk reaction" to news that a major nickel mine in Colombia had gone on strike. Somebody's knee may have jerked, but stainless steel producers can tell you where the boot landed. Until yesterday, it appeared average nickel prices for the month would work out to be about where they were for January. Now, that could be far too conservative of a guess. With the price of ferrochrome already way up, and iron ore right behind it, stainless steel producers, distributors and users, do not need nickel to rise sharply also. U.S. stainless steel surcharges for April appear to be going higher - again. Three month nickel ended the day at  $14.11/lb ($31,100/tonne)  ($3150/tonne higher than Tuesday's close and a new high for 2008)
• Closing Metals Report - more

  Nickel Advances Most in Five Months as BHP Mine Halts Output

• Nickel rose the most in five months after a strike at BHP Billiton Ltd.'s Cerro Matoso mine in Colombia halted production that accounts for about 4 percent of world output. Tin traded at a record. - more

  The countdown has come to an end today Wednesday 27 the zero hour strike begins in Cerromatoso

• As announced last February 15 workers affiliated with SINTRACERROMATOSO - CGT, approved conducting a strike in this company owned by the multinational BHP Billiton; During these days were continuous dialogues, but unfortunately today was not solution to the demands presented by the union. - translated announcement here  another translated report

  Colombia's Cerro Matoso ferronickel mine shut down

• Colombia's Cerro Matoso ferronickel mine was "totally paralyzed" on Thursday by a labor union strike that started the day before, an official at the company with direct knowledge of the situation told Reuters.

  Quantum's Jim Rogers says US 'out of control'

• Jim Rogers - who co-founded the now closed Quantum Fund with George Soros - told 750 global fund managers in Tokyo today that, America is “completely out of control”, there will be a 20-year bull market in commodities and that prices will be in turmoil. - more

  Global Steel Prices Set for Double Digit Percentage Hikes This Year

• US mills appear to be busy with delivery lead times stretching out to early April. Customers need to replenish stocks and there is a lack of imported steel at present, although this could change later in the year. - more

  Quebec stakes claim to best policy for mining; Nevada and Finland round out annual survey’s top three

• Prospectors and investors looking for a stake in the mining sector should turn to Quebec, as La Belle Province is seen by mining executives as having the best policy environment in the world for investment, according to the Survey of Mining Companies 2007/2008, released today by independent research organization The Fraser Institute. - more

  9:15 am LME 3 month nickel now up $2000/tonne.

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

• Indications at 7:50 am CST show 3 month nickel selling up by $.64/lb (that's about $1400/tonne - In the time it took me to look up all three indicators, price jumped by $150/tonne on all three.) If you have ever seen the movie "Independence Day" about the alien attack on the world, there is an early scene, where the character played by Harvey Fierstein, is trapped in his car as a alien caused firestorm and certain death approach. His final thought, before his car is crushed - "oh crap". And speaking of "oh crap", we have a major nickel producer down because of a strike. The first news that came out on this was late yesterday afternoon when BN America announced a strike was imminent, followed by a Reuters report in late evening that the workers were on strike. With the market already up for the economic reasons we mentioned yesterday, throwing a supply disruption into the pot, has taken the market by complete surprise.    
• Bloomberg - more
• Reuters - more

  Nickel Rises to 7-Week High as BHP Billiton Mine Halts Output

• Nickel rose to the highest in seven weeks after a strike at BHP Billiton Ltd.'s Cerro Matoso mine in Colombia halted production that accounts for about 4 percent of world output. Tin traded at a record. - more

  Copyright/courtesy Dow Jones

• .Cerromatoso exported 114,000 tons of nickel in the first 11 months of 2007.....It is therefore a significant contributor to world nickel supply, said Fairfax analyst John Meyer. "This has no doubt helped push up nickel prices further, as well as investment money into commodities," Meyer said.....But in a market of ample material, the spike higher this week is likely a "knee-jerk reaction," said UBS analyst Robin Bhar. He added that nickel has been laggard in the complex, so it makes sense to see some short covering and buying of the metal along with general base metal interest. "Although demand for nickel is improving, the problem is that supply is abundant," Bhar said. "In addition to nickel sourced from stainless scrap, increased amounts will come from Chinese production of pig iron and higher primary output."

  Union: Strike imminent at Cerro Matoso - Colombia

• Employees at the Cerro Matoso metallurgical complex in northern Colombia's Córdoba department are calling for an indefinite strike to demand labor agreements. - more

  China's industrial output grows 13.5 pct year-on-year in 2007 - NBS

• China's industrial output increased by 13.5 percent year-on-year to RMB 10.74 trillion ($1.51 trillion) in 2007, the National Bureau of Statistics (NBS) announced today. - more

  Price Of Low Carbon Fe-Cr Is Viewed To Rise To Level US$4 / Lb. For Troubled Production In S.Africa

• Current Price In Europe Is US$3.75 - 3.90 Per Lb. Of Cr For Carbon 0.1% Max. Material - more

  Bits and Pieces

• A dispute over marketing rights held by Xstrata's biggest shareholder is threatening takeover talks with suitor Vale of Brazil, a source close to the situation said on Thursday.
• Russian billionaire Vladimir Potanin's Interros group has urged fellow shareholders in Polyus Gold to challenge a proposal by the mining firm's management to carve off its exploration business. - more
• Xstrata, the copper miner, reached a record high yesterday amid a rumour that Anglo American, up 50p at £33.30, was plotting a bid, offering one Anglo share and £13 cash for every one of Xstrata. Xstrata, of Switzerland, whose negotiations with Vale, of Brazil, appear to have stalled because Glencore, Xstrata’s main shareholder, cannot agree a price or a metals marketing deal, rose 47p to £41.47.
• South Africa's biggest mining union has threatened to strike if any of its members lose their jobs as a result of the country's electricity shortage. - more
• Canada's biggest producer of coal for the steelmaking industry appears poised for a massive increase in profits, thanks to a "massive squeeze" in global supply. - more
• India - Punjab-based steel producers have requested the Union Finance Minister to completely ban or impose duty on the export of iron ore and abolish import duty on secondary steel in the coming Budget, to reduce the steel prices. This came as these producers were adversely affected by rising input prices.
• Sylvania Resources has signed an amendment to its deal with South African ferrochrome producer Samancor to treat run-of-mine fines from three new sites at Samancor's current South African mining operations, the company said Wednesday. - more
• SSINA (US) - Imports of total stainless steel in YTD December 2007 were 765,431 tons, a 7.6% decrease compared to YTD December 2006; US consumption was 2,225,789 tons, a 14.0% decrease; twelve month import penetration was 34.4%, a 2.4% point increase from 2006.

  Beginning LME nickel inventory / Overnight Shanghai closing price

•   London Metal Exchange - plus 276 tonnes = 47,868 tonnes (1.43% - 684 tonnes cancelled warrants/ 47,004 net stock level) (charts)
•   Shanghai Jinchuan nickel - 245000-249000 RMB/t, plus 4250  (charts)

• Official LME nickel closing prices - cash - $13.06/lb 3 month buyer - $13.15/lb (10.41% higher than 12/31/07) (chart)
• Baltic Dry Index - minus 13 to 7,299. (chart)
• LME nickel inventories - plus 72 tonnes into Rotterdam, Netherlands warehouse, minus 102 tonnes from Rotterdam warehouse, minus 24 tonnes from Singapore warehouse, and minus 18 tonnes from Baltimore, MD, US warehouse
• While some of the base metals traded in London have some supply concerns to content with, the supply/demand parameters met little to London nickel traders today. Only two things really mattered. First, the news out yesterday that proved the US is straining under inflationary pressure, gave commodities fresh fund money investment. Secondly, the dollar took another tumble yesterday, and set a new record low against the Euro this morning, and a falling dollar gives a boost to base metal prices. Thus, it was written in the tea leaves that today would be an green trading day, even before the session opened. The only question that was really left to be answered - was how high would prices go? Three month nickel ended the trading day at $13.25/lb   ($29,200/tonne) - up $1,250/tonne.    
• Closing Metals Report - more

  Dollar weakness, investment money boost metals

• Industrial metals climbed higher on Wednesday, with aluminium hitting its highest in 21 months as a weak dollar boosted commodity prices across the board. - more

  Standard Bank Commodities Weekly - pdf here

  Copyright/courtesy Dow Jones

• "Record oil prices overnight have sparked a suggestion we're moving into a period of higher inflation," said Sempra Metals analyst John Kemp, with "not much push back by the central banks...that's the kind of environment in which commodities do well."

  Chinese businessmen urge EU restraint on tariffs

• Cheap imports do not pose a threat to the EU, Chinese manufacturers have insisted, as the Commission attempts to deal with an increasing number of requests to introduce punitive duties on Chinese products, allegedly dumped on EU markets at below-cost prices. - more
• Chinese screw-makers urge EU to drop duties case - Chinese screw-makers called on the European Union on Tuesday not to hit their exports with anti-dumping duties, saying European companies and consumers would also suffer. - more

  Global Steel may go into iron, nickel mining, readies $1.6B

• (excerpt) He added that Global Steel was also interested in putting up an integrated mill for stainless steel. - more

  Opinions

• Too Much Money Chasing Too Few Commodities
• A historic rally is underway in the global commodities markets. Central bankers in 18 of the top 20 economies in the world have been expanding their money supplies at double digit rates for the past several years, trying to prevent their currencies from rising too quickly against the sickly US dollar. Nowadays, fund managers are pouring billions of dollars into commodities across the board, as a hedge against the explosive growth of the world’s money supply, competitive currency devaluations, and the negative interest rates engineered by central banks. To the chagrin of central bankers, much of new money pumped into the global markets is also going into commodities, instead of the stock market. - more
• Can commodities serve as a reserve currency?
• The financial sector, like the politic arena, can sometimes yield more heat than light, particularly during doldrums or other challenging economic periods. In economist Glen Langan's view, there's no better example of this than the current idea in financial circles that with a period of higher inflation likely ahead, commodities will become the world's new reserve currencies, displacing the U.S. dollar. - more

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

• Indications at 7:50 am CST show 3 month nickel selling  up by $.41/lb . Yes that's correct, market is up about $900/tonne. You just know it's going to be one of those days when the first headline you read says "Nickel, lead, aluminium jumped as weak dollar boost metals". We knew today would be up after yesterday's reports, but we are surprised by how much it has already gone up. Yesterday's nail in the coffin - "Fed Vice Chairman Donald Kohn said turmoil in credit markets and the possibility of slower economic growth pose a ``greater threat'' than inflation." No, not that one, who believes the government anymore. "Labor Department reported that, compared with a year ago, wholesale prices have risen 7.4 percent." That would be inflation. Yesterday's immediate reaction - US Dollar fell to record low against Euro and most major currencies. Today's reaction - Dollar down, base metal prices up, some, including nickel, way up.
• Bloomberg - more
• Thomson Financial - more
• Dow Jones - more

  Steel Founders' Society of America Casteel Report February 2008 - pdf here (and) Steel market condition information - pdf here

  Commodities Show Upward Trend

• Short-term commodity demand growth will remain stronger than expected because of developments in Asia despite the economic slowdown in the United States, said Daniel Sacks, head of resources on the commodity investment team at Investec Asset Management. - more

  China Growth Facts

• In 1997, China imported 55,110,000 tons of iron ore and produced 115,114,000 tonnes of pig iron and 108,911,000 tonnes of crude steel. Five years later, they imported 111,494,000 tonnes of iron ore and produced 170,735,000 tonnes of pig iron and 182,249,000 tonnes of crude steel. Last year, China imported 383,090,000 tonnes of iron ore and produced 469,000,000 tonnes of pig iron and 489,000,000 tonnes of crude steel. Five years ago, China spent nearly $2.8 billion dollars importing iron ore for its steel production. Last year they spent nearly $34 billion.  

  Courtesy Scotia Capital "China Commodities Weekly"

• China’s stainless production surged 36% YOY to 7.2 million tonnes last year, said the Stainless Steel Council of China Special Steel Enterprises Association. Production from China’s largest stainless producer, Taiyuan Iron & Steel, contributed most to the country’s output increase. ...Last year, China’s 300-series stainless steel production stood at 4.19 million tonnes, accounting for 58.1% of total stainless steel output, down 4.2% from a year earlier. The proportion of 400-series stainless steel and 200-series stainless output was 25.5% and 16.4%, respectively, up 3.2% and 1%.

  Bits and Pieces

• The Specialty Steel Industry of North America (SSINA) has released that US stainless steel import declined by 7.6 percent to 765,431 tons in 2007.
• The Russian Nickel Co. will invest $640 million in production within the next three years and reach output of 40,000 tons of nickel and 4,000 tons of cobalt by 2012, its parent, the Russian Copper Co., announced Wednesday.
• Norilsk, the world's biggest producer of nickel, is building its own shipping fleet to capitalize on the melting of the polar ice caps. - more
• Zambia is on track to complete the construction of a dedicated power supply line to its first nickel mine where production of 8,600 tonnes of nickel will commence mid-year, an industry official - more
• The China Iron and Steel Association (CISA) has urged its members to invest directly in overseas resources, as a rise in iron ore prices and constrained coking coal supplies threaten their bottom line. - more
• Companhia Vale do Rio Doce, the world’s largest iron ore producer, concluded the iron ore fines price negotiations for 2008 with Taiwan China Steel Corporation. - more
• Russia's environment agency said on Wednesday it had filed a 4.35 billion rouble ($177.9 million) claim against mining firm Norilsk Nickel for alleged pollution of rivers in Siberia. Rosprirodnadzor said in a statement it had lodged the claim with the Krasnoyarsk regional arbitration court following an investigation of Norilsk's Taimyr division in summer 2007. - more
• Even by Russian standards, this tussle has it all. Feuding oligarchs, national politics and a fight to control what would be one of the mining industry’s biggest companies – all conducted inside a head-spinning commodity bubble. - more
• A sixth employee of leading iron ore producer Assmang Limited (Assmang) has died as a result of the weekend blast at the Number Six furnace of the company’s Cato Ridge works in KwaZulu-Natal.
• Taiwan’s Yieh United Steel Corp. (Yusco) and Tang Eng Iron Works have announced to raise stainless steel prices. The move is mainly motivated by rising prices of ferro-chrome. Downstream customers are replenishing their stocks; therefore, the demand is good. Both companies will raise export prices by around US$60~160/ton in April.
• Argonaut Resources NL, primarily seeking gold in South East Asia, has made a nickel discovery in Laos. - more

  Getting the Best out of Stainless Steel

• "My stainless steel has gone rusty. It can't be stainless. What's gone wrong? Who's to blame? How can I fix it?" - more

  Beginning LME nickel inventory / Overnight Shanghai closing price

•   London Metal Exchange - minus 72 tons = 47,586 tonnes (1.88% - 894 tonnes cancelled warrants/ 46,692 net stock level) (charts)
•   Shanghai Jinchuan nickel - 239500-246000 RMB/t, minus 750  (charts)

• Official LME nickel closing prices - cash - $12.63/lb 3 month buyer - $12.72/lb (6.8% higher than 12/31/07) (chart)
• Baltic Dry Index - plus 16 to 7,312. (chart)
• LME nickel inventories - plus 72 tonnes into Rotterdam, Netherlands warehouse, minus 330 tonnes from Rotterdam warehouse, minus 60 tonnes from Singapore warehouse
• This morning we advised of increases in 400 series stainless steel prices. 300 series stainless has more room to climb next month also. Korean stainless steel wire producers, who typically wait till the end of the month to make price adjustments, advised Taiwanese and Chinese fastener manufacturers that 'effective immediately', the price for A2 (304) stainless steel had risen 4.9% to $4100/MT USD and A4 (316) stainless steel, had increased 3.7% to $6800/MT USD. Considering the average price of nickel has changed little since January, this price increase is primarily due to cost increases seen in ferrochrome, molybdenum, and iron ore. Three month nickel ended the day at $12.67/lb ($27,950/tonne)
• Closing Metals Report - more

  Behre Dolbear Global Mining News - pdf here

  Copyright/courtesy Dow Jones

• "Base and precious metals prices, along with oil, have "staying power" to remain at historically high levels for some time, underpinned by supply issues as well as demand from developing economies, Bart Melek, global commodity strategist with BMO Capital Markets, said Tuesday .... Meanwhile, governments in parts of the world are withdrawing licenses or forcing mining companies to renegotiate the terms of licenses. "Certainly it looks like countries that have the resources want a bigger share of the pie," Melek said. "It shouldn't be a big surprise that is happening." This essentially raises the cost of capital, with companies needing higher prices for the risks they are taking, Melek said. "

  Spain's Acerinox sees base price improving in Q2

• Spanish steel maker Acerinox said on Tuesday it expects the base price of its stainless steel to improve in the second quarter of this year. - more

  High-quality product from low-quality materials (comment - hope this isn't their motto)

• China Steel is a producer of nickel pig-iron, which is used as an alternative to pure nickel in the production of stainless steel. - more

  A market for stainless steel? (comment)

• After years of environmentalist claims that the use of wooden chopsticks in China was helping deforest that country, the Chinese government has recently slapped a tax on disposable chopsticks and urged restaurants to discontinue their use. The potential winners? Standard silverware and stainless steel chopsticks.

  Why Won't Nickel Prices Fall? (comment)

• Commodities have recently offered investors a more stable return than equities - attracting even more fund investment
• Inflation - commodities offer an inflationary hedge to investors, as they typically represent items the economy can't do without, and can, at least in the short term, benefit from a inflationary pricing.
• US recessionary concerns - The old theory that when the US coughed, the rest of the world caught a cold, has lost substantial ground to the "world decoupling theory", which states no one country is solely responsible for the fortunes of others. The growth in China is the single biggest factor for the current commodities bull market, and what impact a US recession might have on it, and the rest of the world, is losing many believers of the old theory. But not all. (more)
• Stainless steel production in most parts of the world are stagnant, according to the best intelligence. Traders are gambling that its revival will put a strain on nickel production in the near future.  They have good reason. LME nickel inventories stood at 47,940 tonnes on January 2nd, 9 weeks ago. Today, they registered 47,658 tonnes. While we aren't seeing inventory's drop, the more important observation is that we aren't seeing the inventory gain. And this is going on while stainless steel production is down!?

  (for the mining investor - annual report) Behre Dolbear - Where NOT to Invest - here

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

• Indications at 7:45 am CST show 3 month nickel selling down by $.07/lb . Steel producers around the world are raising prices on steel, courtesy the new iron ore price increase,  and stainless steel producers are increasing the price of 400 series stainless, due to the sharp increase in the price of ferrochrome.
• Bloomberg - more

  TD Bank Weekly Commodity Price Report - pdf here

  Rand Merchant Bank - Base Metals Weekly Report - pdf here

  Canada Commodity Price Update - pdf here

  World Bank Commodity Markets Review Feb 2008 - pdf here

   General Review Of Nickel In 2007 And Its Outlook For New Year (two part article by Tex Reports)

• Part 1 - here (excerpt) "However, the cost to produce nickel-contained pig iron in China is estimated at US$7 - 8 per lb. of nickel on the basis of the current price for nickel ore and, even if nickel price falls to a level of US$5 per lb. in the future, this nickel-contained pig iron produced in China will still see a possibility to survive. "
• Part 2 - here 

  Stainless steel demand to rise on rail plans

• Stainless steel consumption will rise by at least 140,000 tonnes over the next one year or so after the railway minister announced plans to build new freight wagons and passenger coaches from the metal, a senior industry official said on Tuesday. - more

  Commerce Initiates Antidumping and Countervailing Duty Investigations of Circular Welded Austenitic Stainless Pressure Pipe from China - more

  Power cuts, blast set to lift ferrochrome prices

• Ferrochrome prices are expected to rise sharply as SA’s power shortage cuts production and an explosion at Samancor Chrome, the world’s second-biggest ferrochrome producer, halts production for three to four months. - more

  Baosteel raises prices 20% to cover increased ore cost

• Baoshan Iron & Steel Co said yesterday it would raise second-quarter steel product prices by up to 20 percent to pass on costs to customers after iron ore prices jumped. - more

  Iron Ore Breaking with Tradition?

• Imagine this. You make a product. You've got steep competition. As if by magic, you discover the exact price your biggest competitor is charging, and the precise terms of his contracts with customers you really want.  In other words, it's the perfect opportunity to say, "But wait! I can charge more!" - more

  China Metallurgical to Buy Australian Iron-Ore Mine

• China Metallurgical Group Corp., a state-owned construction company, agreed to pay Cape Lambert Iron Ore Ltd. A$400 million ($369.6 million) for a deposit containing the steelmaking raw material in Western Australia. - more

  Courtesy London Metal Exchange - London Metal Exchange Index thru yesterday (source)

  Goro Nickel seeks the good pipe

• The suspension of work of installation under the sea marks a stage in the dispute, but L’industrial N’does not consider an alternative solution yet. - translated article here
• Coordination of Defense of the South - CoDefSud - This is the website of the organization currently moving against the Goro mine - translated site here  original French language site here

  Courtesy AISI - This Week's Raw Steel Production

• In the week ending February 23, 2008, domestic raw steel production was 2,158,000 net tons while the capability utilization rate was 90.5 percent. Production was 2,126,000 tons in the week ending February 23, 2007, while the capability utilization then was 89.5 percent. The current week production represents a 1.5 percent decrease from the same period in the previous year. Production for the week ending February 23, 2008 is up 0.6 percent from the previous week ending February 16, 2008 when production was 2,144,000 tons and the rate of capability utilization was 89.9 percent.

  Global steel prices: the sky is the limit

• Global steel prices could hit new peaks in 2008, thanks to skyrocketing raw material, energy and freight costs, coupled with tighter supplies because of falling exports from China. - more

  Substantial Steel Price Hikes Inevitable in EU but Few Deals So Far

• EU mills are benefiting from a lack of competitive third country imports. Low inventories at distributors need to be replenished and customers are accepting that prices must go up as producers try to recover higher input costs. - more

  Listed firms ordered to submit green data

• The government will enforce mandatory environmental disclosures for companies with high pollution emissions and energy consumption, according to a regulation released by the State Environmental Protection Administration (SEPA) Monday. - more

  Beginning LME nickel inventory / Overnight Shanghai closing price

•   London Metal Exchange - minus 318 tons = 47,658 tonnes (1.90% - 906 tonnes cancelled warrants/ 46,752 net stock level) (charts)
•   Shanghai Jinchuan nickel - 240000-247000 RMB/t,  minus 2000  (charts)

• Official LME nickel closing prices - cash - $12.90/lb 3 month buyer - 12.99$/lb (9.16% higher than 12/31/07) (chart)
• Baltic Dry Index - plus 109 to 7,296. (chart)
• LME nickel inventories - plus 216 tonnes into Rotterdam, Netherlands warehouse, minus 120 tonnes from Rotterdam warehouse, minus 60 tonnes from Busan, South Korea warehouse, minus 18 tonnes from Vlissingen, Sweden warehouse
• Marketwatch headline told the morning story "U.S. stocks pulled solidly higher Monday after data on the troubled housing industry proved slightly less bleak than predicted, and renewed activity appeared in the deal-making front." Even news from the NY Times that Bank of America was circulating a bail-out proposal in Congress warning " up to $739 billion in mortgages are at "moderate to high risk" of defaulting over the next five years and that millions of families could lose their homes," did not seem to put a damper on the bullish mood. Report from Reuters that South Africa energy supplier Eskom, is paying 50% more for emergency coal. We find it amusing this report comes out a few weeks after Glencore announced force majeure on its coal shipments heading "out" of South Africa, thanks to all three of its cargo crane's breaking down. Not that we could blame them. There are few certainties in life, but one is that if one party is willing to pay a premium for an item, someone will find a way to get them that item. The enthusiasm in the States did not spread across the pond to base metals trading though, with the U.S. Dollar climbing ever-so-slightly against the Euro. Except for tin, which broke another record today, and zinc, which squeaked out a slight gain, metals traded on the London Metal Exchange were down today. Nickel appeared to be playing follow the leader with copper once again, which fell after its LME stockpile grew 5%+. For the first day of the 9th trading week of 2008, three month nickel closed at $12.79/lb  ($28,200/tonne)
• Closing Metals Report - more

  'For miners, the best is yet to come'

• The bull run in commodities is far from over, according to a prominent market strategist who predicts base metal stocks will take a breather before resuming their ride on a "once-in-a-millennium" boom that will last at least two decades. - more

  Canadian Industrial Outlook - pdf here

  Cut Stainless Costs with Lower Nickel Alloys

• Advances in arc and laser welding as well as new solid-state approaches offer opportunities to substitute less expensive, lower content nickel stainless steels in certain types of mechanical assemblies. - more

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

• Indications at 7:50 am CST show 3 month nickel selling up by $.03/lb . There is good reason when looking at 'trading' charts and looking at upcoming reports this week, to believe there is a good chance we may see more increases in the price of nickel this week. Fundamentally, from the supply/demand perspective there is no reason to believe the price of nickel will do much of anything, except possibly take back of some of last weeks gains. So which will win. Market fundamentals? Or trading fundamentals? Stay tuned. 
• Bloomberg - more

  Haywood Securities Metals & Mining - pdf here

  Germany Steel Graphs

• thru 2007 Steel Exports - graph here
• thru 2007 Internal Supply and Imports - graph here

  Global steel prices: the sky is the limit

• Global steel prices could hit new peaks in 2008, thanks to skyrocketing raw material, energy and freight costs, coupled with tighter supplies because of falling exports from China. - more

  Shanghai Metal Forecasts

• Of 29 analysts responding, 17 (58%) felt the [rice of nickel would rise on the Shanghai Metals Market this week, while the remaining 12 (41%) feel the price would say about the same. None (0%) felt the price of nickel would fall this week.

  Six die in two furnace blasts

• A total of six people have been killed and at least four more seriously injured in explosions in two furnaces – one at an leading iron ore producer and the other at the world’s second largest producer of ferrochrome. - more

  Goro Nickel halts construction

• The Goro Nickel Mining company in New Caledonia has temporarily stopped the construction of a waste disposal pipe amid protests by environmentalists and activists. - more  (another translated article here)

  Global DRI production in January 2008 up by 7.8% YoY

• International Iron and Steel Institute have released the production figures for direct reduced iron for the month of January 2008. The global production of DRI in January 2008 was 4.966 million tonne up by 10.9% YoY and up by 3.8% MoM as compared to December 2007. - more

  The Commodity Super-Cycle Will Benefit Sudbury for Years to Come - Stan Sudol

• There is no doubt that the impending recession in the U.S. is causing economic upheaval across Ontario which exports about 86% of its manufactured goods to our southern neighbour. - more

  Beginning LME nickel inventory / Overnight Shanghai closing price

•   London Metal Exchange - plus 18 tons = 47,976 tonnes (2.71% - 1302 tonnes cancelled warrants/ 46,674 net stock level) (charts)
•   Shanghai Jinchuan nickel - 242000-249000 RMB/t, minus 1500   (charts)

• Commodity prices have enjoyed a prolonged bull-market over the last seven years. - more

  Russian metals super-giant on its way?

• Metalloinvest, the mining and steel group that belongs to Russian billionaire Alisher Usmanov, may merge with metals giant Norilsk Nickel. - more

  Xstrata mega deal nears

• Mining groups Vale and Xstrata are inching towards a deal that will create the world’s largest mining group. - more

  2008 mine deals seen to rack up P11.6B in sales

• (excerpt) Projects now in the development stage....Palawan HPAL Nickel Project Line 2, $18.56 million; ...Iligan Ferronickel Smelter Plant, $140.32 million; Manticao Ferronickel smelter plant, $40.86 million; ..." - more (these headlines imply interesting times ahead - "Military braces for coup" - more)

  Richest person in Australia, Andrew Forrest, is 'quintessential Aussie bloke'

• A promise to turn rust-red iron ore into gold for investors has transformed Andrew Forrest from a "penny stock" mining entrepreneur with a dream into the richest person in Australia, worth more than $7 billion. - more

  Hot coal causes steel prices to rocket

• The coal crisis continues, with many countries suffering power outages due to coal supply problems. Macquarie Research says “the strong surge in spot coal prices in recent months, both for coking and thermal, has made forecasting contract price outcomes virtually impossible. - more

  High raw-material costs lead to steel price rise

• Nippon Steel Corp and JFE Holdings Inc, the world's second and third-biggest steel makers, raised domestic wholesale sheet prices by a record 31 percent to pass on higher raw material costs, officials said yesterday. - more

  Nonferrous Metals Outlook Annual Report - pdf here

  National Mining Association Mining Week - pdf here

  Commodities boom as Fed money printing weakens dollar

• The price of oil soared to an historic high above 101 dollars this week, while gold and platinum also scored record peaks as speculators dived into already buoyant commodities markets. - more

  Europe Stainless Steel Sheet Price (CR 304 2B 2mm Euro/Tonne Central Europe)

• November 2007 = 850-1050
• December 2007 = 1000-1150
• January 2008 = 1100-1200
• February 2008 = 1150-1300  

  High costs, labor shortages hampering mining -Teck

• Base metals mining projects could continue to face delays or cancellation from higher costs and a lack of available personnel, Teck Cominco's chief executive said on Thursday. - more

  Minara Resources Director's Report (excerpt)

• "China continued to be the major driver of nickel metal demand during 2007. The first half saw low stocks and supply side concerns push the nickel price up to record levels. A weakening of stainless steel demand and a rule change by the London Metal Exchange (LME) triggered a significant correction in the price mid-year. Nickel pig iron production in China rose markedly in the first half of 2007. However, following the decline in nickel price, stocks of imported lateritic ore were reported building up at major Chinese ports as stainless steel producers cut output in the second half of the year. LME stocks started the year at 6,570 tonnes and ended the year at 47,940 tonnes."

  EU mills push steel plate prices up again, but demand weakens

• ArcelorMittal, Duferco and Reiner Brach are set to increase prices of hot-rolled reversing mill steel plate, despite indications in the market of weakening demand. - more

  PDAC – Mining Matters: Educating the Next Generation about the Mineral Industry - Stan Sudol

• According to a comprehensive study by the Mining Industry Training and Adjustment Council (MITAC), the Canadian mining industry needs to fill 81,000 high-paying, highly skilled new positions in the next 10 years. - more

  Baosteel warns of foreign entry in China through private mills

• China Business News reported that Mr Xu Lejiang chairman of Baosteel's chairman as warning China's steel industry of threats that may be brought by the increasing cases foreign capitals take control of good quality private Chinese steel mills. - more

  China's Iron Ore Imports Go At 440 Mt Annually Unitary import price in Jan 08 sets new record of US127.35 per ton

• According to the Feb. 18 announcement of foreign trade statistics (partly already reported) by China's Customs General Administration, iron ore imports to the country in January 2008 turned out to total 36.81 million tons (Mt), which represents a new single month record, and an annual pace of 440 Mt, being 60 Mt over the 2007 total imports of 380 Mt. Unitary import price set for the month also renewed past record at US$127.35 per ton, which is 1.84 times the level in the same period last year. - more

  Glencore emerges as industrial colossus (older article, good background info)

• When fugitive commodities dealer Marc Rich sold his trading firm 13 years ago, it was best known for doing business with pariah nations. - more

  Vale donates Kubota prize to cancer research

• Vale Inco’s Creighton Mine has purchased the 10,000th Kubota CE unit in Canada from local supplier, Tracks & Wheels, and donated the resulting $10,000 prize to Miners for Cancer, in support of the Northern Cancer Research Foundation, said a news release. - more

  85% of our steel from captive mines by 2014: ArcelorMittal

• Consolidation between mining companies may be a cause for concern for the steel industry but the world’s biggest steelmaker ArcelorMittal is planning to go on the overdrive in search of iron ore mines. - more

  How Japan kept RP mining afloat during war

• The country’s mining industry in Northern Luzon stayed vibrant during World War II, and journals of the Mitsui Group of Companies showed it was because of harmonious Japanese ties with local miners during that period. - more

• Official LME nickel closing prices - cash - $12.95/lb 3 month buyer - $13.04/lb (9.49% higher than 12/31/07) (chart)
• Baltic Dry Index - plus 189 to 7,187. (chart)
• LME nickel inventories - plus 300 tonnes into Rotterdam, Netherlands warehouse, minus 114 tonnes from Rotterdam warehouse, minus 12 tonnes from Busan, South Korea warehouse, minus 48 tonnes from Liverpool, England warehouse
• LME nickel stocks are at their highest level in 10 years. Known stockpiles compared to consumption is running nearly 4 weeks, according to Citigroup's most recent 'Commodity Heap' report, a level it has been running at since September of last year, according to the same report. 300 series stainless sales, according to Chinese, Korean, and Japanese media reports, remain soft in Asia. European economy is softening, but sales of stainless steel appear to be doing well. Nickel, lacking any major supply restraint news, or news that would imply a sizeable shift in world demand, gave little evidence to account for the price swing it experienced this week. The credit goes to fund money pouring into commodities as an inflationary hedge, and playing follow the leader with copper, which had a robust week, on dwindling inventories. Today, the recessionary fears returned, and some traders decided the time was right to take profits. Three month nickel ended the trading day, and week, at $12.86/lb ($28,350/tonne)         
• Closing Metals Report - more
• Have a safe and restful weekend. If you have some extra time this weekend, we found a90 minute Canadian documentary of Russian President Putin's rise to power very interesting - here

  Global Stainless Steel Scenario - Steelworld - pdf here

  That steep iron ore price rise may yet have a silver lining for China

• The 65-percent rise in iron ore prices will not always be bad news for Chinese steel makers, as higher costs will also accelerate the consolidation of the domestic industry and will benefit the sector in a long run. - more

  Chinese Mills Reject Rio's Ore Price Push, People Say

• Chinese steelmakers, the largest buyers of iron ore, will reject Rio Tinto Group's demand for a minimum 71 percent price increase in an attempt to slow accelerating costs for raw materials, two people familiar with the negotiations said. - more

  German steelmakers' pay agreement puts damper on prospect of early ECB interest rate cut

• While the expectations of optimists/wishful thinkers that the European Central Bank would cut its benchmark interest rate rate as early as April, was not expected by most credible market analysts to be realized, a wage settlement won by German steelworkers will strengthen the case of the hawks on the ECB Governing Council, to keep the rate on hold at 4% in the short-term. - more

  Huge metal ore discovered south of Murmansk

• The Irish-owned company Oyosa Gold Plc has made a major finding of molybdenum at a site 160 km south of the Murmansk city. The field could be among the biggest ten in the world. - more

  Power users warn EU investment stalls over climate

• (excerpt) Juha Rantanen, chief executive of Finnish stainless steel company Outokumpu, said the EU's Emissions Trading Scheme, which will make companies pay increasingly for their pollution, was already hitting his company's plans to expand mining of ferrochrome, a stainless steel ingredient. - more

  Thank Scrap: The Market For Recycled Metals

• In September 2007, Nickel Magazine carried a story about a new Yale study on environmental advantages of stainless steel recycling. (here)
• In January, Energy Policy Magazine carried the study (synopsis here)
• An investor magazine wrote on its extensively in "Thank Scrap: The Market For Recycled Metals"(here)
• The Chinese Stainless Steel Council carried the story yesterday - (quote from the article) " The demand for steel will eventually become flat, and the use of stainless steel will become the future of renewable resources, in the total proportion of demand will be higher, so that in the future, the production of stainless steel scrap ratio will increase." (translated source)

  South Africa: ASA Metals to Build Two New Furnaces

• Chrome producer ASA Metals unveiled its expansion programme yesterday, saying the building of two furnaces at its Dilokong chrome mine and smelter in Limpopo would more than double the production of charge chrome. - more

  Minara bullish on nickel outlook as profit drops

• (excerpt) Brokerage Goldman Sachs JBWere, however, is not as positive on the outlook for nickel prices and believes the base metal will remain in oversupply for the next two years. "With a two-year view at least, we are bearish on the nickel price outlook," Goldman Sachs said in a February 12 client note. - more

  Brazil miner Vale raises bid for Xstrata (would be old news from yesterday, except this paper cites a third source confirming the first source, who's initial claim was denied by a second source. Got to love them anonymous sources!)

• Brazilian miner Vale has raised its informal offer price in takeover talks with Swiss rival Xstrata , sources with direct knowledge of the negotiations said on Thursday. - more and another

  Russian Billionaires Tussle Over Nickel Giant

• Another battle between Russian billionaires is brewing, but this time it's not over who supports the Kremlin. - more (we apologize to our readers if this story has gotten mundane, but with the top three nickel miners in the world involved in takeovers , either as taker, or taken, we find this story very interesting)

  Samancor shuts furnace after explosion

• South Africa's privately owned Samancor Chrome, the world's second-biggest producer of ferrochrome, said on Friday it had shut a furnace at its plant after a worker was killed in an explosion on Sunday. - 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 $.11/lb . With no real news to drive nickel trading one way or the other, the metal appears to be playing follow-the-leader with copper trading this week. China has returned to work from its Spring Holiday. Statistics released today by the Chinese government reflect the Chinese steel industry continues to grow monthly, over 7% in January. LME inventory numbers continue to grow as well. Demand is up...supply remains up. Hmmm.
• Bloomberg - more
• Reuters - more

  Barclays Remains Positive On Outlook For Commodity Prices

• (excerpt) A gradual pick-up in stainless steel activity should see the nickel price push higher in the first half of 2008 but Barclays is not so positive on zinc given its weak market balance, which it suggests will see prices fall below recent support at around US$2,200 per tonne. - more

  Chinese domestic ferromoly trade picks up on stronger demand

• China's domestic ferromolybdenum trade was active this week with prices moving higher, prompted by stronger demand following the Chinese New Year holidays, industry sources said. - more

  Smaller steel firms begin to raise price

• Many small and medium-sized steel manufacturers have raised their prices ahead of an expected price increase announcement by Baosteel, the nation's largest steelmaker. more

  Vale says Baosteel agrees to 65 pct ore price hike

• Brazil's mining giant Vale said on Friday it secured a 65 percent rise in iron ore prices for 2008 from China's largest steelmaker Baosteel Group. - more

  China's crude steel output up 7.3 pct year-on-year in January - IISI

• China produced 40.9 million tons of crude steel in January this year, up 7.3 percent from the same period last year, the International Iron and Steel Institute (IISI) announced in Brussels yesterday. - more

  EU mills push steel plate prices up again, but demand weakens

• ArcelorMittal, Duferco and Reiner Brach are set to increase prices of hot-rolled reversing mill steel plate, despite indications in the market of weakening demand. - more

  Market Tendency On Imports Of Ferro-Alloys At 18th February 2008

• A crisis of electricity supply attacked both countries of South Africa and China, as main bases to supply ferro-alloys, has deeply rooted. - more

  Brazil's Behemoth  by Time Magazine

• Few companies offer a more stunning testimonial to the benefits of privatization--and fortuitous timing--than the formerly state-owned Brazilian mining firm Companhia Vale do Rio Doce. - more

  Russian/Norilsk Updates

• Billionaire Alisher Usmanov's holding company ZAO Metalloinvest, Russia's largest producer of iron ore, wants to combine with OAO GMK Norilsk Nickel to create an $85 billion mining company. - more (background here)

  Beginning LME nickel inventory / Overnight Shanghai closing price

•   London Metal Exchange - plus 126 tons = 47,958 tonnes (2.48% - 1188 tonnes cancelled warrants/ 46,770 net stock level) (charts)
•   Shanghai Jinchuan nickel - 244000-250000 RMB/t, plus  2000  (charts)

• Official LME nickel closing prices - cash - $12.87/lb 3 month buyer - $12.98/lb (8.98% higher than 12/31/07) (chart)
• Baltic Dry Index - minus 83 to 6998. (chart)
• LME nickel inventories - plus 462 tonnes into Rotterdam, Netherlands warehouse, minus 102 tonnes from Rotterdam warehouse, plus 96 tonnes into Baltimore, MD, USA warehouse
• Metals, both base and precious, were green across the board today. "Commodities such as oil, metals and other natural resources are another traditional inflation hedge." If you understand that, then you know why so much fund money is pouring into base metals.  Here is how it works. Prices rise, inflation. Fund money pours into commodities and the prices rise further. Prices rise and you see....further inflationary risk. Go figure. Steven Merkel, CFP, writes in Investopedia that "Because commodities prices usually rise when inflation is accelerating, they offer protection from the effects of inflation. Few assets benefit from rising inflation, particularly unexpected inflation, but commodities usually do. As demand for goods and services increases, the price of goods and services usually rises too, as does the price of the commodities used to produce those goods and services." Harold Evensky, chairman of Evensky & Katz, a wealth management firm, explained it like this to CNN Money back in 2006 "High inflation is associated with booming economies. That means demand is typically rising for commodities, lifting their prices to the benefit of those invested in them. Inflation is the biggest risk to someone's retirement planning and the most ignored. It's too subtle and takes a long time for someone to realize it's bit you in the heinie." (source) Speaking of being bit in the heinie, after the biggest one day gain in LME nickel inventory so far this year, typically a 'bearish' turn of events, three month nickel ended the day at $13.27/lb  ($29,250/tonne).       
• Closing Metals Report - more

  Courtesy Dow Jones - "Brazil's Companhia Vale do Rio Doce hasn't raised an informal offer to buy Anglo-Swiss miner Xstrata PLC and no formal offer is imminent, a person close to Vale said Thursday."

  (from Eramet press release) Eramet Nickel: current operating income up 79% at EUR 693m. The current operating income of Eramet Nickel grew by 79% in 2007, to EUR 693m. The current operating margin came in at 54% of turnover, compared with 38% in 2006. This increase can be attributed mainly to the effect of higher selling prices. Nickel prices on the LME hit record highs in the 1st half 2007, topping 50,000 USD/tonne in May, before a steep downturn in the 2nd half 2007, when they stood on average at 29,700 USD/tonne (13.5 USD/pound). The nickel hedging programme applied to 31,700 tonnes in 2007, or about 57% of deliveries, at an average price of 21,100 USD/tonne (9.6 USD/pound). The two half-years also differed in terms of physical demand for nickel. After a 13% rise in the 1st half, global stainless steel production - the largest nickel consuming sector - dropped abruptly in the 3rd quarter 2007, before recovering gradually in the 4th quarter. Over the year, it grew by about 1.7%. Nickel deliveries by Eramet Nickel eventually exceeded the forecast we gave in August 2007, reaching 55,088 tonnes, thanks to the recovery in global demand for nickel in the 4th quarter 2007. Metallurgical production of nickel at Doniambo (New Caledonia) was 59,796 tonnes, down slightly (-4%) on 2006, due mainly to the decline in ore grade resulting from the effect of the strike in late 2006 and the programmed rebuilding of two calcining furnaces."

  (blurb) Chief executive Andre Wilkens said although the 10 percent cut in power implemented by Eskom would have “very, very little” damage on the group, the ferrochrome and ferromanganese smelters would be affected. - article here

  The Russian Copper Co, the country's third-largest copper producer, plans to invest $160 million building a complex to produce nickel in the Urals region of Chelyabinsk from 2009, the company said on Thursday. - more

  Copyright/courtesy RBC News - "Co-owner of Norilsk Nickel Vladimir Potanin is attempting to strengthen the company's position for a merger with United Company RUSAL by seeking a deal with Alisher Usmanov's Gazmetal, analysts told RBC. According to recent media reports, the Russian mining and metallurgical company is eyeing a merger with the leading metals company Gazmetal as an alternative to the deal with UC RUSAL. Analysts believe that Norilsk Nickel would be able to diversify its production as a result of the deal with Gazmetal. However, experts note that neither deal would be profitable for the metallurgical giant. Some analysts go as far as saying that Gazmetal could join in the merger of UC RUSAL and Norilsk Nickel, but question the possibility of existence of the new company."...."United Company Rusal is not in talks with Russian businessman Vladimir Potanin on the purchase of his stake in Norilsk Nickel, Viktor Vekselberg, Chairman of the Board of Directors of the Russian aluminum giant, told RBC today. Therefore, he denied recent media reports that UC RUSAL had made a proposal to the co-owner of the Russian mining and metallurgical company to buy out his stake and pay for it with cash and UC RUSAL's shares." (and finally) "Metalloinvest chief executive Maxim Gubiyev said he was not aware of any plans to merge with JSC MMC Norilsk Nickel, but added that such a move would be an 'interesting step', Interfax reported. - more (talk about a soap opera - all because a rich guy had a party with hookers in France)

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

• Indications at 7:50 am CST show 3 month nickel selling up by $.18/lb . We have misplaced our volume of "Excuses to Explain The Unexplainable", so we will leave it at that.
• Bloomberg - more

  BMO Capital Markets "The Goods" - pdf here

  Stainless steel prices are moving higher and global economic uncertainty has yet to impact the sector, Juha Rantanen, chief executive of Finnish stainless steel company Outokumpu said on Thursday. - more

  WBMS January to December 2007 Metals Balances - pdf here

  World crude steel production for the 66 countries reporting to the International Iron and Steel Institute (IISI) was 113 million metric tons (mmt) in January. This is a 4.9% increase on January 2007. However the Moving Annual Total (MAT) growth rate slowed from a peak in March 2007 of 10.8% to 6.6% in January 2008. - more

  European steelmakers on Thursday blasted a massive hike in iron ore prices and called on EU regulators to block miner BHP Billiton Ltd.'s bid for rival Rio Tinto PLC. - more

  New Caledonian activists say they have this week applied for a court injunction to stop the Goro Nickel mining company from building a waste disposal pipe. - more

  A Chinese industry group on Wednesday denied the claims of a US study released last month, which stated that massive government energy subsidies had fueled the country's steel exports. - more

  Brazilian miner Vale has raised its bid for rival Xstrata to 47 pounds a share from 40 pounds and a formal statement of an offer is expected in the coming days, a source with direct knowledge of the merger talks said on Thursday. - more

  Eramet SA, operator of the world's largest ferronickel plant, said full-year profit climbed 82 percent after manganese surged. The shares rose to a record. - more

  Thanks to the reader who sent us a copy of a recent Patersons (Australian stockbroker) report on Mincor Resources. We would like to quote from their forecast for nickel from this report. "We understand banks are willing to hedge nickel at up to US$11/lb out to December 2013. With current spot at $13/lb the nickel price is quite flat out 5 years, leaving large upside to our long term price assumptions and valuations across the board. The floor below the nickel price is provided by the cost of incremental new production from nickel laterite mines, which require US$6/lb return on capex on top of circa US$6/lb operating costs (=US$12/lb). Meanwhile nickel pig iron will continue to keep a cap on any potential price spikes despite not altering the market.s balance at current prices."

  China produced 17.468 million tons of ferro-alloys in the calendar year ( January - December ) of 2007, having increased by 22.1% ( 3.16 million tons ) compared with that ( 14.303 million tons ) in the preceding year of 2006. The capacity to produce ferro-alloys in China is estimated at 22.00 million tons per annum and, as far as this capacity is taken into account, the operation rate in China for 2007 came to 79%. - more

  Beginning LME nickel inventory / Overnight Shanghai closing price

•   London Metal Exchange - plus 456 tons = 47,832 tonnes (2.68% - 1284 tonnes cancelled warrants/ 46,548 net stock level) (charts)
•   Shanghai Jinchuan nickel - 241000-249000 RMB/t, minus 2000   (charts)

• Official LME nickel closing prices - cash - $12.54/lb 3 month buyer - $12.66/lb (6.3% higher than 12/31/07) (chart)
• Baltic Dry Index - minus 238 to 7,081. (chart)
• LME nickel inventories - plus 276 tonnes into Rotterdam, Netherlands warehouse, minus 66 tonnes from Rotterdam warehouse, minus 24 tonnes from Vlissingen, Sweden, warehouse
• Barry Ritholtz's blog 'The Big Picture' carried an article in his commodities section today titled "Inflating Our Way Into Recession". US housing starts came in, as expected, disappointing. Markets could best be described today as nervous. Nickel traders were playing blind man's bluff with each other today, trying to decide whether to hold for potential gains, or to fold and take some profits. After yesterday's influx of fund money, the market appeared to be a little nervous about which way the market might turn today. In reality, this stalemate proved to be just that, and the market did very little. As we indicated yesterday, we monitor three indicators daily, and today, two of the three weren't working properly. So we don't dare try to give you a run down of the dips and turns in the daily trades. Three month nickel ended the day at $12.75/lb ($28,100/tonne)   
• Closing Metals Report - more

  Standard Bank Commodities Weekly - pdf here

  Damstahl Stainless Steel Report - February 2008 - pdf here

  The Largo Letter (molybdenum) - pdf here

  Copyright/courtesy Dow Jones - "The global nickel market was in a surplus of 37,200 metric tons in 2007, the World Bureau For Metal Statistics said Wednesday. WBMS had said previously the global nickel market recorded a deficit of 50,000 tons in 2006. Refined production for the year totaled 1.464 million tons and demand was 1.427 million tons. The supply and demand data include low grade ferro nickel produced in China from imported ores previously excluded from WBMS data. The quantity of this material produced in the last three months has fallen due to lower availability of imported feed materials, WBMS said. Mine production rose 9.2% to 1.558 million tons from 2006 while refined production rose 7.5% with output increases in China, Finland and Canada accounting for most of the higher output. World demand was 32,000 tons higher. In December, nickel smelter production was 123,200 tons and consumption was 113,800 tons. "

  The interim update to the latest monthly Base Metals Markets Review from GFMS Metals Consulting, the base metals arm of the GFMS Group, notes that supply disruptions associated primarily with concerns over availability of power have been impinging heavily on the base metals markets, with constraint on production overshadowing concerns over the degree of economic slowdown in the United States. - more

  While average U.S. metal consumption per capita is nine times that of China and 15 times greater than in India, it is less influential on the global metal market than it has been in the past. - 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 $.09/lb . Yesterday's increase is apparently making traders a bit edgy today, and LME market is softer this morning. Market could still break either way, on profit taking or short covering, or drift until US housing starts and consumer confidence numbers are released, giving equity markets a direction. As we are publishing morning update, WBMS has just released report forecasting nickel market with a 37,200 tonne surplus in 2007. More to follow at noon
• Bloomberg - more

  TD Bank Weekly Commodity Price Report - pdf here

  Karvy Comtrade Metals Insight (India market) - pdf here

  Copyright/courtesy Dow Jones - ""With inflationary fears still very firmly at the front of people's minds and concerns over a recession in the U.S. having been absorbed, it appears that money continues to flow into commodities in general, as part of a wider program of asset re-allocation and as a hedge against inflation," says Standard Bank."

  According to the customs-statistics released in China, the total quantity of nickel ore imported into China in the calendar year ( January - December ) of 2007 came to 15,626,175 tons on material base, which had a remarkable increase of about 4.1 times compared with that ( 3,788,228 tons ) in the preceding year of 2006. - more

  China's consumption of crude steel in 2008 is expected to rise around 11 percent, representing an increase of some 44 to 50 million tons, the China Iron and Steel Association said in a statement. - more

  South Korean Posco is adding prices of its stainless steel 400 series. - more

  Courtesy AISI - "In the week ending February 16, 2008, domestic raw steel production was 2,144,000 net tons while the capability utilization rate was 89.9 percent. Production was 2,126,000 tons in the week ending February 16, 2007, while the capability utilization then was 89.5 percent. The current week production represents a 0.8 percent decrease from the same period in the previous year. Production for the week ending February 16, 2008 is up 1.2 percent from the previous week ending February 9, 2008 when production was 2,118,000 tons and the rate of capability utilization was 88.8 percent."

  The French government says it will grant a key nickel project in New Caledonia’s north tax exemptions worth 230 million US dollars. - more

  Russian billionaire Alisher Usmanov has made a bid to merge his assets with Norilsk Nickel , a step that could complicate plans by RUSAL to gain control of the Russian metals giant. - more and another

  It's never been the custom of Russian hunters to speak of hitting two birds with