Trading Signals for Base Metals
Trading Signals based on LME Warehouse Inventories Data
This is the first document in a series of three focusing on inventory-based trading signals for base metals. The signals are derived from the daily changes in 'on warrant' inventories in London Metal Exchange (LME) approved warehouses.
By Jesper Dannesboe, Commodities Now, June 2007.

Non-Ferrous Exploration Budgets Reach New US$ 7.5 bn High
Metals Economics Group's (MEG) analysis of 2006 worldwide exploration budgets shows an increase to US$7.5 billion this year - the fourth consecutive yearly increase since the bottom of the cycle in 2002 and the highest total since the study series began in 1989.
By Metals Economics Group, Commodities Now, December 2006.

Copper Mining: Facing the Demand Challenge
The base metal industry is enjoying strong market fundamentals and should continue to do so for some time to come. The combination of high demand growth and a prolonged period of under-investment in exploration and lack of major discoveries will continue to drive metals for decades to come. Today's inventories of most base metals are at almost statistically insignificant levels, measured in just days of global consumption.
By Robyn Storer, HansonWesthouse, Commodities Now, September 2006.

Copper: Confounding Reason?
The explosion in copper prices that has continued this year has left many confused, and some no doubt poorer. Base metal specialists Bloomsbury Minerals Economics (BME) investigate if, and when, 'normality' can be returned to the sector. This copper story comes in five parts. The First is a brief review of the physical market, in which the consensus of the copper industry and the analytical community is for surplus in 2006-07. However, BME expects a continuing deficit market. Second comes the other aspect of demand: long-only investment buying, in three main forms, traditional rather rigid commodity index funds, modern more flexible (and often more copper-intensive) forms, and finally structured notes where ownership is of a call option. Combined, these represent rights to own more than three quarters of a million tonnes of copper which does not yet exist. The third subject is interaction of the physical market and long-only investment demand in price determination - something which only BME has so far quantified. The fourth topic is a re-appraisal of how long-term equilibrium might be reached in a market which is now hybrid: part old industrial raw material market and part new financial instrument. BME's conclusion is that equilibrium will not be regained until around 2012 by which time stocks may be adequate to cover both forms of demand. Fifth is a review of the implications for the copper industry and for investors.
By Peter Hollands & Leon Westgate from BME's Copper Team, plus Adam Sotowicz & Mire Zloh of BME's Price Modelling Team, Commodities Now, June 2006.

Strong Asset Momentum Underpins Metals Markets
The last few months have seen commodity prices rally strongly. One of the common explanations for this has been the weight of investment money driving prices higher. There is no authoritative estimate of the extent of this investment although there have been a number of unsubstantiated estimates of between US$75-90 billion invested in commodity index products linked to or associated with the three main vehicles described.
By Robin Bhar, Base Metals Strategist, UBS, Commodities Now, March 2006.

The Changing Nature of the Base Metal Cycle: A Producer's Perspective
Whatever the precise terms used to describe it, there is little doubt that the mining and metals industries have been going through something extraordinary. Quite how extraordinary we won't know for certain for some time to come. Meanwhile, we can enjoy debating the exact nature of the experience, its origins and its sustainability. For producers these have unquestionably been good times. However, they are also potentially dangerous times because of the expectations they engender.
By David Humphreys, Chief Economist, Norilsk Nickel, Commodities Now, December 2005.

DUBAI: Taking Centre-Stage in the Gold Markets?
It may seem a little premature to suggest that Dubai might, in short order, become the epicentre of global gold trade - particularly as its exchange, the Dubai Gold and Commodities Exchange (DGCX), has not yet been fully built. But things move fast in Dubai. The launch date for DGCX is just around the corner and Dubai has an enviable record for doing things well and doing things on time.
By Ross Norman, TheBullionDesk.com, Commodities Now, September 2005.

Silver Salvation?
Investors have been driving silver prices ever higher. According to the Silver Institute World Silver Survey 2005 (prepared by the consultants GFMS), the foundations for continued strength could be in place. And the underlying trend in fabrication demand remains positive, regardless of the secular decline in photographic uses. There is also some scope for a recovery in jewellery sales, as well as the possibility of exchange traded funds (ETFs) for silver which could also attract more investment.
By Silver Institute World Silver Survey 2005, Commodities Now, June 2005.

Riding the Metals & Mining 'Super-Cycle'
A long-term 'super-cycle' combined with an extended current cycle will drive sustained earnings growth in the metals and mining sector and outweigh conventional sell signals in a maturing cycle, according to Alan Heap of Smith Barney (a division of Citigroup Global Markets Inc.)
By Alan Heap, Smith Barney (a division of Citigroup Global Markets Inc), Commodities Now, March 2005.

PGMs: Mixed Fortunes to Continue
Platinum prices have traded above US$750 throughout the first eight months of 2004. Palladium prices have written a very different story. But these markets actually are as straight-forward as basic economics, even if they do not seem that way at times.
By Jeffrey M. Christian, CPM Group, Commodities Now, September 2004.

Aluminium: Growing Demand & Fund Activity
In common with many other commodities aluminium prices have rallied appreciably in the last 24 months. The reasons for the rally are varied and apply to both supply and demand categories, and have similarities with other commodities, especially other base metals. The optimism surrounding world growth, the constant speculation on China's emergence as a major industrial power, the intervention of the funds and the weakness of the US dollar and American external positions will likely inject an added element of volatility into the aluminium market.
By Jim Steel, Refco, Commodities Now, December 2003.

Mining - A Survey of Global Reporting Trends
Are stakeholders in global mining firms getting the full picture? Not always, according to a new survey from KPMG. Inconsistencies in the way some mining companies report on their performance could leave investors and other stakeholders in the dark. But significant improvements have been made.
KPMG, Commodities Now, September 2003

Aluminium - The China Syndrome
China's transformation over the past few years from net importer to net exporter of primary aluminium to the West has raised the spectre that supply and demand will be in large surplus for the foreseeable future. Growth in primary capacity continues to set records but evidence has emerged recently that constraints, both market and government-imposed, will act to moderate future growth. Robin Bhar of Standard Bank London Limited discusses the background to the rapid growth in primary aluminium capacity in China and what conclusions can be drawn.
By Robin Bhar, Standard Bank London Limited, Commodities Now, June 2003.

Precious Metal Markets
The conflicting health of markets in platinum and palladium look sets to continue, as evidenced by Platinum 2003, Johnson Matthey's latest market review of supply and demand for the platinum group metals (PGMs). Gold, meanwhile, continues to mystify.
By Guy Isherwood, Editor, Commodities Now, June 2003

New Insights into the Drivers of Metals Prices
Latest work by Bloomsbury Minerals Economics (BME) has shed fresh light on the different drivers of metals prices. Most important is BME's review of the very different impact that exchange rate shifts can have on the different metals' dollar prices. BME also enters the debate between the two rival schools of thought on metals prices: analysts who follow market balance and stocks, versus those who believe in the IP cycle. BME's conclusion: both schools represent partial truths; much more powerful understanding of prices comes from robust models taking account of all three main drivers: exchange rates, the IP cycle and stocks.
By Peter Hollands, Commodities Now, March 2003.