SMM Metals Reports

Record Silver Mining Output 'Negated' by 2014 Drop in Scrap

Author: Paul Ploumis
24 Nov 2014 Last updated at 00:17:22 GMT
EDGWARE (Scrap Monster): Silver mining production worldwide is set to reach an all-time high in 2014, according to new analysis from the market's leading data consultancy.
This week's Interim Silver Market Review from GFMS – a division of the Thomson Reuters newswire and data agency – says silver mining output will rise 3.5% this calendar year from 2013.
However, due to this year's steep fall in prices, the silver market is also seeing a continued decline in 'scrap' flows from sales of existing above-ground holdings. So the total increase in supply to the market expected to increase by only 2.9% year-on-year.
Increased mining supply is coming particularly from South and Central American countries such as Guatemala, Mexico, Chile and Peru, explained Andrew Leyland, manager of GFMS Precious Metals Demand research, at the Annual Silver Industry Dinner hosted by the Silver Institute this week in New York.
Full year 2014 mining supply is expected to total 868 million ounces (27,000 tonnes), a rise of 35% from 10 years ago.
Balancing that, total physical silver demand will probably fall some 6.7% in 2014 says GFMS. Led by the slow pace of purchases by many silver-consuming sectors in the first half of the year, demand is seen dropping to 1,005 million Troy ounces (31,258 tonnes) from 2013's record high of 1,077 moz (33,498 tonnes).
"In Europe a harmonization of sales tax rates in January 2014 saw silver become significantly more expensive for retail investors," explains the GFMS team, "and led to lower sales until the recent price declines."
Already averaging $19 per ounce in 2014-to-date, silver prices are set to average that level by end-December as well, GFMS believes, with spot prices little changed by New Year.

LME Lead Price to Range $1,900-2,300/tonne in 2015, Says SMM

SHANGHAI, Nov. 26 (SMM) – LME lead price is expected to move between $1,900-2,300 per tonne in 2015, Shanghai Metals Market foresees. 
In China’s domestic lead spot market, price will range between 13,300-14,200 yuan per tonne in 2015, Zhu Rongrong, SMM’s lead analyst said at 2014 SMM China Metals Summit on Nov. 23-24. 
“Commissioning of new capacities, a strong dollar and slowing growth in China will pressure domestic lead prices during the first half of 2015, but price should turn better during the second half,” she told delegates at the summit in Shanghai.  
The impact on domestic lead industry from China’s environment protection inspections should be also closely watched, she added.   

Rising Aluminum Prices in East China Drop on Tepid Demand (Nov. 27, 2014)

SHANGHAI, Nov. 27 (SMM) – Spot aluminum largely traded at RMB 13,680-13,690/mt in Shanghai and Wuxi on Thursday, discounts of RMB 30-40/mt over SHFE 1412 aluminum contract, versus RMB 13,720-13,750/mt in Hangzhou. Consumption remained sluggish, sending prices down RMB 20/mt. 

Copper mines expands and power supply shrinks in Zambia

LUSAKA (Scrap Monster): The Managing Director of the state owned energy provider Zesco, Cyprian Chitundu, stated in Lusaka that, the country will face a marginal oversupply of power, in the year 2015, but the chances are still very low.

Chinese Analysts Bearish towards December Copper Market, SMM Interviews

SHANGHAI, Nov. 26 (SMM) – Although the interest rate cut announced by China's central bank last Friday with an aim to ease funding problems with Chinese companies drove a rally in copper prices the same night, analysts are far from optimistic about copper market outlook in December.
“It appeared that the impact of China’s interest rate cut was limited,” an analyst from CIFCO told SMM. He pointed out that the one-year loan prime rate only dropped 20 basis points on Monday, a reflection that commercial banks were unwilling to lower lending rate as it may hurt their profits. In response, copper prices have surrendered most of their gains.
The same analyst also noted that the US dollar will remain strong given expectation for Fed’s interest rate hike next year, which will also pressure copper prices.
“With the European Central Bank introducing more accommodative policies, the US dollar will continue to strengthen,” an analyst from Nanzheng Futures also expressed gloomy prediction while interviewed by SMM.
“What’s worse,” he added, “the rising copper inventories and continuous drops in gold and rebar will add to a drag on copper, so it remains possible that copper prices will fall even faster in December.”
“Copper prices are also confronted with technical resistance”, a Chief Economist at COFCO Futures said in a recent interview.
“LME copper is expected to meet resistance at $6,750 per tonne, and may drop below $6,500 per tonne once extending losses, and we see the February copper on SHFE to fall below 46,000 yuan per tonne as support at this level is too fragile,” he told SMM.