Friday, August 15, 2008

In This Issue:

1. The Scrap Post News
    • Why Join Us?

2. Metal Market Review
    • Economic Data Drives the Markets This Week

3. Metal News
    • Sumimoto Buys Up Company Shares
    • ICSG Copper Refinery Capacity Report
    • Mittal Says Consumers Will Absorb Rising Production Costs

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Metal Market Review:

 MONDAY- LME copper is poised for further near-term gains as sentiment remains bullish due to falling inventories and strong demand from China. LME base metals started the week trading in the red as news that China's central
bank had decided to raise interest rates by 27 basis points dampened upside price momentum. However, the
reaction of LME base metals to the Chinese rate hike has been rather muted. Declining LME stocks - down 9% from month-ago levels - and strong Chinese demand continue to underpin prices. However, a softer U.S. housing market is one factor that has limited the upside momentum, according to analysts. Therefore, the markets will keep a close watch on U.S. housing starts data for Feb due for release Tue at 1230 GMT.
 TUESDAY- The performance of LME base metals was mixed with copper holding onto gains while nickel led the way in losses. The complex will look to Wed's Federal Reserve meeting minutes for further indications of the health of the U.S. economy and near-term price direction. News that European premiums are softening may also have
had an effect, said Robin Bhar of UBS. Three-month copper jumped after stronger-than-expected U.S. housing data encouraged LME copper short positions to cover and push the market to a fresh three-month highs, a broker said. Housing starts rose 9% to a seasonally adjusted 1.525 million annual rate Tue, up from expectations of a 3% rise. Housing and construction is a key consumer area for copper.
 WEDNESDAY- Fund selling pressured LME base metals, but market players await the Federal Reserve's statement for further clues over the health of the U.S. economy and fresh price direction, said traders. Activity across the complex was "rather dull", with a large majority of market players sidelined ahead of the Federal Reserve's statement, a London-based broker said. The two-day meeting of the Federal Open Market Committee, the Fed's policy-making arm, continues today with a rate decision expected at 1815 GMT. The FOMC is expected to leave rates unchanged at 5.25%, but market players will be poring through the statement for clues about the U.S. housing market, inflation risks and the general health of the economy.compared with a deficit of around 100,000 tons in 2005.
 THURSDAY- London Metal Exchange base metals jumped on fund buying late Thursday, but profit-taking and weekend position squaring may yet send prices lower, said traders. Fund buying late Thursday helped copper and the rest of the base metals complex extend its recent strength, said traders. Moreover, the LME complex got a boost from strength in oil and gold prices, said an LME trader in London. Copper was well supported early Thursday on gains made after dovish comments by the U.S. Federal Reserve on the state of the economy boosted sentiment. News from China that the countrys copper concentrate imports rose 34.9% on year in February to 392,366 tons, while refined copper imports in February more than doubled to 148,679 tons, also provided strong underlying price support.
 FRIDAY- Copper futures raced to their highest level in 3 1/2 months today before fading late in the session on profit-taking by longs to finish the session with a minute loss. The most-active Comex May copper contract settled
down 40 points at $3.0690/lb. The futures hit a high of $3.1330 in screen trading that was its strongest level since Dec. 12. Copper has been trending higher since early Feb, helped in recent days by a steady drawdown in LME warehouse inventories and reports of strong Chinese imports. Then today, the LME drawdown was larger than other recent ones. There is potential for copper to lose some of its upside momentum if China - which has been a noted buyer so far this year - opts not to keep chasing prices above $3.Check today's metal prices right now: http://thescrappost.com/members/quotes
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Metal News:

Sumitomo Metal Mining Co. said Friday that it and Sumitomo Metal Industries Ltd. have increased their stakes in each other through additional stock purchases, The Nikkei reported in its Saturday morning edition. Starting last December, Sumitomo Metal Mining acquired 19.46 million shares of Sumitomo Metal Industries on the market through Tuesday, bringing its total holdings to 30.48 million shares, or 0.63% of the issues outstanding shares. Meanwhile, Sumitomo Metal Industries holdings in Sumitomo Metal Mining rose to 7.8 million shares, culminating in a 1.36% stake. Based on a breakdown of Sumitomo Metal Minings shareholder data as of Sept. 30, 2006, Sumitomo Metal Industries would surpass Sumitomo Mitsui Financial Group Inc. unit Sumitomo Mitsui Banking Corp., which held 7.65 million shares, as the fifth-biggest shareholder. Sumitomo Metal Mining aims to roughly double its annual production volume of nickel, a mainstay business area, to 100,000 tons in 2013. To ensure stable buyers, the company is strengthening its alliance with Sumitomo Metal Industries through the cross-shareholding increase. "They are our major supplier of nickel, so we aim to strengthen ties with them," says a Sumitomo Metal Industries official, referring to the decision to boost its holdings in Sumitomo Metal Mining, which provides about 40% of its nickel. Also, a series of major global acquisitions in the resource industry may be spurring the companies to expand their cross-shareholding arrangement.

In 2011, the ICSG projects that world copper refinery capacity will reach 24.4 million tons, an increase of 3.8 million tons, or 18%, from 2006. About 2.3 million tons of the expansion is expected to come from electrolytic refineries and 1.5 million tons from electrowinning capacity, ICSG said. The average growth rate over 2006-2011 for electrolytic refineries is projected to be 2.7% a year, slightly more than the projected growth in smelter capacity, and the growth rate for electrowinning capacity at the refinery level is expected to be 7.4% annually. China and Chile will be the main contributors to the total refinery capacity rise. ICSG projections include unused capacity at mines and plants that are currently on care and maintenance or are temporarily operating at reduced production levels, known as swing capacity. According to ICSG, the current swing capacity for mines is minimal. With the closure of two U.S. plants at the end of 2005 that had been on care and maintenance since 2001, total idled copper capacity for smelters declined to 180,000 tons and idled refinery capacity fell to 370,000 tons.

Rising input costs for steel production would not be absorbed, but passed on to end consumers, said the chief executive of the worlds largest steel maker, Arcelor Mittal, Saturday. "Input costs in steel production are rising all over, there is nothing unusual in it and any price rise will be passed on to the customers," Lakshmi N. Mittal said on the sidelines of an event. Costs of raw materials used in steel making, like iron ore, have been rising on the back of strong demand for steel in countries building up infrastructure, such as China and India. Recently, India - one of the largest exporters of iron ore globally - imposed an export tax of INR300 per ton on the raw material. Speaking on the companys plans in India - where he has committed to set up a plant with capacity of 12 million tons of steel a year - Mittal said the pace of progress on the project was a problem. "The speed at which land acquisitions are taking place is a problem but we are in talks with both state and Centre (central government) to expedite the issues and things are moving in the right direction," he said. "When plants of such capacity come up after a pause, problems are bound to happen." Mittal had initially signed a memorandum of understanding with the government of the eastern state of Jharkhand to establish the steel plant in the state. Investment for the plant was to be in the region of $10 billion to $12 billion. Unhappy with the slow progress on the project due to delays in land acquisition and granting of mining leases, the company signed another memorandum of understanding with a neighboring state, Orissa, for a similar plant. Separately, the chief executive of Mittals Indian arm, Sanak Mishra, had earlier said the company would set up the plant in the state which offered it land and mine allocations first. Asked on Arcelor Mittals plans to acquire South Korean steel major Posco - as was speculated in the South Korean media - Mittal denied the reports and said he had no such plans. "These are all rumors, I dont know what you are talking about," he said.Read more metals news at the Scrap Post: http://thescrappost.com/members/news
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