LME strikes deal to use one of China’s largest logistics companies for its electronic warehouse receipt system
• The deal should help to recreate confidence for lenders over the financing of metal in warehouses and to avoid a repeat of use of metal stocks as collateral with multiple lenders.
• The Qingdao warehouse frauds last year where lenders discovered that metal was used as collateral with multiple banks sparked a rush to sell metal stocks and a general destocking of metal inventories.
• Chinese manufacturers are now seen getting ready to take on new stock to meet new demand from China’s ‘One Belt, One Road’ infrastructure strategy announced by President Xi.
• China generally sees an amount of manufacturer restocking as activity restarts after the Chinese new year and political conferences.
• The government is expected to provide necessary stimulus to meet President Xi’s new 6.5-7% GDP growth target and associated infrastructure plans and other policies
• The US Federal Reserve’s plan to
Gold prices continue to dip on news of Bombs in Brussels airport and metro today
• The bombing by ISIS fanatics in Brussels is likely to be a reaction to the capture of Salah Abdeslam in relation to the Paris attacks.
• The news is causing the Euro to continue to weaken with resulting dollar strength acting as a slight negative for gold
Giant floating solar farm combines 23,000 panels on reservoir near London
• The solar farm can produce sufficient power for 1,800 homes
BREXIT – Moody’s credit rating agency reckons the economic impact of Brexit would be small and unlikely to lead to significant job losses
• Moody’s comment that the UK could also be allowed to keep many of its trade terms with the EU so as to avoid disruption on both sides.
• The comments from Moody’s counteract comments from the Confederation of British Industry ‘CBI’ which indicated the cost could be £100bn and cost nearly 1m jobs.
• The last leader of the CBI, John Longworth, was suspended and then resigned for publicly stating his support for Britain’s exit from the EU.
• Longworth has so far refused to comment on suggestions that the government had applied pressure to suspend him and remove him from office.
Extel survey – voting for the Extel survey is open today
• Please feel free to express your appreciation for our work by voting using the link below
• https://www.extelsurveys.com/QuickVote
PlOD along to the 121 Mining Investment Conference in London on 14th -15th April at 8 Fenchurch Place, Fenchurch Street Station
• See the inflatable PODs at the 121 Mining Investment Conference - Investors and analysts go free:
https://www.weare121.com/121mininginvestment-london/registration/register-investor/
Dow Jones Industrials +0.12% at 17,624
Nikkei 225 +1.94% at 17,049
HK Hang Seng -0.08% at 20,667
Shanghai Composite -0.64% at 2,999
FTSE 350 Mining -0.12% at 9,222
AIM Basic Resources -1.44% at 1,716
Economic News
US – Dennis Lockhart, a head of the Atlanta Fed and a former voting member of the FOMC, is expecting a rate increase “as early as the meeting scheduled for end of Apr”.
• “In my opinion, there is sufficient momentum evidenced by the economic data to justify a further step at one of the coming meeting, possibly as early as the meeting scheduled for end of Apr.”
• Growth in consumer spending led by job gains, low oil prices and steady housing market is expected to more than compensate for slowing growth overseas and unease in financial markets.
• Equity indices dipped on poor existing home sales data released yesterday before recovering all losses and closing higher.
• Economic news due this week:
Date Index Period Actual Expected (Bloomberg) Previous
Monday Existing Home Sales Feb -7.1%mom -3.0%mom 0.4%mom
Tuesday Markit Manufacturing PMI Mar 51.9 51.3
Wednesday New Home Sales Feb 3.2%mom -9.2%mom
Thursday Weekly Jobless Claims 268k 265k
Durable Goods Orders Feb -3.0%mom 4.7%mom
Core Durable Goods Feb -0.3%mom 1.7%mom
Capital Nondefence Goods Orders Feb -0.5%mom 3.4%mom
Friday Q4 GDP (Final Reading) 1.0%qoq 1.0%qoq (previous estimate)
Q4 Core PCE 1.3%qoq 1.3%qoq (previous estimate)
Source: Bloomberg
China – Media reports cite People’s bank of China Governor Zhou Xiaochuan as encouraging individuals to invest personal savings in stock market were “misinterpretations”.
• The Shanghai Composite closed lower today following a seven-day winning streak as investors took profits on some of their trades.
Japan – Manufacturing activity continued to underperform sliding to the lowest level in at least three years in Mar.
• Markit Manufacturing PMI: 49.1 v 50.1 in Feb and 50.5 forecast.
• The previous time the index was in the sub-50 territory was in Apr/15.
• Both production and new orders contracted.
• “One of the key drivers behind the decline in total new work was a slump in international demand, as new export orders decreased at the sharpest rate in over three years,” Markit said.
Germany – Economic activity expanded at the same pace as in Feb when growth hit a five-month low, according to Markit data.
• Solid growth recorded in the service sector with manufacturers showing the weakest increase in production since Nov/14.
• “A closer look at the data highlights a contrasting trend between the manufacturing and service sectors. In the detail, solid activity growth was maintained in the mighty service sector while the manufacturing PMI is now at a level that indicates a near-stagnation of the more export-oriented goods producing sector, with jobs cuts and declining overseas demand weighing on the sector’s performance in particular.”
• New orders increased at the weakest pace in eight months in Mar, with lower intakes recorded at both manufacturers and service providers.
• Manufacturing sector recorded a stagnation in new export orders.
• “The PMI results provide the first complete picture of business conditions over the first quarter as a whole and are indicative of moderate, although unspectacular GDP growth, similar to the rates seen during the last two quarters.”
• GDP climbed 1.7%yoy and 1.3%yoy in Q3 and Q4 last year, respectively.
France – Composite output PMI recovered from a slump in Feb returning to growth this month led by both services and manufacturing sectors.
• “The French private sector economy ended the first quarter on a more positive note, reversing the dip in output seen during Feb.”
• “However, there were also pockets of notable weakness, such as manufacturers’ new orders and employment, which both fell.”
• “Overall, PMI data suggest a further modest rise in GDP during Q1, doing little to suggest any break from the sluggish growth pattern seen during recent times.”
• Markit Composite PMI: 51.1 v 49.3 in Feb and 49.7 forecast.
• Markit Manufacturing PMI: 49.6 v 50.2 in Feb and 50.2 forecast.
• Markit Services PMI: 51.2 v 49.2 in Feb and 49.5 forecast.
Australia – While house prices growth slowed in Q4/15, the pace still came in better than forecast.
• Property prices were up 0.2%qoq/8.7%yoy, down from 2.0%qoq/10.7%yoy in Q3/15.
• Estimates were for a 0.0%qoq/8.5%yoy reading.
• On a more positive note, Glenn Stevens, an Australian Fed Governor, noted the economy was “adjusting quite well” to lower commodity prices and has more fiscal and monetary policy scope to respond to potential challenges.
• “Even with interest rates at already low levels, and public debt higher than it was, there would, in the event of a serious economic downturn, be more room to ease both monetary and fiscal policy than in many, indeed most, other countries,” he said.
Base metals:
Copper US$ 5,051/t vs US$5,058/t yesterday – CRU see copper deficit this year but reckon China demand for copper will grow at just 0.6% this year down from 3.8% seen in 2015
• CRU see copper-consuming industries such as air conditioning, construction and electricity infrastructure have shown little growth.
• CRU also forecast copper demand in the US to rise 2.1% vs 1.4% in Europe and 6.2% in India.
• They forecast copper prices should return to average of $4,529 in Q2.
• They point to a build up of some 200,000t of copper stocks in China which have yet to be drawn down
• CRU reckon there will be a 73,000t defecit in supply this year after 144,000t of mine cutbacks but that copper supply will move to surplus in 2017 and 2018
Aluminium US$ 1,502/t vs US$1,526/t yesterday –
Nickel US$ 8,640/t vs US$8,855/t yesterday –
Zinc US$ 1,846/t vs US$1,845/t yesterday
Lead US$ 1,823/t vs US$1,813/t yesterday
Tin US$ 16,785/t vs US$16,910/t yesterday
Energy:
Oil US$41.4/bbl vs US$41.1/bbl yesterday – OPEC reckons oil prices will recover to moderate levels even if Iran does not join other producers in freezing output.
• Experts reckon Iran is not able to quickly ramp up oil production from current levels.
• OPEC reports a fall in oil production from non OPEC sources as the impact of lower oil prices starts to cut production levels.
Natural Gas US$1.812/mmbtu vs US$1.898/mmbtu yesterday
Uranium US$29.65/lb vs US$29.75/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$55.7/t vs US$55.5/t –
Thermal coal (1st year forward cif ARA) US$42.50/t vs US$42.50/t yesterday –
Other:
Tungsten - APT European prices stood at $168-185/mtu vs $165-180/mtu last week – tungsten prices appear to be turning slowly off a low base. The entry of new production from Wolf’s Drakelands tungsten mine in Devon
Company News
Kefi Minerals* (LON:KEFI) 0.36 pence, Mkt Cap £9.3m – Kefi raises $2.5m in placing to Ausdrill the Australian drilling contractor
(Kefi hold 75% of the Tulu Kapi project, Govt of Ethopia hold 25%)
• Kefi Minerals announces today that it has raised $2.5m by placing 499m new shares with Ausdrill International Ltd at a price of 0.35p/s.
• Ausdrill International describes itself an integrated mining and energy services group providing exploration, mine development, surface and underground mining, manufacturing, energy and infrastructure services globally.
• The Placing provides working capital ahead of the signing and drawdown of project finance which it expects to present to shareholders for approval in June.
• It also demonstrates commitment by cornerstone investors, complementing the strong specialist finance syndicate being assembled for the development of
*SP Angel act as Nomad and broker to Kefi Minerals