News

Base metal prices slip after Fed hikes rates, China finalises winter cuts

Date Sep 27 2018 15:37:56 Source:Foreign media

Base metal prices fell on Thursday after a U.S. interest rate hike pushed the dollar higher and as an anti-pollution plan in top metals consumer China did not impose blanket production cuts on heavy industry this winter.

 

A stronger greenback makes dollar-denominated metals more expensive for holders of other currencies and can weigh on prices.

 

London copper was trading lower for a fourth day, as investors closed out positions ahead of a week-long holiday in China from Oct. 1. However, China copper premiums SMM-CUYP-CN are still at $120 a tonne, the highest since 2015, indicating strong demand for physical metal.

 

    "The big disconnect between the shorts looking for another market crash and the reality of what is happening in the physical market continues to grow," Malcolm Freeman, director of

Kingdom Futures, wrote in a note.

China plans to launch iron ore options in 2019 – source

Date Sep 27 2018 15:36:07 Source:Foreign media

China aims to launch iron ore options next year, a source with direct knowledge of the matter said, as the world's top buyer of the steelmaking raw material looks to offer more hedging tools to iron ore producers and steelmakers.

 

China's plan follows the opening of its iron ore futures to foreign investors in May, and would challenge iron ore options in Singapore, where the bulk of global trades is concentrated, as well as in New York.

 

It would follow China's launch of sugar and soymeal options last year and copper options which debuted just last week.

 

"The Dalian Commodity Exchange is still working on preparations for the iron ore options. But it won't take too long and could be launched by the end of 2019 at the latest," the source said, declining to be identified as the plan has not been approved by market regulators.

 

The Dalian Commodity Exchange and the China Securities Regulatory Commission did not immediately respond to faxed requests for comment.

 

As a hedging tool, options would allow iron ore traders, miners and steel mills to manage price exposure, giving the buyer the right - but no obligation - to assume a futures position at a specified price.

 

The ability to carry out hedging trades could encourage more primary users to take part in the iron ore futures market, which traders say has been dominated by speculative investors who have deserted the market recently amid stagnant prices.

 

Iron ore options are mainly traded on the Singapore Exchange, with 1.77 million contracts, equal to 176.8 million tonnes, traded in January to August, exchange data showed. New York-based CME Group Inc CME.O also offers iron ore options.

 

The Dalian Commodity Exchange (DCE) allowed foreign investors to directly trade iron ore futures 0#DCIO:  for the first time in May, hoping the most liquid iron ore derivative in the world would benefit from more institutional investors.

 

It was the second commodity that China opened to outside investors after the launch of crude oil futures in March. 0#ISC    

 

But open contracts held by investors in Dalian iron ore futures fell to a 3-1/2-year low on Tuesday, to 822,452 lots,  and trading volumes nearly halved in August from May, which traders say shows that the bulk of the market remains in the hands of local speculators.

 

    The source said he did not expect Chinese regulators to delay approval of DCE's iron ore options, as offering existing participants a new tool would have less risk than opening the futures market to overseas investors.      

Barrick and Shandong announce $300m cross investment

Date Sep 26 2018 14:14:55 Source:Mining weekly

Gold major Barrick Gold, which on Monday announced an $18.5-billion merger with Randgold Resources, has reached a cross investment agreement with China’s Shandong Gold, which executive chairperson John Thornton said further deepened the partnership between the two companies.

 

Under the agreement, Shandong will purchase up to $300-million of Barrick shares, and Barrick will invest an equivalent amount in shares of Shandong Gold Mining Co, a publicly listed company controlled by Shandong Gold.

 

Shares will be purchased in the open market.

 

Barrick and Shandong Gold are 50:50 joint venture partners at the Veladero mine, in Argentina, the first step in the partnership between the two companies. As a second step, Shandong Gold is currently carrying out an independent evaluation of Barrick’s Lama project, including an analysis of potential synergies between Lama and the nearby Veladero operation. Barrick and Shandong Gold have also created internal working groups that are sharing technical expertise and best practices focused on best-in-class mining practices and innovation.

 

“Barrick and Shandong both believe that by working in partnership, we can leverage our collective strengths to unlock long-term value for our respective shareholders, just as we are at Veladero today, with the potential to expand to Lama and other El Indio Belt projects in the future,” Thornton said.

 

The agreement builds on the enhanced strategic cooperation agreement entered into on July 9.

Wold Gold Council Predicts 25% Surge to India's H2 Gold Demand

Date Sep 26 2018 14:14:01 Source:Scrap Monster

The latest report published by the World Gold Council (WGC) in association with ASSOCHAM forecasts 25% surge in Indian gold demand during the second half of the current year. This is mainly on account anticipated higher purchasing power among farmers, due to higher minimum support price (MSP) for crops announced by the Indian government. Incidentally, rural population accounts for nearly two-thirds of the country’s total gold demand.

 

According to the report, Indian gold consumption remained tepid in the first half of the year. However, higher MSP should boost gold trade in the country in H2 2018, as it would ensure more cash in the hands of farmers, which in turn may lead to increased gold purchases. Traditionally, higher rural incomes lead to higher gold purchases, the report said. It predicts 25% jump in gold demand, upon comparison with the second half of 2017.

 

The report mentions that the rich Indians purchase more gold when compared with the poor. The average spending on gold by households belonging to the top decile in the country was roughly eight times as that of the bottom decile.

 

However, even the poor people buy gold in India. The rural population considers gold as a store of wealth and also a tool for economic security. A recent survey had indicated that nearly 50% of Indian households had purchased gold within the past five years. Approximately 87% of Indian households are believed to hold some amount of gold holding.

China Baowu Steel Group denies report about takeover of Magang – media

Date Sep 26 2018 09:00:47 Source:Foreign media

China Baowu Steel Group said a media report that it is in talks to take over Magang group was not true, state media Shanghai Securities News reported on Tuesday.

 

Top Chinese steelmaker China Baowu Steel Group is in talks to take over rival Magang Group, three sources familiar with the discussions told Reuters earlier, a deal that would help entrench the nation's position as a serious competitor in global steel markets.

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