Energy crisis puts rocket under base metal prices Alex Gluyas Markets Reporter Oct 19, 2021 https://www.afr.com/markets/commodi...ocket-under-base-metal-prices-20211019-p5916t The world’s most critical industrial metals have soared to record levels as energy shortages drive supply cuts in China and across Europe, and production costs surge, stoking concerns of inflation. Last week, the London Metal Exchange (LME) Index, which tracks the price of six metals, hit an all-time high. The base metals market has historically been viewed as an indicator of global economic health. The sharp rise comes despite evidence of weakening demand because of a slowdown in US and Chinese industrial production. But strategists noted that supply disruptions, rather than demand risks, are having the biggest impact on metals markets. “With power shortages deepening, authorities in Europe and Asia are being forced to ration electricity usage in an effort to stabilise the system. This is likely to see some sizeable losses of output for various markets,” said Daniel Hynes, senior commodity strategist at ANZ. Zinc High power prices and carbon emission costs have forced production cuts across the zinc market, sparking supply concerns and pushing zinc prices to levels not seen since 2007. Nystar, one of the world’s largest producers, last week used that justification to cut output at three of its European smelters by as much as 50 per cent. Fellow major Glencore, which also has three zinc smelters in Europe, said it was adjusting its output to save energy costs. A similar trend is seen across China as major zinc-producing provinces suffer shutdowns or output cuts at smelters. Zinc prices eased 3.1 per cent to $US3729 a tonne following eight consecutive sessions of gains. Last week the metal climbed as high as $US3637 a tonne on the LME. Strategists said they remained focused on developments in China and across Europe when forecasting how long the surge in base metal prices could extend for. “The outlook remains heavily dependent on how the China power situation develops, and whether the country’s winter is colder than expected,” Mr Dhar said. “If that’s the case, industrial output could stay weak for months, and base metal prices would continue to climb.”
Gold and silver seem to be missing out on this bull market rally in metals, energy and other commodities. I keep hoping that one day I might get some return on the miserable silver investments I've been holding for the past 8 years.
https://smallcaps.com.au/silver-supply-doubts-grow-australia-gears-up-bring-on-mines/ Silver supply doubts grow as Australia gears up to bring on mines By Robin Bromby October 21, 2021 There are several ASX-listed explorers with advanced silver projects looking to supply any potential market gaps. Signs are emerging that the silver sector is facing a shake-up — and one that could play into the hands of primary producers of the metal. This is coming at a time when Australia’s silver sector has sprung back to life after years of dwelling in the doldrums — and all the four leading contenders have, one, advanced projects; and, two, will be primary producers of the metal rather than by-product suppliers. That latter factor is important if, as seems increasingly likely, base metals output may find some short-term challenges — and that may mean their silver by-product output could be affected. China is cutting off commodity supplies to the world First, the geopolitical factor. China (when you include what transits through Hong Kong) accounts for 21% of silver exports. In the past few weeks China — the world’s biggest producer of phosphate — has banned all exports through to the end of 2022, causing a major headache for fertiliser manufacturers around the world (and for farmers). Beijing has signalled it wants to keep its phosphate output for domestic use. In late September, China ordered closed 25 magnesium plants and told another five to cut output by 50% due to the acute power shortages in the country. China produces 87% of the world’s magnesium metal. By the end of November, as a result, European magnesium stocks are expected to be exhausted — leaving the EU’s aluminium and auto industries with no supplies. But there is another perspective to this: China has already used bans and quotas to restrict the supply of rare earths leaving the country, leaving the industrialised world in a precarious position. Shortages of phosphate and magnesium will have the same effect. The Net Zero target relies on silver The great Net Zero 2050 carbon emission dream relies on silver — and also on solar panels, for which silver is a vital component. Can we go on relying on China for silver itself and/or the solar panels vital to the renewables quest? It is an interesting facet of the China silver story that, while the country is so dominant in supply, it does not have a mining capability matching that dominance. A Canadian company actually mining silver in China, Silvercorp Metals Inc, explains that, despite being the third largest silver producing country, China is dependent on large numbers of small mines rather than any globally significant ones It has none of the top 10 silver mines in the world, nor do any of the top 20 miners operate there Primary producers in safe jurisdictions could be in the box seat There are other issues clouding the silver outlook. China’s falling demand for copper, zinc and lead could ricochet through to the silver sector. In 2020, only 27% of the world’s silver supply came from primary producers of the metal. Copper miners provided 25% of the world’s silver, zinc and leader producers another 32%. (Gold miners accounted for 16% of global silver production — but that is not expected to contract.) Another point: the average age of the top 10 primary silver mines in the world is 29.5 years. Also, a high proportion of silver comes from countries that are outside what could be regarded as tier-one jurisdictions. In the top 10 are: Mexico, Peru, China, Russia and Bolivia. Toronto Venture Exchange-listed Blackrock Silver — which is hunting silver in Nevada — points out in a new presentation that Mexico, Chile and Peru rank among the top five countries for the number of mining disputes.
Silver miners are a highly leveraged area that is difficult to trade but can generate huge returns in certain trends. I owned some BCM ( Silver miner with a project in Peru ) as a speculative play and it dropped a ton ( my worst holding ). Part of the drop came when the Peru election results came in. This week, the new leader announced his support for the company and the stock is going straight up. I sold it Friday at my average purchase price, a nice capital recovery. I suspect it may go higher but I want to see a clearer trade before I risk money in it again ( so many other stocks provide oversized return potential without the same risk ). Now if Silver goes up from here I may jump in again with a tighter stop loss. It's at $1.92 used to be in $3's last year and one analyst has a target of $4.75. It's just tough to trust in such a futures story when the stock dropped to $0.98 not long ago. I prefer profitable companies like Endeavour Silver, MAG Silver, and stocks that used to be a lot higher like Fortuna and Silvercrest. But they are more range bound trades unless Silver goes to $25+ in short order. If we take out $30 at any point I'd probably buy all of them.
https://www.afr.com/companies/manuf...to-curb-dirty-chinese-imports-20211101-p5950s Biden hails EU-US steel deal as chance to curb ‘dirty’ Chinese imports Andy Bounds and Katrina Manson Nov 1, 2021 Brussels/Washington | President Joe Biden has said the United States and the European Union were seeking ways to curb imports of “dirty steel” from China after Washington and Brussels put aside their own trade dispute. In a deal that was swiftly criticised by China, the US and EU have agreed to work jointly on a “global arrangement” to support sustainable steel and aluminium to reduce overcapacity and encourage greener production. Steelmaking in China. China produces 56 per cent of the world’s steel, mostly through blast furnaces that use iron ore and coking coal. AP It is part of a two-year ceasefire deal reached for the US to ease tariffs on European steel and aluminium. In return, the European Commission has proposed to EU member states that they temporarily drop retaliatory tariffs and pause legal action at the World Trade Organisation. Speaking in Rome, Mr Biden said the arrangement would “lift up US aluminum and steel … [and] incentivise emission reductions in one of the most carbon-intensive sectors of the global economy”. The deal would “restrict access to our markets for dirty steel from countries like China, and counter countries that dumped steel in our markets, hammering our workers”, Mr Biden said at a press conference with Ursula von der Leyen, the commission president. Earlier, Valdis Dombrovskis, the EU’s trade commissioner, told reporters the two sides would be “inviting like-minded economies to join this arrangement”. It would seek to tackle the longstanding problem of overproduction, which has led to tariff wars as countries protect their industries from cheap imports. “One of the elements we will be discussing will be how to restrict market access for non-participants that do not meet the conditions for the market,” he said. “We will do this [in a way that is] compatible with our international obligations and multilateral rules.” Doing so under WTO rules “is a challenge”, one EU official admitted. Mr Dombrovskis noted there was already a Global Forum on Steel Excess Capacity, but added that “due to the time that China has led this forum, its efficiency may be somewhat limited”. China produces 56 per cent of the world’s steel, mostly through blast furnaces that use iron ore and coking coal. It was one of a handful of countries to increase output in 2020. The Chinese embassy in Washington said Beijing firmly opposed “the US’ groundless accusations”. “How the US develops its economic and trade relations with the EU is its own business. But it should not make an issue of China or even attempt to form a clique against China,” the embassy said. “We hope all sides can earnestly take effective measures to contribute to the orderly operation of the global market, and sound and steady growth of international trade.” As part of the deal between Washington and Brussels, the US has agreed to allow up to 4.4 million tonnes of steel annually to enter from the EU tariff-free, in line with levels before former president Donald Trump imposed tariffs under little-used national security legislation. Imports are half that level at present. Without a deal, the EU was threatening to double tariffs in December on products such as US whiskey. Mr Dombrovskis said the agreement was “not an end destination … but a useful step on the road”. Ms von der Leyen said the global arrangement would help towards climate neutrality and ensuring a “level playing field” for the steel and aluminium industries. “Defusing yet another source of tension in the trans-Atlantic trade partnership will help industries on both sides,” she said. The EU and US in June also paused a long-running dispute over subsidies given to aircraft makers Boeing and Airbus. Additional reporting by Sylvia Pfeifer in London Financial Times
Chalice declares biggest nickel discovery in 20 years By Lucy Battersby Shares in Chalice Mining jumped this morning after released its maiden estimate for a nickel, copper, gold deposit at Gonneville in its Julimar Project, Western Australia. Shares up 26% so far today. The morning Chalice claimed to have found the largest nickel sulphide discovery worldwide since 2000 and the largest platinum group elements (PGE) deposit in Australian history. Chalice Mining’s chairman, Tim Goyder on the left, and chief executive Alex Dorsch. Credit:Trevor Collens “This is a major milestone for Chalice, coming just 18 months after our stunning first hole discovery at Julimar,” Chalice’s managing director Alex Dorsch said. “The Resource confirms that Gonneville is the largest nickel sulphide discovery globally in over two decades, as the largest PGE discovery in Australia’s history.” Chalice noted the section explored so far is 2 kilometres of the 26 kilometre-long Julimar Complex. “Given its sheer scale, the attractive suite of six payable metals it contains and its premier location close to world-class infrastructure and services in Perth, Chalice clearly has the potential to become a leading global player in the green metals space.” The company is 10.7 per cent owned by Tim Goyder, 4.98 per cent old by Goldman Sachs, and 4.5 per cent owned by Franklin Resources. The stock price has doubled since the start of this year.