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January 2007
China's GDP grows 10.7% in 2006
Preliminary estimation shows China's gross domestic product (GDP) totaled 20.9407 trillion yuan (US$2.7 trillion) in 2006, up 10.7 percent year on year, according to latest figures provided by the National Bureau of Statistics (NBS) Thursday.
The growth was 0.3 percentage point higher than that in 2005. China recently revised its GDP growth in 2005 to the final figure of 10.4 percent, higher than the original 9.9 percent.
China's GDP growth was 10.4 percent, 11.5 percent, 10.6 percent and 10.4 percent from the first to fourth quarter of 2006, said Xie Fuzhan, commissioner of the NBS at a press conference.
According to previous figures released by the NBS, China's GDP grew 10.3 percent, 11.3 percent and 10.4 percent in the first, second and third quarter, so possibilities exist for the rate in fourth quarter to be revised to a higher level.
The Chinese government timely took a series of macro-control policies last year, effectively preventing the economy from going fast into overheated, Xie said.
China's primary, secondary and tertiary sectors posted a respective 2.47 trillion, 10.2004 trillion and 8.27 trillion yuan in added value, with the secondary sector, including industry, manufacturing and mining, growing at the fastest pace -- 12.5 percent -- last year, according to Xie.
China's consumer price index (CPI), a major inflation index, grew by 1.5 percent in 2006.
Housing prices in the country's 70 medium-sized and large cities went up by 5.5 percent in 2006 over the previous year and the increase rate was 2.1 percentage points lower than that for 2005.
With the strong growth of China economy, many money-making opportunities emerged ie China stocks, industrial metal trading etc.
I believe the growth in China will maintain at least for the next 2 years, and hence would mean that more money from trading can be made.
Posted by Brendan at 09:28 5 comments
Xstrata Rejects Union Offer at Sudbury Nickel Unit
Xstrata Plc rejected an offer from alabor union at its Sudbury nickel unit in Canada and withdrew anearlier proposal to end a dispute, threatening to halt production as the metal traded at a record.
Both sides will have to renegotiate from scratch to establish a labor agreement, Richard Paquin, chairman of the Canadian Auto Workers Union local 598, said in a phone interview today from Sudbury, Ontario. He didn't give details of what wasoffered by either party. Workers have threatened to strike when the existing labor contract expires Jan. 31.
Nickel, used in stainless steel, rose to a record in Londontoday for an eight consecutive trading session amid concern thatsupply may not be meet demand. Sudbury was acquired last year by Zug, Switzerland-based Xstrata in its C$19 billion ($16.1billion) takeover of Falconbridge Ltd. The unit's smelter accounts for 4 percent of world nickel supply.
If the strike occurs, I predict nickel 3 month futures price will rise to $40,000.
Posted by Brendan at 08:49 0 comments
25 January 2007
Copper Gains as Economy of China, World's Largest User, Expands
Jan. 25 (Bloomberg) -- Copper gained for a fifth consecutive session in London as the economy of China, the world's largest user of the metal, expanded at its fastest pace in 11 years.
Copper prices have quadrupled in the past five years, partly driven by rising demand from China, whose economy expanded 10.7 percent last year.
``This indicates the economy is booming, supporting demand for metals,'' RBC Capital Markets traders led by Alex Heath in London said in a report today. Heath has traded metals on the London Metal Exchange for about three decades.
Copper for delivery in three months on the LME gained $75, or 1.3 percent, to $5,790 a metric ton as of 11:24 a.m. local time. The metal has declined 8.5 percent this year.
The metal pared earlier gains of as much as 1.6 percent today after the exchange reported that stockpiles rose 2.7 percent to 203,375 tons, the first time they have surpassed 200,000 tons since March, 2004.
Producers of copper are still expanding production to benefit from higher average prices. Jiangxi Copper Co., China's biggest producer, today said it will increase capacity by 25 percent this year to 550,000 tons, and to 700,000 tons next year.
Codelco, the world's largest producer, plans to invest a record $2.4 billion at mines in Chile this year, seeking to reverse a drop in copper output that began last year. Current copper prices are ``excellent,'' Chile Mining Minister Karen Poniachik said yesterday in an interview in Davos, Switzerland.
Nickel gained, reversing an earlier decline. The three-month contract rose $250, or 0.7 percent, to $37,700 a ton. It earlier dropped as much as 1.2 percent.
Metal Holdings
More than 90 percent of the LME-monitored nickel stockpiles were held by a single firm as of two days ago, data from the bourse show. I had checked that this firm is a US hedge fund.
The so-called warrant cash holdings, documents on the ownership of metals registered at LME-monitored warehouses, also indicate single companies each held at least the same proportion of aluminum, aluminum alloy, lead and zinc inventories. The report was updated at 10:30 a.m. in London. The companies may no longer hold the positions as of today.
The LME data don't include metals that have been bought and are due for delivery, known as canceled warrants.
As of yesterday, nickel stockpiles excluding the so-called canceled warrants were 2,700 tons, aluminum totaled 707,775 tons, aluminum alloy 98,920 tons, lead 36,825 tons and zinc 7,700 tons.
Among other metals traded on the LME, aluminum rose $16 to $2,820 a ton, lead added $11 to $1,696 and tin advanced $100 to $12,350. Zinc increased $20 to $3,715.
I'll not be convinced that the rally of copper price is sustainable, unless I see that inventory level falling continously. I do believe that copper price is near the bottom now, but not sure where is the exact point. And when copper recovers, it will lead some of the metals up as well. Zinc is a very likely candidate as the correlation with copper is very close.
Currently funds hold substantial amount of metal inventory at LME warehouse. I believe they are all prepared to create a massive metal rally when copper price rebounds.
Posted by Brendan at 19:06 7 comments
Buy Lead again!
Sold off my lead trade too early. Establish another long position on Lead futures.
Lead is trading at $1700/ $1705. Bought 3 lots of Lead at $1705.
Margin required: USD3100 X 3 = USD9300.
Currently one fund is holding 50% - 59% of Lead inventory; this fund may have interest to push the Lead price higher.
Looking from technical analysis perceptive: Lead chart is showing a very good uptrend, as shown in Chart 1.
Posted by Brendan at 08:53 0 comments
News on tin
Police in Indonesia's Bangka-Belitung province are investigating tin miner PT Koba Tin in connection with sourcing illegal tin ore and operating outside its mining area, the police chief said on Wednesday.
Bangka-Belitung Police Chief Imam Sudjarwo told Reuters police had received reports Koba Tin has sourced tin ore from local miners that worked outside the firm's mining area.
"It means Koba Tin has violated the mining law by operating outside its concession and violated the criminal law for fencing illegal tin ore," Sudjarwo said by telephone from Bangka.
Sudjarwo said police had seized 500 tonnes of refined tin owned by Koba Tin, but the company was still allowed to run its smelter. Koba Tin is 25 percent-owned by state-owned PT Timah Tbk and the rest by Malaysia Smelting Corp. Bhd.
PT Koba Tin is the second-largest tin miner on the island after Timah. The police were currently questioning some of Koba Tin's staff, Sudjarwo said. Asked if top officials would be quizzed, he said: "the investigation will lead in that direction."
Koba Tin said mining operations were running smoothly despite the police investigation. "We have coordinated and fully cooperated with the police investigation. It is a progressive process, so we have to wait for the report from the police," Mathias Harryanto, Koba Tin administration director, told Reuters, without elaborating.
"But I don't know about the smelter, I am still in Jakarta so I haven't received the report from Bangka yet," he said when asked about the smelter operation. NO UNREST. The police investigation at Koba had not triggered any unrest among local miners and the situation on the tin-producing islands was calm, Sudjarwo said.
In October, dozens of small smelters ceased business after the police closed three for operating without proper mining permits, triggering violent protests by miners concerned about their livelihood.
Small-scale smelters emerged on the tin-producing island of Bangka, off Sumatra, after Jakarta banned exports of tin ore in 2002 to stop illegal mining that had caused environmental damage on the island.
Tin on the London Metal Exchange traded at a record high of $12,225 a tonne on Tuesday, but closed at $12,100/12,200, buoyed by uncertainty about the operation of the independent smelters in Indonesia which faced closure in October.
"Timah and Koba Tin are actually the biggest buyers of tin ore produced by local miners. People are wondering why the police only arrested officials from the three smelters," said a trader, who buys tin ore from Bangka.
"It looks like the police want to be fair. They look into Koba because local smelters believe it has been buying lots of ore, more than 500 tonnes a month. The raid simply makes those smelters happy," he said.
Timah officials were unavailable for comment, but the firm was assigned to buy tin ore from local miners to appease the miners after the violent protests in October.
Before October, the small smelters produced around 60,000 tonnes of tin a year, roughly the same amount of tin produce by Timah and Koba Tin.
"Production from the smelters is undetected right now. The smelters are dying," said a smelter official. Indonesia accounts for one-third of the world's tin output in a market estimated at some 350,000 tonnes annually.
Tin is one of my top picks for futures trading in 2007. With supply disruption, and demand growing, tin price is expected to rise. Will look for opportunity to enter again.
Posted by Brendan at 08:46 1 comments
32% profit on the Lead trade
Bought 3 lots of Lead @ $1650 on 3 Jan 07:
basemetal-trading.blogspot.com
Today lead is trading at $1690 / $1700.
Unrealised profit is now: USD3000
Margin required: USD9300
Percentage profit: 32%
Decided to take profit as the upward momentum starts to look weak. Sold!
Posted by Brendan at 03:59 0 comments
24 January 2007
Review on my US market Top Picks
Recommended 3 US stocks on 30 Dec 06: Southern Copper Corporation, Companhia Vale do Rio Doce and The First Marblehead Corporation.
basemetal-trading.blogspot.com
Southern Copper: Price was USD53.89 then, now is USD57.79, up 7.24%
Companhia Vale do Rio Doce: Price was USD29.74 then, now is USD32.81, up 10.32%
The First Marblehead Corporation: Price was USD54.65 then, now is USD52.88, down 3.24%
Posted by Brendan at 06:23 0 comments
40% profit on Lead trade
Bought 3 lots of Lead @ $1650 on 3 Jan 07:
basemetal-trading.blogspot.com
Today lead is trading at $1700 / $1710.
Unrealised profit is now: $3750
Margin required: $9300
Percentage profit: 40%
With backwardation still rising, and cancel warrants increases, I'm pretty sure that lead price will continue to rise. So hold on to my trade.
Posted by Brendan at 05:04 0 comments
23 January 2007
CVRD to invest heavily in Brazil infrastructure
CVDR is one of my top pick for stocks listed in US:
basemetal-trading.blogspot.com
BRASILIA, Jan 23 (Reuters) - CVRD, the world's largest iron ore miner, will unveil its 2007 investment budget this week, including hefty investments in Brazil's infrastructure and overseas mining projects, Chief Executive Roger Agnelli said on Tuesday.
"The plan is for CVRD to keep investing heavily in (Brazilian) infrastructure," Agnelli told reporters after meeting with Brazilian President Luiz Inacio Lula da Silva.
Lula unveiled an ambitious 500-billion-real ($235-billion) infrastructure investment plan on Monday, but he said the government will spend only 68 billion reais while state-run and private companies are expected to contribute the rest.
Poor infrastructure is partly to blame for tepid economic growth in Brazil, an agriculture and mining nation the size of the continental United States.
CVRD has built up its own rail network over the years to move iron from inland mines to ports. The formerly state-run company is the largest-single infrastructure investor in Brazil.
Agnelli said CVRD is interested in investing in government infrastructure projects, citing railways, energy and ports as important areas.
"The whole world is growing and if Brazil wants to grow ... it has to take advantage," he said.
CVRD has grown rapidly owing to a surge in global iron ore demand and became one of the world's largest diversified miners when it sealed the acquisition of Canadian miner Inco this year.
Agnelli said CVRD will move forward in 2007 with large overseas investments in nickel and coal, a key input for steel clients that is hard to come by in Brazil.
CVRD would still consider investing in the right Venezuelan coal project, even though President Hugo Chavez announced plans to nationalize Venezuela's mining industry this month.
CVRD ended a coal exploration venture in Venezuela last year. ($1 = 2.13 reais)
Posted by Brendan at 22:40 4 comments
16% profit on my Lead buy trade
Bought 3 lots of Lead @ $1650 on 3 Jan 07:
basemetal-trading.blogspot.com
Today lead is trading at $1670 / $1680.
Unrealised profit is now: $1500
Margin required: $9300
Percentage profit: 16%
With backwardation rising, and inventory continues to fall, I'm pretty sure that lead price will continue to rise.
Somebody please buy lead futures and make some money!!!
Posted by Brendan at 07:43 0 comments
22 January 2007
Zinifex share price Vs zinc and lead price
Posted by Brendan at 23:59 0 comments
Zinc price rebounded unexpectedly
Zinc inventory had stopped rising, hence create upward pressure for zinc price.
Hedge funds bought up huge amount of call options for zinc, will try to push up zinc price before the option expiration date:
Zinc call option, strike price $3800, expiring in February 2007, open interest is now 1470 lots.
Zinc call option, strike price $4000, expiring in February 2007, open interest is now 1140 lots.
Zinc call option, strike price $4150, expiring in February 2007, open interest is now 1020 lots.
Zinc call option, strike price $4250, expiring in February 2007, open interest is now 1000 lots.
Zinc call option, strike price $4500, expiring in March 2007, open interest is now 1500 lots.
Zinc call option, strike price $5000, expiring in March 2007, open interest is now 2100 lots.
Posted by Brendan at 08:57 0 comments
Update on my Lead trade
Bought 3 lots of Lead on 3 Jan 07:
basemetal-trading.blogspot.com
Lead is still trading sideways, but looks like it is going to break through the range soon. Inventory has continued to fall, will provide upward pressure to the lead price.
Lead chart
Lead inventory level
Posted by Brendan at 05:47 0 comments
Aluminum
Data as at 15 Jan 07:
Aluminum call option, strike price $2850, expiring in February 2007, open interest is now 4020 lots.
Aluminum call option, strike price $2900, expiring in February 2007, open interest is now 5580 lots.
Aluminum call option, strike price $3000, expiring in February 2007, open interest is now 3720 lots.
Aluminum call option, strike price $3100, expiring in February 2007, open interest is now 8060 lots.
Posted by Brendan at 04:43 0 comments
Goldman, Deutsche Bank Say Double Down on Commodities
Anyone who followed the advice of Goldman Sachs Group Inc. last year and invested $10 million in the Goldman Sachs Commodity Index would have lost 15 percent, or $1.5 million.
Like so many of Wall Street's best and brightest, Goldman, the biggest securities firm by market value, says it wasn't wrong, just early, and to expect an 8.1 percent return in 2007.
``The long-term secular story is very much intact,'' Jeff Currie, global head of commodities research at New York-based Goldman, told customers in London earlier this month. That's the same outlook provided 13 months ago by Arun Assumall, the firm's London-based head of commodities sales.
Like Goldman, Deutsche Bank AG isn't discouraging anyone from doubling down in what increasingly looks like a bear market. Germany's largest bank in September said oil will trade between $60 and $70 a barrel this year, well above the $49.90 fetched last week. Barclays Capital, the securities unit of the U.K.'s No. 3 bank, said four months ago crude won't drop below $60.
As losses mount in copper, oil and sugar, these firms say the 20 percent plunge in commodities, as measured by the Reuters/Jefferies CRB Index, since May offers a chance to buy before demand from China and India causes a rebound. History shows otherwise. The CRB index dropped at least 20 percent six times since 1970, and on average, fell a further 7.7 percent before bottoming.
`Further to Fall'
``Over the course of this year, many investors who went into commodities will question why they did so and whether they strategically want to be in it for the long term,'' said Simon Hayley, a senior economist at London-based Capital Economics Ltd., who said in May that prices would slump. Raw materials still ``have further to fall,'' he said.
Stocks and bonds in 2006 offered better returns than commodities for the first time in three years. The decline in energy prices led to a record $6.6 billion loss from natural gas trading at Amaranth Advisors LLC and a 19 percent drop at the $1.3 billion Oppenheimer Commodity Strategy Total Return Fund.
The CRB index, which reached a record high of 365 in May, fell 0.14 last week to 290.48 Friday, its lowest weekly close in almost two years.
I do not encouraged buying into a commodity index, because not all commodities have good fundamentals, and hence not all commodities will rise. Right now I'm more bullish on industrial metals, believe copper price will rebound soon, and then lead the rest of the metals up.
Currently I'm taking profit on my stocks in Singapore market, and switching more into Australia commodity stocks.
Posted by Brendan at 03:09 2 comments
Citigroup's Heap Comments on Copper Demand, Aluminum Prices
Copper in New York rose for the first time in six sessions on Jan. 19 as stockpiles of the metal declined the most in seven weeks and a report showed consumer confidence in the U.S. economy at the highest level in three years.
On copper demand and prices:
``Uncertainty in the U.S. economy is at the forefront of investors minds. We are seeing clear signs of a slowdown in demand for many commodities in the U.S. but we think that is going to be a fairly subdued and not particularly prolonged slowdown. And of course it is primarily the housing sector which is under threat here.
``We think we have probably seen the worst already, at least in terms of housing permits, and the market will progressively recover from here.
``Importantly the deterioration in the housing sector will not spread into a broader-based weakness across the economy. Particularly it won't damage consumer sentiment.''
On the U.S. housing slowdown:
``It is certainly bad news for copper so long as it lasts. We can see that already in the numbers. Shipments through the service sectors are running at minus half a percent. So it tends to point to negative demand in the first half but then recovery in the second half.
``We see a similar sort of situation in China, interestingly, with Chinese demand quite soft through much of last year for copper. It also remains quite soft right now but it is slowly, slowly starting to turn the corner.
``The lack of strike-related disruptions (this year) will take some of the heat out of the copper market. That is why, although we are looking for a recovery in prices later this year, we are certainly not looking for prices to get back up to last year's highs.'' On investor interest in commodities:
``The institutional investors, the long-only funds who have been the big new entrants into investment in commodity markets over the last couple of years, still seem to be sticking with their guns.
``Theirs is a medium-and-longer term thesis and so far they appear to be showing patience in riding out this cycle.
``The speculative selling is more from the hedge funds and the commodity trading advisers, the more short-term players. There are clear signs there that they are building short positions especially in copper, both on the New York Exchange and on the LME.''
On aluminum prices:
``From a fundamental point of view I am not nearly as bearish as many. Certainly China is not emerging as a new source of export supply of aluminum like many in the market were expecting.
``Secondly there is no doubt that there is a squeeze on the market. We can see from the LME statistics that one particular player has a very large concentration of positions holding a lot of the open interest and also the actual physical stock on the LME.
``A lot will depend on them and their game plan and the extent to which they come under unforeseen pricing pressures that may cause them to liquidate that position in a disorderly fashion. But so far they seem to be sitting pretty.''
On base metal picks for the coming year:
``Our base metal number one pick by a long way is zinc. We see a persisting supply shortage of zinc and that is a legacy of the lack of investment in the late 90s and early 2000s when prices were really at chronically low levels.
``After zinc, we like aluminum and then copper and nickel would be a little further down the pecking order.''
``Previously we have had a strong preference for bulk commodities over base metals. The reason for this is China emerging as a potential supply side threat in the bulk commodity markets.
``Iron ore production in China is increasing dramatically as the Chinese steel mills take steps to ensure their security of supply of this vital raw material.
``Similarly in the coking coal markets, China is not emerging as the major importer of coking coal which we expected it was going to be. They are becoming much more self-sufficient.''
Posted by Brendan at 02:27 0 comments
21 January 2007
Shanghai Copper Rises From Nine-Month Low on Lower Stockpiles
Copper futures in Shanghai rose from a nine-month low following a reduction in global stockpiles and speculation that China, the world's largest consumer of the industrial metal, may step up imports.
Inventories monitored by the London Metal Exchange fell by 2.7 percent, the most in three months, to 192,975 metric tons Jan. 19, with most decreases in South Korean warehouses, the most probable location for shipments to China. The volume of the exchange-monitored stockpiles bought and due for delivery, referred to as canceled warrants, has more than doubled since the start of the year to stand at 16,825 tons the same day.
``The changes in stockpiles and canceled warrants has got to have a lot to do with Chinese imports which we expect to rise,'' said Cai Luoyi, an analyst at China International Futures (Shanghai) Co., today.
Copper for delivery in March on the Shanghai Futures Exchange rose as much as 1,180 yuan, or 2.3 percent, to 52,470 yuan ($6,746) and traded at 52,400 yuan at the market's midday break. The contract fell to 50,920 yuan, the lowest in over nine months, Jan 19.
Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, fell as much as 1,410 yuan, or 2.6 percent, to 55,480 yuan a ton today.
Copper for delivery in three months on the London Metal Exchange was up $5, or 0.1 percent, at $5,605 a ton at 12:40 p.m. Shanghai time, after rising 1.2 percent on Friday.
China imported 11 percent more of the metal and its products in December, the first year-on-year gain since October 2005. Chinese imports of copper and copper products in 2006 dropped 19 percent to 2.1 million tons.
Supply Surplus
Copper supplies from mines and scrap yards exceeded demand by 51,000 metric tons in October, compared with a deficit of 16,000 tons in September, as the U.S. usage fell 14 percent, the International Copper Study Group said Jan. 18. Global copper production exceeded demand by 353,000 metric tons in the 11 months through November 2006 as consumption in China fell 2.8 percent, the World Bureau of Metal Statistics said Jan. 17.
Stockpiles monitored by the London, New York and Shanghai exchanges rose 51 percent in the past four months. Prices have slumped 35 percent from all-time highs touched in May 2006.
Shanghai aluminum rose the first day in five as much as 230 yuan, or 1.2 percent, to 19,640 yuan a ton and traded at 19,600 yuan at midday.
A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
At Nov 06, I wrote reports, sent out emails to my clients, telling them that there are many signs that copper price is going to crash. At that time, copper price is about $7000, today is only $5560. Now I see many signs that copper price is going to recover.
Posted by Brendan at 22:20 0 comments
Chinese domestic alumina prices have risen 300 yuan or 12 percent
Mentioned in previous thread that alumina price places a part in aluminum price:
basemetal-trading.blogspot.com
Chinese domestic alumina prices have risen 300 yuan or 12 percent to 2,650-2,800 yuan ($341-360) per tonne over the last week as domestic refineries raise prices and demand remains strong.
Hence this should provide support for aluminum price.
Posted by Brendan at 22:16 0 comments
20 January 2007
Review on my 3 top picks listed in US
Recommended 3 US stocks on 30 Dec 06: Southern Copper Corporation, Companhia Vale do Rio Doce and The First Marblehead Corporation.
basemetal-trading.blogspot.com
Southern Copper: Price was USD53.89 then, now is USD55.88, up 3.69%
Companhia Vale do Rio Doce: Price was USD29.74 then, now is USD30.12, up 1.28%
The First Marblehead Corporation: Price was USD54.65 then, now is USD52.28, down 4.33%
Posted by Brendan at 06:47 0 comments
A good start for my top picks in Spore market
On 12 Dec 06, I had recommended 3 stocks listed in Singapore for 2007.They are CG Technologies, Midsouth and Longcheer.
basemetal-trading.blogspot.com
At that time, price of CG Technologies is $0.405, today is $0.54, up 33.33%
At that time, price of Midsouth is $0.555, today is $0.61, up 9.91%
At that time, price of Longcheer is $1.23, today is $1.23, even.
Posted by Brendan at 06:43 0 comments
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