Monthly Metal Review

Overview

While October ended on a positive note after a difficult start, November followed the same pattern. Base metal prices started negatively as metal market players were shocked by MF Global Holdings bankruptcy. Metal prices kept on declining through out the month as the Greek crisis spread across Europe. Italian and Spanish govern-ment bond yields reached record highs at 7% and for the first time since a long time, Germany faced issues con-ducting bond auction. In Italy, Prime Minister Silvio Ber-lusconi was replaced by Economist and Goldman Sachs advisor, Mario Monti, who announced an austerity meas-ure plan for December 5th, 2011. In Greece, Lucas Pa-pademos, former vice president of the European Central Bank, was elected president of the government. At the months closing base metals recovered strongly during the last few days of November thanks to short covering. As a matter of fact, a combined intervention of six major cen-tral banks (USA, Europe, Japan, Canada, Switzerland and United Kingdom) to provide market with higher US dol-lars liquidity and the People Bank of China decision to cut bank reserve requirement ratio lead to a strong Copper, Zinc and Lead rally on November 29th, 2011.

Though it is true that most base metals declined during the month of November, some managed to find support at strong technical levels thanks to tight physical supply, softer Chinese monetary policy expectations and robust metal demand coming from Asia. Copper remained above $ 7’000 USD per metric ton on the downside and Tin found support at $ 20’000 USD per metric ton. China Consumer Price index decreased from 6.1% in September to 5.5% in October, opening the window for lower inter-est rate by the People Bank of China which would help support Chinas economic growth. On the supply side, even though Anglo American announced a ramp up in output thanks to its extension project at Los Bronces, Copper remains tight. There was no agreement reached at Freeports Indonesian Grasberg mine or the Peruvian Cerro Verde mine. Also, two of the big base metal market players, Rio Tinto and BHP Billiton communicated their market view this month. Anticipating a slower Chinese economic growth, they remain confident that growth should remain resilient at 8%, sufficient to sup-port base metal demand.

Nevertheless, one should remain cautious. Some ana-lysts have argued that Chinas tighter credit conditions could lead small to medium size companies as well as state firms to use metals, particularly copper, as leverage or collateral to obtain additional loans. These companies use Letters of Credit (LCs) to import base metals. They pay minimal fees (around 3%) to the bank and are al-lowed to reimburse the borrowed amount up to three months after issuance. In the meantime, some sell the merchandise and lend the cash at higher interest rates off-market, while others use commodities as collateral for real estate loans. If base metal prices were again to drop massively in the coming months, margin calls on LCs could increase, leading banks to cash in commodities and seeing companies struggle to repay their additional loans.

On the financial side, INTL FCSTone, the American broker, announced it will acquire MF Global Holdings people and LME ring dealing seat. In China, the Shangai Futures Exchange increased its copper margin require-ment by 1%. On the banking side, European banks were still facing issues to fund in US dollars and several banks had to increase rates at which they lend to customers. The end of month Central Banks intervention should relieve some pressure until the end of the year.

Daily Prices

November 2011

Copper
Date(Fix.) ($/MT)
Average 7551.77
30-11-2011 7405.5
29-11-2011 7448
28-11-2011 7381
25-11-2011 7196.5
24-11-2011 7271.5
23-11-2011 7176
22-11-2011 7398
21-11-2011 7301
18-11-2011 7582.5
17-11-2011 7501.5
16-11-2011 7592
15-11-2011 7632
14-11-2011 7731.5
11-11-2011 7451
10-11-2011 7456
09-11-2011 7672
08-11-2011 7820.5
07-11-2011 7775.5
04-11-2011 7930
03-11-2011 7845
02-11-2011 7912
01-11-2011 7660
Silver
Date(Fix.) ($/OZ)
Average 33.08
30-11-2011 31.35
29-11-2011 31.96
28-11-2011 32
25-11-2011 31.24
24-11-2011 31.94
23-11-2011 31.51
22-11-2011 31.85
21-11-2011 30.9
18-11-2011 32.25
17-11-2011 33.3
16-11-2011 34.45
15-11-2011 34.02
14-11-2011 34.38
11-11-2011 33.77
10-11-2011 33.71
09-11-2011 34.58
08-11-2011 34.64
07-11-2011 34.48
04-11-2011 33.95
03-11-2011 34.72
02-11-2011 33.83
01-11-2011 32.97
PM MEAN AM Gold
Date(Fix.) ($/OZ)
Average -
30-11-2011 -
29-11-2011 -
28-11-2011 -
25-11-2011 -
24-11-2011 -
23-11-2011 -
22-11-2011 -
21-11-2011 -
18-11-2011 -
17-11-2011 -
16-11-2011 -
15-11-2011 -
14-11-2011 -
11-11-2011 -
10-11-2011 -
09-11-2011 -
08-11-2011 -
07-11-2011 -
04-11-2011 -
03-11-2011 -
02-11-2011 -
01-11-2011 -
Date(Fix.) ($/OZ)
Average -
30-11-2011 -
29-11-2011 -
28-11-2011 -
25-11-2011 -
24-11-2011 -
23-11-2011 -
22-11-2011 -
21-11-2011 -
18-11-2011 -
17-11-2011 -
16-11-2011 -
15-11-2011 -
14-11-2011 -
11-11-2011 -
10-11-2011 -
09-11-2011 -
08-11-2011 -
07-11-2011 -
04-11-2011 -
03-11-2011 -
02-11-2011 -
01-11-2011 -
Date(Fix.) ($/OZ)
Average 1737.48
30-11-2011 1725
29-11-2011 1717
28-11-2011 1714
25-11-2011 1682.25
24-11-2011 1695.75
23-11-2011 1683.5
22-11-2011 1698.25
21-11-2011 1703
18-11-2011 1724.5
17-11-2011 1749.25
16-11-2011 1764.5
15-11-2011 1775
14-11-2011 1778.25
11-11-2011 1768.5
10-11-2011 1761
09-11-2011 1782
08-11-2011 1794.5
07-11-2011 1773
04-11-2011 1752.5
03-11-2011 1745.25
02-11-2011 1737
01-11-2011 1700.5
Lead
Date(Fix.) ($/MT)
Average 1984.09
30-11-2011 1985.5
29-11-2011 1999
28-11-2011 2004
25-11-2011 1975
24-11-2011 1982.5
23-11-2011 1957
22-11-2011 1976
21-11-2011 2001
18-11-2011 1996
17-11-2011 1975
16-11-2011 1982
15-11-2011 1983
14-11-2011 1990.5
11-11-2011 1949
10-11-2011 1966.5
09-11-2011 1966.5
08-11-2011 1995.5
07-11-2011 1976
04-11-2011 2022
03-11-2011 1993
02-11-2011 1978
01-11-2011 1997
Zinc
Date(Fix.) ($/MT)
Average 1916.11
30-11-2011 1943
29-11-2011 1936
28-11-2011 1928
25-11-2011 1880.5
24-11-2011 1898
23-11-2011 1903.5
22-11-2011 1929
21-11-2011 1923
18-11-2011 1926
17-11-2011 1911.5
16-11-2011 1911.5
15-11-2011 1905.5
14-11-2011 1925.5
11-11-2011 1880
10-11-2011 1883
09-11-2011 1946
08-11-2011 1953
07-11-2011 1912
04-11-2011 1950.5
03-11-2011 1922
02-11-2011 1916
01-11-2011 1871
Tin
Date(Fix.) ($/MT)
Average 21277.95
30-11-2011 20100
29-11-2011 20500
28-11-2011 20560
25-11-2011 20325
24-11-2011 20550
23-11-2011 20705
22-11-2011 20775
21-11-2011 20800
18-11-2011 21425
17-11-2011 21225
16-11-2011 21355
15-11-2011 21575
14-11-2011 21625
11-11-2011 21625
10-11-2011 21785
09-11-2011 21785
08-11-2011 22200
07-11-2011 21905
04-11-2011 22075
03-11-2011 22085
02-11-2011 21605
01-11-2011 21530