From Reuters:

• Chinese copper and semi-fabricated imports fell 20 percent in August from July at just over 325,000 tonnes, and off 30 percent from a record 476,000 tonnes in June.

• The Baltic Dry Index hit a fresh four-month low on Tuesday with a slowdown in Chinese demand hurting sentiment. There has been an apparent slowdown in China’s iron ore import demand and a bit less coal imports. … China’s commodity imports slowed rapidly in August

… meanwhile elsewhere (The Australian):

• Unexpectedly strong demand from China in the third quarter has forced Australia’s government forecaster to boost production expectations for most mineral commodities.

… perhaps individual.com can clear this up:

• China’s iron ore imports in August rose 33% from a year earlier to 49.68 million metric tons, according to preliminary data provided Friday by the General Administration of Customs. Imports fell 14% from a month earlier.

… ditto mineweb.com:

• Chinese August iron ore imports retreat 14.5 % from July record, while steel exports rise from July figure but down 73% year on year.

So imports are down and up. If you’re glass half empty you cite month on month numbers. If you’re glass half full you cite year on year numbers.

Baltic Dry index · China imports

Rare earths have been in the news recently, primarily because China produces an estimated 93% and whenever China has a stranglehold on something it makes news these days — although you don’t hear much about tungsten anymore.

Had an admittedly quick look at the recent Lynas presentation (ASX ticker: LYC) and two things caught my eye:

Slide 18: Weighted price average $9.52 per kg of ore—based on the analytical composition of the ore.

Slide 30: Expected cash cost $5.65 per kg of ore processed.

This looks good: $4 margin per kg. Slide 19 shows a total resource of 2.78 Mt, but most of this resource is inferred. In any case what you’ll notice in slide 18 is that the weighted average price is heavily dependent on the trace components Dysprosium Oxide, Europium Oxide, and Terbium Oxide. With an estimated 4% total rare earths in the ore, these three components make up only 0.00048%, 0.0176% and 0.0028% of the ore respectively, or 4.8 g/t, 176 g/t and 28 g/t. The grams per tonne numbers would be pretty good for gold or platinum group elements in terms of the stuff being economically recoverable, but what does it mean for rare earths? Exclude those trace components and the weighted average comes down to ~ $6.80 per kg, assuming 100% recovery. So it seems to me that leaving aside the uncertainty in the size of the resource, the issue is how well you can economically extract rare earths that exist in ores in the gram per tonne range, and what sort of recovery rates you would expect. I’d like to know more about rare earth (i.e. lanthanides) chemistry, and extraction and recovery before being a buyer.

Lynas · rare earths

Today I thought I’d plot the Baltic Dry Index (BDI) versus spot base metal prices over the last 5 years, as of the end of August 2009. Similar plots can be made for most/many commodities.

We can see the point earlier this year–the rise in the BDI–when China began stockpiling copper (and some other minerals/metals). Copper stockpiles also declined at about this time. Chinese stockpiling presumably ended a few months ago because we’ve seen a rise in LME copper stockpiles indicating a drop in demand. The BDI began dropping at about the same time. Nevertheless despite the signs of decreasing demand copper, and other base metals, spot prices keep marching upward. So we have the BDI declining-which can be interpreted as decreasing demand-we have LME stockpiles rising-which can be interpreted as decreasing demand-yet we have LME prices rising. Punters are clearly betting on a global recovery. Either a correction is on the way, likely to occur when speculators conclude increasing demand is still some time off, or real demand, from an eventual global recovery, is going to have to pick up.

Baltic Dry Index vs spot aluminium prices

(more…)

aluminium · Baltic Dry index · copper · lead · nickel · tin · zinc

It is puzzling that base metal prices are rising at a time when stockpiles are also rising. This is not some sort of short term fluctuation, it has been a trend since late March 09.

Copper is an exception in that there was a sharp drop in the stockpile earlier this year, attributed to Chinese buying, but stockpiles have been drifting up for 2-3 months since then.

LME copper data from the last 2 years

(more…)

aluminium · copper · lead · LME prices · LME stockpiles · nickel · tin · zinc