LME Week: Where Do Industry Leaders See Base Metals Prices Going Forward?

SHANGHAI, Oct. 30 (SMM) – SMM is summarizing the views and opinions of various analysts on the LME week, which as follows:

BHP Wants More Copper as Electric Car Fever Drives Prices

BHP Billiton Ltd., the world’s biggest miner, wants to own even more copper deposits as electric cars drive an increasingly bullish outlook for metal.

“We want more copper resources in our portfolio,” Daniel Malchuk, head of BHP’s Minerals Americas division, said in a speech at Bloomberg Intelligence’s LME Week Forum in London. The company is already the fourth-largest copper producer.

“The value of the copper market could increase by over 50 percent by 2035 – an opportunity worth seizing,” Malchuk said.

“Now you see why copper is firmly on our radar.” Still, finding those new projects won’t be easy.

Freeport to Squeeze Smelters on Charges as Copper Tightens

Freeport-McMoRan Inc. will be gunning for lower refining charges as the market for semi-processed copper gets "tight, tight, tight," according to the mining giant’s head of sales.

The world’s largest publicly traded copper producer will push to lower treatment and refining charges in annual benchmark negotiations for next year, Vice President of Marketing and Sales Javier Targhetta said in an interview during LME Week in London. The charges, known as TC/RCs, are paid by miners to smelters to refine concentrate into metal.

Voting Results for LME Week: Copper No.1, Nickel No.2

As per voting results of present participants in LME Week, copper has the most rising potential in 2018 among base metals, accounting for 31% votes. Then is nickel, accounting for 29%. Aluminium accounts for 20%, zinc accounts for 13% and lead only accounts fort 7%.

Trimet sees full-capacity output, to spin off auto parts:

German aluminium producer Trimet Aluminium expects to keep operating at full capacity in 2018 as European demand stays strong, and plans to transfer its automobile parts business into a new joint venture, executive board member Thomas Reuther said.

Trimet has decided to spin off its automobile aluminium products business into a new joint venture, Reuther said. The profitable business has annual sales of about 200 million euros ($232 million) with about 13 million parts produced annually, he said.

General aluminium demand from the automobile industry is expected to remain firm in the new year.“The automobile industry in Europe is currently focussing intently on electro-mobility and autonomous driving,” he said.

Aurubis to expand from copper into other non-ferrous metals:

Aurubis AG, Europe’s biggest copper smelter, plans to expand into production of other non-ferrous metals. The new CEO Juergen Schachler said the group’s new corporate strategy, dubbed Vision 2025, could involve buying suitable non-ferrous metal production companies.  Aurubis should concentrate on its core expertise of metal production, metal recycling and metal product production, Schachler said in a speech to shareholders.

The group is already involved in gold, silver, nickel and selenium production and these sectors could also be built up, said Schachler. Traces of such metals are contained in copper concentrates (ore) and scrap.

“We can and will expand this in the framework of our metallurgy expertise,” Schachler told shareholders. “We will take a more consistent route away from copper towards becoming a multi metals producer and we will establish ourselves a wider basis.”He said the group would seek both “internal and external growth,” which “can include the expansion of existing capacity or also acquisitions, when these in terms of content and geography make sense and fit.”

Alongside major copper smelters in Hamburg and Luenen in Germany, Aurubis also has copper and copper product activities including in Bulgaria, Belgium, Italy, the Netherlands, Finland, and the United States. 

Copper：Codelco, the world’s top copper producer, raised copper term premiums to customers in Europe for shipments in 2018, making the first hike in four years, according to sources from the LME Week.

The hike indicates strengthening of confidence over consumption in Europe.  

The company set its term premium to European customers in 2017 at $82/tonne. 

Aluminum : Aluminum maker Norsk Hydro may restart a mothballed Norwegian production line as global metals markets tighten following a Chinese clampdown on pollution. Hydro is considering boosting output at its Husnes plant by some 95,000 tonnes per year, raising the smelter’s utilization to its full capacity of about 185,000 tonnes of primary metal per year, Chief Executive Svein Richard Brandtzaeg said. In total, Hydro expects China to cut its aluminum output by some 1.4 million tonnes next year due to stricter environmental measures to curb pollution during winter.

Zinc：

“The potential for a spike is certainly the highest it’s been in a very long time,” Colin Hamilton, head of metals research at BMO Capital Markets, said by phone from London.“We’re looking at a very strong demand outlook for the first half of the year.”

“China has just done its Party Congress. We’ve probably reached peak credit creation for this cycle in China”, said Mark Hansen, chief executive of mid-sized metals trader Concord Resources Ltd. He warned that miners could respond to the recent rally by adding new production, especially in zinc where prices are trading far above the cost of production.

Electric Cars：Bank of America Merrill Lynch expects battery-powered vehicles to account for 90 percent of total vehicle sales by the middle of the century. 

Nickel ：For Electric Cars, Bright  Annual demand for the metal may increase by 230,000 tons by 2025, equal to 12 percent of the current market, according to Bank of America Merrill Lynch. 

Freeport Plans to Lower TC of Copper Concentrates of Long-term Order in 2018

As per sales director of Freeport-McMoRan Inc., due to frequent news of short supply in copper market, Freeport plans to lower smelting fees. Javier Targhetta, vice marketing director of Freeport said on LME Week, Freeport will devote to lowering TC/RCs of copper concentrates of long-term order based on annual negotiation in 2018.

LME Plans to Lower Contracts Margin for Attracting Investors

London Metal Exchange (LME) is planning to recapture investors form its competitor CME because the latter gains a great rise in copper transaction volume driven by low contracts margin. LME says it will take new calculating measures to lower 1/4 of trading margin of copper futures contracts.

BHP Billiton: Planning to Increase Exploration with Estimated Copper Price in 2035 to Rise 50%

With bearish prospect of copper brought by electric cars, the world’s largest mining company BHP Billiton Ltd. says it hopes to possess more copper reserves. The company is now the world’s fourth largest copper producer. Daniel Malchuk, head of America department of BHP, saying on LME WEEK, “We hope to possess more copper mines resources in investment portfolio. The copper price is estimated to have over 50% rising space until 2035.”

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