Copper Trades Near Four-Year Low as
Greece Crisis Fuels Concern
Copper traded near the lowest in more than four years as
concern that Greece will exit the euro area weighed on markets, bolstering
speculation that consumption will slow.
Asian stocks fell for a second day, extending a global selloff
as crude oil traded near its lowest since 2009. The prospect of Greece leaving
the currency block is weighing on trading, helping send the euro to an almost
nine-year low against the dollar.
“Any development on Greece triggers earthquakes in the broader
market from bonds to equities, from which commodities cannot survive,” said Fang
Junfeng, an analyst at Shanghai Cifco Futures Co.
Copper for delivery in three months on the London Metal
Exchange fell 0.2 percent to $6,136 a metric ton by 4:14 p.m. in Shanghai. The
metal slid 1.8 percent to close at $6,145 a ton yesterday, the lowest since June
2010. Price are down 2.6 percent this year following a 14 percent loss in
2014.
Prices are also dropping amid slowing winter demand from
Chinese downstream users and a continuous increase in stockpiles in London and
Shanghai warehouses, Fang said. “I won’t be surprised if copper extends losses,”
he said.
Inventories of the metal tracked by the LME gained 0.8 percent
to 178,425 tons yesterday, the highest since May, while stockpiles at warehouses
registered with the Shanghai Futures Exchange rose to the highest since April,
according to bourse data.
China is accelerating 300 infrastructure projects valued at 7
trillion yuan ($1.1 trillion) this year as policy makers seek to shore up growth
that’s in danger of slipping below 7 percent. The country is the world’s largest
metals consumer.
Doubtful Boost
“China’s spending on infrastructure is expected to be higher
this year than 2014,” said Xu Yongqi, a Shanghai-based analyst at Guotai &
Junan Futures. “Whether the investment will boost consumption of base metals is
doubtful.”
The country’s official Purchasing Managers’ Index (CPMINDX) in
December slid to the lowest in 18 months, data showed last week. A gauge of its
service industry released today by HSBC Holdings Plc and Markit Economics rose
to 53.4 last month from 53 in November.
In New York, copper futures for March were little changed at
$2.7645 a pound. The March contract on the SHFE dropped 0.6 percent to close at
44,800 yuan ($7,212) a ton.
On the LME, nickel, aluminum, zinc and lead fell while tin
rose.
Source: Bloomberg
Shandong Mine Workers Strike Over Months
of Back Pay, Bonuses
Hundreds of workers at a state-run coal mine in the eastern
Chinese province of Shandong are on strike following clashes at the weekend amid
protests over unpaid wages and benefits, workers said.
Around half the workforce at the Jinda mine near Shandong’s
Tengzhou city continued to strike on Monday after crowds of more than 1,000
people began gathering outside municipal government offices at the beginning of
the year, sparking clashes with police on Sunday.
Local sources told RFA that one worker sustained head injuries
in the clashes and was taken to hospital for treatment, while six people were
detained at the scene.
“They owe us five months’ back pay, so this affects everyone
at the mine,” a striking worker who gave only a nickname A Ming
said.
He said the strike action had continued on
Monday.
“We’re still not back in production,” he said. “Some of the
workers went to their work stations today, but they just hung out
there.”
Six workers, four men and two women, were detained during
Sunday’s mass protest, but were later released, he added.
Holiday affected
“They promised they would give us two months’ worth [of back
pay] ahead of the New Year, but instead they are doing ‘ideological work’ with
us,” A Ming said.
He said the workers “had no idea” why the company was having
trouble meeting its wage bill.
“I really can’t answer that,” he said.
The strike comes just weeks ahead of the annual Chinese New
Year celebrations, when millions of migrant workers traditionally make the trip
home to spend time with their families, bringing gifts of money, luxury food and
drink, and new clothes.
An employee surnamed Jin who answered the phone at a
coal-washing contractor in Jinda’s supply chain confirmed that the mine had
ceased production.
“Some 1,000 to 2,000 people are affected, like a chain
reaction,” Jin said. “They all went to the municipal government to
protest.”
“We don’t know where the money went, but the fact is, they
can’t pay these wages,” he said.
Failure to pay
A list of the workers’ demands posted to Chinese social media
said the company had failed to pay out a traditional year-end bonus in 2013, and
had also failed to pay out workers’ regular wages in January and February 2014,
as well as October through December 2014.
It said the company had also failed to make mandatory health
insurance and pension payments for “several months.”
“If things go on like this, we don’t know how we are to live,”
the statement said.
An employee who answered the phone at the Jinda mine on Monday
declined to comment on the dispute.
“I can’t answer your questions right now,” the employee said.
“I won’t give you an interview.”
Further calls to the Jinda mine and to the Tengzhou municipal
government offices rang unanswered during office hours on Monday.
Growth ‘a priority’
The Jinda mine is one of a number controlled by the Chenlong
Energy Group, which was set up by the ruling Chinese Communist Party leadership
in Tengzhou in 2005 to meet growing demand for coal.
Under Chinese labor law, employers must pay a “social
insurance” contribution on behalf of employees covering pension, health care,
unemployment, accident insurances, maternity, and severance pay.
Local governments in China are responsible for enforcing labor
law and for ensuring that workers’ rights are protected.
But according to the Hong Kong-based rights group China Labour
Bulletin, local labor departments lack the staff, funding, and political clout
to enforce these laws, amid a climate in which economic growth is the top
priority of cash-strapped governments.
“It has largely been up to the workers themselves to ensure
that the law is enforced,” the group said in a recent article on its
website.
Source: RFA
Gold Advances as Flight to Safety Spurs
Best Run Since October
Gold climbed for a third day, set for the longest run of gains
since October, as slumping equity markets and political uncertainty in Greece
spurred demand for a haven.
The U.S. Mint sold 42,000 ounces of gold coins so far this
month compared with 18,000 ounces in all of December. In China, the largest
consumer, volumes for the benchmark spot contract on the Shanghai Gold Exchange
rose today to the highest level since Dec. 18.
European policy makers are focused on the fate of Greece,
which triggered the region’s sovereign-debt crisis in 2009, as campaigning
begins for a Jan. 25 election that Prime Minister Antonis Samaras said may lead
to an exit from the 19-member euro zone region should the opposition
anti-austerity Syriza alliance win. The euro traded near an almost nine-year
low.
“The precious metal is in demand as traders want to hedge
their position against Greek-exit uncertainty,” Naeem Aslam, chief market
analyst at Ava Capital Markets Ltd. in Dublin, said by e-mail today. While the
chances of Greece leaving the euro zone are “very slim,” investors “do not want
to put themselves under a situation where they are not hedged,” he
said.
Bullion for immediate delivery advanced as much as 0.8 percent
to $1,214.43 an ounce, the highest level since Dec. 16, and traded at $1,211.82
by 10:55 a.m. in London, according to Bloomberg generic pricing.
Gold for February delivery on the Comex climbed 0.6 percent to
$1,211.60, with trading volumes about the average for the past 100 days for this
time of day, according to data compiled by Bloomberg.
European Equities
After sliding 2.2 percent yesterday, European equities
extended a selloff today as crude oil sank to the lowest level since 2009 and a
gauge of euro-area services and manufacturing signaled economic growth slowed in
the final quarter of 2014, supporting calls for more economic
stimulus.
Bullish wagers on the metal rose for the first week in three
in the period ended Dec. 30, and assets in bullion-backed exchange-traded
products rose last week for the first time in three weeks. Gold priced in euros
rose to the highest level since September 2013, after advancing 12 percent last
year.
“Gold benefits from an increase in risk aversion,” said Mark
To, head of research at Wing Fung Financial Group, a trader and refiner in Hong
Kong. “With crude oil below $50 and uncertainty building around Greece, equity
markets have been dragged lower, triggering a flight to safety.”
Silver for immediate delivery rose 0.8 percent to $16.3112 an
ounce, while platinum climbed 0.4 percent to $1,217.34 an ounce and palladium
rose 0.7 percent to $800.05 an ounce, halting a six-day decline that was the
longest since February.
Source: Bloomberg
India turns net importer of iron ore in
2014
Indian steel mills set a new record by importing an all-time
high of over 8 million tonne of key steel-making raw material in the 2014
calendar year.
Lack of stocks in the domestic market and falling prices in
the overseas markets encouraged iron ore-starved steel mills to look out for
imported material during the year. Major producers like Tata Steel and JSW Steel
were the largest importers during the year. JSW Steel had announced its plans to
import close to 10 million tonne during 2014-15.
Compared to the previous years, 2014 witnessed heavy imports.
In 2013, import of iron ore stood at a mere 1.2 million tonne. CY 2012 had seen
previous highest level of imports at 3.1 million tonne. CY 2011 on the other
hand had witnessed just about 600,000 tonne, according to data compiled by
Delhi-based Ore Team Research.
“Conditions have changed through the years and in the process
of correcting the illegalities and regularising the mining industry the
judiciary and state governments had to take hard decisions, which led to these
circumstances today,” said Prakash Duvvuri, head of research at Ore Team
Research.
As a result, India has turned out to be a net importer of iron
ore as exports have dipped amidst the shrinking global prices. India exported
barely 7.14 million tonne in CY 2014 against 8.12 million tonne of imports, he
pointed out.
“We were the third largest exporter a few years ago. This
year, India’s exports will come to zero level, unless the government takes some
corrective steps and withdraws export duty. The government should at least
withdraw duty on Goan ore, which is of low quality and there is no market for it
within the country,” Basant Poddar, vice president, Federation of Indian Mineral
Industries (FIMI) said.
Looking ahead at 2015, domestic production is likely to
improve. Hence, India might see its dependency on imports come down slightly but
not sharply.
Since the iron ore production would take time to come back on
track and PSU mines would gradually increase their figures, the situation in the
domestic market is set to improve in 2015 rather than turning further bullish,
Duvvuri added.
However, imports will continue to be higher even in 2015
because the opening up of mines in Goa and Karnataka will take more time. “We
can expect some more mines to open this year only by September,” Poddar
said.
Source: Business Standard
China’s iron ore, rebar futures rise on
supply worries
China’s iron ore futures jumped 4 percent on Tuesday to reach
their highest level since early November, as bad weather in Australia, the
world’s biggest producing nation, threatened to disrupt shipments.
A tropical low pressure system is bringing heavy rain and
floods to northwest Australia, with a chance of up to 50 percent that it could
strengthen into a tropical cyclone by Wednesday.
Ports in Australia may have to be closed as a result of the
cyclone, analysts said. Each year, cyclones close shipping lanes and disrupt the
mining of hundreds of millions of tonnes of iron ore, coal, sugar and other
commodities in Australia.
Iron ore futures for May delivery on the Dalian Commodity
Exchange rose by their maximum daily amount of 4 percent to 520 yuan ($83) a
tonne. The most-traded May rebar contract on the Shanghai Futures Exchange was
up 2.46 percent at 2,619 yuan.
“Weather is one factor pushing up iron ore futures prices but
it is not necessarily affecting spot prices. High levels of inventory at ports
and low demand from steel mills in China cannot lift spot iron ore prices,” said
a Ningbo-based trader.
Benchmark 62 percent grade iron ore for immediate delivery to
China .IO62-CNI=SI fell 0.56 percent to $70.80 a tonne on Monday, according to
data compiled by the Steel Index.
According to data provider SteelHome, imported iron ore
stockpiles at major Chinese ports
SH-TOT-IRONINV fell for the fifth week in a row last week, but
they remain at 100.6 million tonnes, 15 percent higher than the same time last
year.
Weak appetite in China is expected to remain at least until
the Chinese new year on Feb. 19, though the impact of the cancellation of a tax
rebate on boron-steel exports is expected to be limited, with the move already
priced into the market and producers exploring new options.
There have also been growing concerns over the debts of local
governments, which may hurt their ability to fund infrastructure
projects.
The China Iron and Steel Association (CISA), in its regular
market report published on
Monday, said that there was little likelihood of any recovery
in iron ore prices in January,
noting that there was still room for further
declines.
“As the winter season continues and the (Chinese new year)
holiday approaches, steel
production is likely to cool down, the gap between iron ore
supply and demand is unlikely to
ease and iron ore prices will fluctuate in line with current
trends,” the association said.
Source: Reuters (Reporting by Shanghai newsroom and David
Stanway; Editing by Joseph Radford and Biju Dwarakanath)
Global coal demand to hit 9bn tonnes by
2019
Global demand for coal over the next five years will continue
marching higher, breaking the nine billion-tonne level by 2019, the
International Energy Agency (IEA) has said in its annual Medium Term Coal Market
Report released recently.
The report noted that despite China’s efforts to moderate its
coal consumption, it will still account for three-fifths of demand growth during
the outlook period. Moreover, China will be joined by India, ASEAN countries and
other countries in Asia as the main engines of growth in coal consumption,
offsetting declines in Europe and the United States.
“We have heard many pledges and policies aimed at mitigating
climate change but over the next five years they will mostly fail to arrest the
growth in coal demand,” IEA Executive Director, Maria van der Hoeven, said at
the launch of the report.
“Although the contribution that coal makes to energy security
and access to energy is undeniable, I must emphasise once again that coal use in
its current form is simply unsustainable. For this to change, we need to
radically accelerate deployment of carbon capture and sequestration,” she
said.
The Executive Director also called for more investment in
high-efficiency coal-fired power plants, especially in emerging economies. “New
plants are being built, in an arc running from South Africa to Southeast Asia,
but too many of these are based on decades-old technology,” she said.
“Regrettably, they will be burning coal inefficiently for many years to
come.”
Global coal demand growth has been slowing in recent years,
and the report sees that trend continuing. Coal demand will grow at an average
rate of 2.1 per cent per year through 2019, the report said. This compares to
the 2013 report’s forecast of 2.3 per cent for the five years through 2018 and
the actual growth rate of 3.3 per cent per year between 2010 and
2013.
As has been the case for more than a decade, the fate of the
global coal market will be determined by China. The world’s biggest coal user,
producer and importer has embarked on a campaign to diversify its energy supply
and reduce its energy intensity, and the resulting increase in gas, nuclear and
renewables will be staggering. However, the IEA report shows that despite these
efforts, and under normal macroeconomic circumstances, Chinese coal consumption
will not peak during the five-year outlook period.
The report’s forecasts come with considerable uncertainties,
especially regarding the prospect of new policies affecting coal. Authorities
in China as well as in key markets like Indonesia, Korea, Germany and India,
have announced policy changes that could sharply affect coal market
fundamentals. The possibility of these policy changes becoming reality is
compounding uncertainty resulting from the current economic
climate.
The issue of low prices remains a hot topic among coal market
participants. Last year’s report emphasised that many coal producers were
running at losses, largely driven by take-or-pay infrastructure contracts or
financial liabilities. Coal prices have declined even more since last year, but
several factors have helped producers withstand further economic
pain.