SP Angel . Morning View . Metals rise as tariff trade tensions ease

Date: Dec 14, 2018

SP Angel – Morning View – Thursday 13 12 18

Metals rise as tariff trade tensions ease

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Bacanora Lithium (BCN LN) – Blackrock cuts stake

Erris Resources (ERIS LN) – Exploration update

Hummingbird Resources (HUM LN) – Progress report on exploration drilling

Savannah Resources (SAV LN) – High-quality saleable by-product from Mino do Barroso lithium project

Thor Mining (THR LN) – Mineral resource update at Pilot Mountain

Tariff tensions ease as China places orders with the US

  • London copper prices surge to the highest in more than a week amid signals China is keeping promises made to the United States as part of a deal to resolve the ongoing trade row between the world’s top economies. Chinese companies have moved to order the first major purchases of US soybeans – a commodity at the heart of the trade spat – in more than six months, while Beijing also appeared to have toned down a high-tech industrial push that has long hampered Washington.
  • China is also set to hold a high-level economic policy meeting next week, triggering gains for everything from property stocks to steel futures as investors bet on pro-growth measures.
  • The metal received support from more bullish statements from Morgan Stanley; “our economists expect policy easing (i.e. tax/RRR cuts; infrastructure capex) to generate results from 2Q19, supporting demand at a level sufficient to keep those supply-constrained markets tight”.
  • Prices are expected to rise, climbing to an average $6,801/t in 2019, driven by flat mine supply growth offsetting slowing demand. Potential labour disruptions are also cited among risk to copper supply forecasts for 2019 as 700 workers have taken over the Chuquicamata copper mine – Codelco’s third-largest operation that produced nearly 200,000t in the first three quarters of 2018.

Trump says he will not raise Tariffs till he knows if the two sides will reach a deal

  • Talks are in progress by phone but we suspect the Americans are going to want to see more tariff cuts before easing the pressure.

Second Canadian detained in China

  • The detention of Michael Spavor is potentially related to the arrest of the Huawei cfo.

Larco – The Greek state-owned nickel producer may shut down if power supply cut off

  • Larco which produces some 18,000-20,000tpa of nickel in ferro-nickel owes the Greek Public Power Corp. ‘PPC’ around EUR280m
  • The European Court of Justice ruled in February that Greece should recover EUR135.8m which it considered to be state aid.
  • Never mind the rest of the power bill, the PPC may be lucky to recover the EUR135.8m it is owed by Larco.
  • It would seem perverse to shutdown one of Europe’s few battery metal producers at a time when Europe is looking to stimulate production to feed new planned European battery plants.

Vanadium prices pull back 8.5% to US$95-100/kg in Western Europe (Fastmarkets MB)

  • Bloomberg are still showing China Ferro Vanadium 80% FOB US$106.5/kg vs US$109.5/kg (Asian Metal Inc.)
  • The pull back in vanadium prices in Western Europe is no great surprise as buyers hold back ahead of the Christmas and new year break and given the extraordinary high levels maintained over the past four months.
  • Vanadium prices have held high levels through 2018 starting the year at $48/kg on 3rd January rising quickly to $60/kg on 19 January.
  • Implementation of China’s green shield policies cut production from stone coal and also restricted Chinese conversion of vanadium-bearing slag with Russian slag now treated elsewhere.
  • The situation was compounded by the introduction of new regulations raising vanadium content in steel in China and better testing of steel to ensure it is properly strengthened.
  • This cut out Q&T steel which had little or no vanadium content but is hard on the outside and still soft on the inside and is about as effective as a Cadbury’s Creme Egg in an earthquake
  • Poor quality reinforcement in concrete was seen as a major contributory factor in the failure of government buildings in China’s major 2008 earthquake which killed some 68,712 people with a further 18,392 reported missing.

California passes 500,000 EV mark

  • The new car market in California has reached a major milestone with the sale of its 500,000th electric vehicle.
  • Veloz has been keeping track of EV sales and reports that 512,717 electric cars have been sold in California as of Dec. 5, 2018.
  • The electric vehicles sales in the state are up 30% over last year and now account for 7.1% of all vehicle sales in California in the first three-quarters of the year. 

Reduction of emissions from existing combustion engines

  • As tightening emission rules force the car industry to embrace battery power, a German start up says it has the technology to give the combustion engine a reprieve.
  • Higher engine  efficiency and reduced emissions can be achieved through a more diluted fuel air mix and higher compression. However, efficiency can be constrained by combustion initiation and flame propagation.
  • Microwave- assisted spark ignition is seen as a solution to these constraints and has been under investigation for a number of years.   
  • Using pulsed microwaves to ignite fuel rather than spark plugs or glow plugs, the engineers behind MWI Micro Wave Ignition AG say they can cut consumption of gasoline and diesel by as much as 30%, and emissions by as much as 80%, as the fuel burns at a lower temperature.
  • The company is backed by Wendelin Wiedeking, the former CEO of Porsche, and has reportedly begun talks with large automakers in South Korea and China.

Branson’s plans for Virgin Galactic hinge on key space flight

  • Sir Richard Branson’s Virgin Galactic is hoping to reach the edge of space for the first time on Thursday with a test flight that could mark a turning point in its long-delayed efforts to create a new space tourism industry.
  • The latest test of the company’s space plane is scheduled to take it to a height of more than 80km. However, it will still fall short of the 100km Karman line
  • The craft, a SpaceShipTwo class vehicle, is due to be carried to a height of more than 12,000m by a specially designed plane, before its pilots ignite its rocket and steer it into a vertical climb towards space.
  • If the flight performs as planned, the company will probably need only “two or three” more powered tests to prove it is capable of taking paying customers into space according to the CEO
Dow Jones Industrials+0.64%at  24,527
Nikkei 225+0.99%at  21,816
HK Hang Seng+1.18%at  26,496
Shanghai Composite+1.23%at   2,634
FTSE 350 Mining+1.11%at  17,087
AIM Basic Resources-0.33%at   2,049


US$1.1388/eur vs 1.1323/eur yesterday  Yen 113.43/$ vs 113.44/$  SAr 14.073/$ vs 14.300/$  $1.265/gbp vs $1.251/gbp  0.724/aud vs 0.721/aud  CNY 6.867/$ vs 6.888/$

Commodity News

Precious metals:         

Gold US$1,246/oz vs US$1,244/oz yesterday

   Gold ETFs 69.3moz vs US$69.2moz yesterday

Platinum US$805/oz vs US$787/oz yesterday

Palladium US$1,268/oz vs US$1,253/oz yesterday

Silver US$14.78/oz vs US$14.60/oz yesterday

Base metals:   

Copper US$ 6,204/t vs US$6,149/t yesterday

Aluminium US$ 1,939/t vs US$1,938/t yesterday

Nickel US$ 10,880/t vs US$10,770/t yesterday

Zinc US$ 2,588/t vs US$2,595/t yesterday

Lead US$ 1,978/t vs US$1,988/t yesterday

Tin US$ 19,375/t vs US$19,150/t yesterday


Oil US$60.3/bbl vs US$60.6/bbl yesterday – Global oil producers set ‘floor’ of $60 a barrel

  • Co-ordinated action among global producers to enact supply cuts has helped to put a “floor” under crude prices around $60 a barrel, the International Energy Agency has announced.
  • “The agreement aims to achieve relative stability and to bring the market towards balance. So far, the Brent crude oil price seems to have found a floor,” said the IEA in its monthly oil market report.
  • The IEA maintained its oil demand growth estimates for 2019, saying it will increase by 1.4m barrels a day to 100.6m bpd

Natural Gas US$4.107/mmbtu vs US$4.330/mmbtu yesterday

Uranium US$29.75/lb vs US$28.75/lb yesterday


Iron ore 62% Fe spot (cfr Tianjin) US$65.3/t vs US$64.9/t

Chinese steel rebar 25mm US$588.8/t vs US$585.1/t

  • Chinese rebar futures climbed the most since August as the key steelmaking hub of Tangshan started its ’20-day war for blue skies’ campaign, imposing harsher controls to fight smog levels, according to Steelhome.
  • Tangshan ruled to intensify its winter environmental policy from Dec. 13-31 according to official documents from authorities, including new rules to stop production from sintering machines that fail an ultra-low emission test.
  • The most-active rebar contract on the Shanghai Futures Exchange closed up +2.1%. The growth reversed falling trends as cold weather weighed on steel prices in recent weeks.
  • Meanwhile expectations of Chinese demand grew as the nation could launch more infrastructure projects through 2019, with the government tweaking priorities to focus more on construction, exports and fighting water pollution while slowing efforts to reduce capacity in coal and steel industries.
  • In its guidance to local governments and authorities, the State Council, or cabinet, said new infrastructure should focus on construction of roads and waterways. “There is this expectation of Chinese government stimulating more growth in 2019 just after the Chinese New Year,” said Darren Toh, steel and iron ore data scientist at Tivlon Technologies, a Singapore-based steel and iron ore data analytics company.

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