LME considers new metals contracts

The London Metal Exchange, the world's largest metals bourse, may introduce new contracts for a variety of steel products and is also considering metals like magnesium and cobalt.

The LME announced plans last month to start handling steel contracts via electronic and telephone trading, starting Feb. 25. Trading on the LME dealing floor will begin April 28. The contracts are for steel billet, a semi-finished product made from scrap. One will be deliverable in Turkey and the other in South Korea.

"One steel contract for the entire steel industry is akin to saying the one base-metals contract can meet the needs of all those in the aluminium, copper, nickel, lead, zinc and tin industries," the LME chief executive, Martin Abbott, said at a seminar to mark the beginning of LME Week in London on Monday. "Our steel billet contracts are therefore a start of what could be several LME steel contracts."

The 130-year-old bourse is competing with rivals including the New York Mercantile Exchange to expand its share of commodities trading after metals and energy prices climbed to record levels last year. The LME handled commodities trades valued at $8.1 trillion in 2006, 80 percent higher than a year earlier.

The LME has received a study on magnesium trading and will begin to assess it Tuesday, Abbott said.

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US-listed China Direct raises 2007 guidance on magnesium, chemical ops

Florida-based China Direct Inc said it is raising its 2007 forecasts on strong magnesium prices, and strong performances from its consulting and chemical operations.

Management now sees 2007 revenue exceeding 175 mln usd with net profit of over 9.5 mln, compared to previous guidance of 150 mln and 8.25 mln, respectively.

"The third quarter and remainder of 2007 have been positively impacted by the overall prices for pure magnesium in the global marketplace as well as strong performances from the consulting division and chemical operations," China Direct said in a statement.

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Magnesium offering prices up in India but domestic price keeps stable

Magnesium price in Indian domestic market remains stable at around INR130-135/kg, while CIF price went up to around USD3,050-3,100/t CIF Mumbai port, from USD2,950-3,000/kg sold last week and sources believe the price will continue to go up.

According to participants, most deals this week were concluded at the higher side of the price level of around USD3,100/t CIF Mumbai port and the stable price of around INR130-135/kg in the local market was attributed to the fact that some traders still have old stocks.

A source who concluded a deal of USD3, 070/t CIF Mumbai port, up from USD3, 050/t CIF Mumbai port sold last week, agreed that price will continue to go up as tight supply will continue to drive the price to the sky.

"I think Chinese suppliers are trying to achieve around USD3,500/t CIF Mumbai port by the end of the year but I do not think they will reach that level because consumers are fed up of week-on-week price increase," said the source. "I do not foresee much price increase before end of the year.

Another source reported a deal at USD3,100/t CIF Mumbai port, USD70 higher than his last deal, believing that price will not go down in a short time because material is still in short supply and Chinese suppliers are not eager to sell at this moment which will continue to help to push the price higher.

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Chinese bismuth participants watch the market

Facing the dropping price in bismuth market, many Chinese participants are cautious to take much new action, planning to watch the market.

"We quote USD13/lb for bismuth 99.99%min these two weeks, but customers do not have any interest to purchase, nor do they send the counter bid," said a trader, whose last conclusion was traced back to late September, when an Indian consumer bought five tons of bismuth 99.99%min at USD13/lb.

The source usually deals with about 100 tons of bismuth per month, but it does not contract any deal so far this month. "Receiving few inquires from consumers, we are almost out of the bismuth business this month," added the source, believing it can not see any sign of rebound, but remain stable in the near future.

"Smelters quoted RMB190,000/t for bismuth 99.99%min last week, and we purchased five tons at the price of RMB187,000/t, " stated a manufacturer of bismuth oxide, emphasizing that they do not want to purchase in large volume due to volatile bismuth price.

With the only purchase mentioned above in October, the consumer expressed its worry about the price decrease. If the consumer buys large volumes of the material, it will lose money in case the price of bismuth metal drops when selling bismuth oxide, elaborated the source.

Under the pressure of turnover, smelters may have to undersell their stockpile if demand remains low, forecasted the consumer.

Participants hold that the bismuth market may remain stable in the coming weeks, or slide after a period of stability if demand continues to be low.

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Zinc oxide market stable

Although spot zinc ingot price decreases continuously and reached to the low level of RMB25,400-25,500/t (USD3,382-3,395/t) this Tuesday, zinc oxide market keeps relatively stable.

A source from a Jiangsu-based producer with a monthly output of 100tpm offered its zinc oxide 99.7%min at around RMB25,000 (RMB3,329/t) ex works. "Spot zinc ingot price has slid by about RMB1,000/t (USD133/t) in recent two weeks, but zinc oxide price remains at the level of around RMB25,000/t (RMB3,329/t) ex works, the same level as that the previous two weeks," said the source.

"As our plant is carrying out long-term contracts, we could not adjust zinc oxide price in such a short time. In addition, the direction of zinc ingot market is still unclear, so we prefer to keep watching the market," said the source.

The source believes that spot zinc ingot price would drop further, pressed down by the downward movement of 3-month zinc on LME. Zinc oxide price may follow suit in the coming days.

The source said that the plant purchased some stocks of zinc ingot at around RMB26,000/t (USD3,462/t) delivered to its warehouse, when the mainstream price was at around RMB25,900/t (RMB3,449/t).

Another producer in Tianjin offered zinc oxide 99.7%min at around RMB24,800/t (USD3,302/t) processed from zinc scraps, almost unchanged with that half a month ago.

The source revealed that most producers mainly sell zinc oxide to regular customers and received few inquiries from new buyers. "As zinc consumption would not change greatly in the near future, zinc oxide market would keep stable in the following weeks," said the source. The plant is running with an output of 350tpm.

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Antimony export market unchanged

The export market for antimony ingot remains unchanged. While Chinese state-owned exporting enterprises still complain their offers of USD5,700-5,800/t FOB are unacceptable for foreign buyers, concluded deals have been reported at USD5,500-5,600/t FOB.

A Japanese trader reported that offers from Chinese state-owned exporting enterprises are as high as USD5,750-5,800/t FOB, USD150-200/t higher than those offered by some others suppliers. "We can understand why Chinese exporters hold the high offer as their purchasing price runs high and the export of the material is restrained according to the export policy," said the source. "However, neither consumers nor us cannot accept the price."

The source trades small quantities of antimony ingot, and only buys one or two containers after receiving inquiries from customers. The source claimed that they could obtain antimony ingot at a level slightly higher than USD5,600/t CIF Japan but acknowledged that those materials might be shipped out of China through illegal ways.

A Guangdong-based trader revealed that demand of antimony ingot from Asian market is not strong. "Major consumers usually sign long-term supplying contracts to satisfy the demand for production, and some-to-medium consumers only buy from hand to mouth due to the high price" said the source.

The source did not conclude any antimony ingot deals in the past week and reported some Korean and Japanese buyers would not like to accept the offer of around USD5,600/t FOB. Meanwhile, the quotation of USD5,650/t CIF Rotterdam was also turned down buy European customers.

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Manganese market in stalemate

Manganese metal price has been declining to the current level of RMB17,300-17,600/t (USD2,304-2,344/t) ex works. Little business goes on and most participants tend to watch and wait, but sources think the market will not recover soon due to the low demand and large stock.

A Hunan-based producer, who is running at its full capacity of 10,000tpy and holds a stock of 300t on hand, did not sell material recently due to the low bid from buyers. The producer informed few deals were closed at RMB17,300-17,400/t (USD2,304-2,317/t) ex works, but he refused to sell below RMB17,500/t (USD2,330/t) ex works. "Export market also keeps slack with large stockpile in Rotterdam, so the domestic price can only be pulled up by internal demand," commented the source. "Therefore, the market will not recover soon."

The source revealed that the price of sulphate rose by around RMB100/t (USD13/t) from last month to RMB800/t (USD107/t). The manganese ore in their mine was RMB700/t (USD93/t) last month and may rise a little in the coming days, while the market price for manganese ore is RMB700-800/t (USD93-107/t) delivered to plants.

A Guizhou-based producer, with a full capacity of 30,000tpy, revealed that the market is in an unstable state compared with the previous years. The slack market is affected by many factors. The demand from steel mills has not reached the level as expected and most smelters hold large stock. The consumers stay away from the market for lower prices while the smelters also hold back from selling and hope the market to turn better.

According to the source, the market seems to be chaotic and no one can predict when it will warm up. If the supply of raw materials keeps stable and demand moves up, the market is likely to rebound in mid-November or early December. However, it is hard to predict what a level it will reach. Most participants are waiting for a clear situation.

The market will keep in stalemate for a while and may warm up in mid-November. However, participants think the rising scope will not be large and it still needs time to identify the direction.

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