Gold Declines in London as Dollar Advances, Equities Climb

Oct. 21 (Bloomberg) - Gold declined to near a one-month low in London as the dollar gained against the euro and stocks rose, reducing the appeal of the metal as an alternative investment.

Stock indexes in Europe and Asia rose for a third day and the dollar climbed to an 18-month high against the euro as the U.S. moved toward a second stimulus package to buoy the economy.

''We're seeing increasing stability in the equities markets,'' Bayram Dincer, a commodity research analyst at Dresdner Bank, said by phone from Zurich. ''The fear is coming down. The volatility indexes are coming down, and that eases the upside pressure on gold.''

Gold for immediate delivery fell $15.16, or 1.9 percent, to $781.74 an ounce by 11:10 a.m. in London. Futures for December slipped $6.70, or 0.9 percent, to $783.30 in electronic trading on the Comex division of the New York Mercantile Exchange.

''The gold bulls are out of the market for the time being,'' Dincer said. ''Liquidation by the hedge funds in New York will continue this week.''

Bullion will probably fall further as weakening crude oil prices reduce the appeal of commodities as an inflation hedge.

Gold fell to $781 an ounce in the morning ''fixing'' in London, used by some mining companies to sell production, from $795 at the previous afternoon fixing.

Among other metals for immediate delivery, silver gained 4 cents, or 0.4 percent, to $9.82 an ounce, platinum fell 10 cents to $898.40 an ounce and palladium slipped $2.25, or 1.2 percent, $180.75 an ounce.

Platinum rose to $887 an ounce in the morning fixing in London from $877 at the previous afternoon fixing. Palladium was unchanged at $182.

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Nickel market seen in surplus until mid-2009

October 14, 2008: It is likely that the world nickel market would continue to be in surplus until the middle of 2009, opined an executive in the world's largest nickel producer OAO Norilsk Nickel.

According to a foreign news agency report the Deputy Director-General Viktor Sprogis said after that the market would return closer to balance. However he felt that it would take a some time for the demand to improve in the face of the present financial crisis.

"Where prices currently are, that surplus will vanish and (the market will) become more balanced," he said, stated the report. It would be worthwhile to note that prices of nickel on the London Metal Exchange have declined heavily recently and are at present nearly 75 percent less from their May 2007 high of $51,800 a ton at $12,800 per ton.

The report informed that the company is at present not planning any reduction in its production operations. However, Sprogis said it is likely that other companies would be forced to reduce output.

"Producers are in a difficult position. They are currently in discussion on what to do. They are discussing 2009 plans and the possibility of closures," he said. "We think we will be the last company to cut production," he added, stated the report.

He further added that a substantial amount of the material produced depends on prices which are above current levels and some operations require prices which are above $20,000 per ton. "If prices stay lower, we will see (output) cuts," Sprogis said stated the report.

While the low prices are likely to compel companies to curtail projects demand of stainless steel would react to a global slowdown and it is likely that it would require more than a few months for demand to recover.

"We assume certain stagnation and that we will face certain problems," Sprogis said. "It will take time - we are talking years, not months. Demand will recover, it is just a question of time." However a lot depends on economic and psychological sentiment of the markets, he said.

In the present situation the supply and demand fundamentals will be of importance priority, opined Norilsk economist David Humphreys. Sprogis added that the supply and demand fundamentals will make it more difficult to negotiate with customers.

"We do not expect this market to be easy for us to negotiate with our customers," he said. "There is reason to expect the amount delivered to customers long-term to be lower. Today, not everyone is willing to take long-term contracts."

Sprogis opined that customers are likely to go for short-term contracts, stated the report.

Source: Sourcing Insights Bureau

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Ferrophosphorous prices decrease slightly in China

Due to the low demand, the prevailing price of ferrophosphorous 23% decreases a little bit to USD670-690/kg depending on the quality. However, there is no sign of recovery for the demand in the near future.
A Yunnan-based smelter disclosed to Asian Metal that they decreased their offer from USD700/t to USD680-690/t for ferrophosphorous 23-25%, Ti1% in September due to the slack market. The source insisted on offering USD700/t in August though the demand was weak, but finally made the concession under the pressure of poor demand. "The market remains slack, so it is normal to see some price decreases," said the source.
A major exporter in Guizhou also confirmed the price decrease of ferrophosphorous, and he lowered the offer of ferrophosphorous 25% Ti0.5% to USD690/t from USD700/t last weekend. "The market sees no momentum at all, so we can do nothing to keep the price at the previous level," lamented the source. The source also holds some ferrophosphorous in warehouse Rotterdam and is willing to sell.
Meanwhile, a smelter in Hubei offered USD680/t for ferrophosphorous 23%, Ti 1% to a buyer, and has been waiting for the reply at press time.
However, a trader in Yunnan indicated that as the raining season will end soon, buyers would have to replenish their stocks before the dry season comes. Therefore, the price will not decrease much. The source offered USD700/t FOB CMP for ferrophosphorous 25% Ti1-2%, but he admitted that the workable price is at USD680-690/t.
"I prefer to watch the market for a while, because I believe the market would not remain weak all the time," said the source.

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molybdenum market summary Oct 13-17

With demand remaining weak in Chinese ferromolybdenum market, participants stop lowering offers sharply this week, and the market appears generally stable. Offers for ferromolybdenum slip slightly to RMB200,000-205,000/t (USD48.88-50.1/kg), down by about RMB5,000/t (USD1.22/kg) compared with that the previous weekend, while offers for molybdenum concentrate slide to around RMB2,700/mtu (USD17.96/lb). However, low prices are seen in the market, though major suppliers claim that they offer high prices. Some deals for ferromolybdenum are reportedly concluded at around RMB190,000/t (USD46.43/kg), and a major consumer purchased ferromolybdenum at below RMB190,000/t (USD46.43/kg) in the weekend.
Seeing the slow steel market, Chinese ferromolybdenum market has little chance to recover in the near future. Meanwhile, because the price of molybdenum concentrate is getting close to the mining cost, participants believe that the price decrease would be limited in the future.
Meanwhile, the export market generally stalls. As European molybdenum market dropped by over USD5/kg for ferromolybdenum, few people are interested in purchasing. Traders are under the pressure of credit obligation, dumping inventories for cash. Few buyers dare to purchase materials for prompt shipment, while few deals of molybdenum oxide 57% were concluded at USD28-29/lb. Insiders believe the price of ferromolybdenum would fall to USD60/kg or below with firm enquiries.
Molybdate market keeps slipping. Prices for grade-one ammonium tetramolybdate decreased to around RMB200,000/t (USD29.33/kg), while some deals were reportedly concluded at a little bit higher than RMB190,000/t (USD27.86/kg). The market is so slow that many smelters have halted production
Molybdenum products market is chaotic with all kinds of offers appearing in the market. Participants lament about the falling prices in both domestic and overseas markets, and the price of wrought molybdenum bar is getting close to USD60/kg.

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UBS: steel output may drop 11 percent in October

UBS predicted that China's steel output may drop five million tons, or 11 percent, in October and pig iron output may dip 5.5 million tons unless demand for steel starts to rebound.

It implied that demand for iron ore in the month will decline 8.8 million tons and that for coking coal will fall 3.5 million tons.

Smaller mills moved to adjust what they paid for spot raw materials as early as August. – CISA

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Asian manganese ore price drops sharply

Dragged by the price decrease in silicomanganese and ferromanganese markets, the price of manganese ore, especially for the local material, has dropped sharply in recent weeks in both India and China. Meanwhile, in other Southeast Asian countries mainly depending on export market, the manganese ore suppliers seem to have no choice but to cut down their offers greatly.
An Indian trader reported the price of manganese ore, especially local material, has fallen down greatly in recent weeks. He sold a batch of lumps 42%min at INR9,800/t ex mines this week, decreased by about 20%-25% compared to one month ago.
"Many smelters have shut down because the price keeps dropping for silicomanganese and ferromanganese, so the demand for manganese ore becomes really sluggish," he said. "However, as natural resource, its price will rebound quickly when the demand warms up."
Meanwhile, a trader in Indonesia just sold hundreds of tons of lumps 35%min at USD6.15/dmtu FOB Indonesia, and the price is far from what they expected.
"We still hold lots of the material on hand, which were purchased at high cost," he said. "However, the market becomes so sluggish that things come to a pretty pass for us."
Market participants don't hold consistent views about how long the current sluggish situation will last, and most of them take watch-and-wait attitudes towards the market for the moment.

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Chinese molybdenum market summary Oct 13-17

With demand remaining weak in Chinese ferromolybdenum market, participants stop lowering offers sharply this week, and the market appears generally stable. Offers for ferromolybdenum slip slightly to RMB200,000-205,000/t (USD48.88-50.1/kg), down by about RMB5,000/t (USD1.22/kg) compared with that the previous weekend, while offers for molybdenum concentrate slide to around RMB2,700/mtu (USD17.96/lb). However, low prices are seen in the market, though major suppliers claim that they offer high prices. Some deals for ferromolybdenum are reportedly concluded at around RMB190,000/t (USD46.43/kg), and a major consumer purchased ferromolybdenum at below RMB190,000/t (USD46.43/kg) in the weekend.
Seeing the slow steel market, Chinese ferromolybdenum market has little chance to recover in the near future. Meanwhile, because the price of molybdenum concentrate is getting close to the mining cost, participants believe that the price decrease would be limited in the future.
Meanwhile, the export market generally stalls. As European molybdenum market dropped by over USD5/kg for ferromolybdenum, few people are interested in purchasing. Traders are under the pressure of credit obligation, dumping inventories for cash. Few buyers dare to purchase materials for prompt shipment, while few deals of molybdenum oxide 57% were concluded at USD28-29/lb. Insiders believe the price of ferromolybdenum would fall to USD60/kg or below with firm enquiries.
Molybdate market keeps slipping. Prices for grade-one ammonium tetramolybdate decreased to around RMB200,000/t (USD29.33/kg), while some deals were reportedly concluded at a little bit higher than RMB190,000/t (USD27.86/kg). The market is so slow that many smelters have halted production
Molybdenum products market is chaotic with all kinds of offers appearing in the market. Participants lament about the falling prices in both domestic and overseas markets, and the price of wrought molybdenum bar is getting close to USD60/kg.

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