Equity markets around the world moved higher with many large indices rising to fresh highs as the Federal Reserve’s signaled that US interest rates would remain close to zero for longer and the Bank of Japan said it would take further steps to boost credit growth. Meanwhile, India’s central bank announced a surprise 25-basis point increase in its key policy rates, the first rise in nearly two years, in a bid to contain inflation. Brazil is believed poised to raise rates fairly soon. Conversely, the Russian central bank cut its two important interest rates by 25 basis points to 8.25% and 7.25% in order to boost fading growth. Likewise, South Africa trimmed its benchmark interest rate by 50 basis points to 6.5%, its lowest in 12 years, as a firm rand has helped reduce inflationary pressures and indirectly, boost employment.
    In Europe, an emergency European / IMF loan pack-age has eventually been approved for Greece, spurring the euro to bounce vigorously off 10-month lows versus the dollar. The loans would probably be made in case the current measures the Greeks are undertaking fail to work.
    Despite concerns about a difficult and sluggish re-covery following the global financial crisis, global indus-trial production has actually bounced back very quickly. The 12-month rate of change in the OECD+6 lead indica-tor (for China, India, Brazil, Russia, Indonesia and South Africa) points to an annual growth of 12.7% in industrial output in the coming months, albeit from a low base. In Europe, services and manufacturing industries grew at their fastest pace since 2007, while in Germany, a business confidence index rose from 51.9 to 54.7. Moreover, the latest set of the International Lead and Zinc Study Group data shows that the recovery is becoming more broad-based outside of China, with the US recording its third consecutive month of year-on-year increases in consumption, and European consumption turning positive in January for the first time since June 2008. Consumption in the rest of Asia, as well as in Oceania, also recorded solid growth. Eventually, the inventory cycle has been the dominant factor driving the recovery thus far in the world ex-China, with production and inventory levels likely to be calibrated to the current level of sales in many industries by mid 2010. Besides, the evidence points towards the next few months being supportive, particularly in line with the usual seasonal restocking cycle.
    In China, the outlook for many end use markets con-tinue to look very robust, with car and appliance pro-duction both booming. Residential construction, however, does look more vulnerable and the rate of growth is likely to ease in the second half of the year given the slowdown in real estate activity seen thus far. China’s Premier Wen Jiabao has said that the country is seeking to grow money supply by around 17% in 2010. Wen also stressed that money supply growth will be sufficient to meet capital demands for its target economic growth of 8 %. Most of the lending that has been advanced is still being held by provincial authorities, and disbursement of these funds should continue to provide a stimulus to growth in the coming months.

    In London, the Lead cash settlement price slightly in-creased to US$ 2,120 per ton while the Zinc cash settle-ment price rose by 9% to US$ 2,360 per ton on the 31st of March 2010.
   According to the International Lead and Zinc Study Group, in January, both the global lead market and the global zinc market were in surplus respectively by 2,700 tons and by 71,500 tons.
   In Peru, Iscaycruz mine which was placed on care and maintenance in February 2009 should shortly resume operations. This will add 140,000 tons of zinc per year to concentrate supply this year.
   Votorantim Metais has postponed the commissioning of its expanded output from 160,000 tpy to 320,000 tpy at its Cajamarquilla zinc refinery in Peru from February to June 2010. As a result, its zinc metal output this year should be around 50,000 tons lower than forecasted. Meanwhile, Doe Run has just agreed on a credit line to fund the restart of its idle La Oroya zinc-lead smelter, closed since last June. In 2008, it produced 114,000 tons of refined lead (1.5% of world total) and 43,000 tons of refined zinc.
   In China, severe droughts in the Yunnan province are currently causing power shortages. This has in turn caused about 500,000 tons per year of smelting capacity to be shut down in the province, though many had al-ready been operating well below capacity. Although it is difficult to evaluate how long production will be af-fected, this could tighten the domestic market if it is sustained.
    In Fengxiang, Dongling Group is preparing to restart a 100,000 ton per year lead and zinc smelter which was shut in August 2009 on the back of lead poisoning accu sations. However, such issue in China has not gone to rest yet, with another smelter, Sichuan Longchang Zhongyi, closing its 8,000 tons per year plant after locals were found to have excessive levels of lead in their blood. Meanwhile, Yuguang Gold and Lead plans to commence production from its new 100,000 tpy lead plant in April, bringing its total capacity to 330,000 tpy. 
    In Australia, production is to continue at Xstrata’s Mount Isa mine, as concerns that the mine was breach-ing its lead emissions limits proved to be due to a reporting error. 
  In Russia, Chelyabinsk Zinc Plant, the country’s largest zinc producer, plans to increase output by over 50,000 tons in 2012, to 175,000 tons of salable zinc.

   In London, the Copper settlement price rose by over 10% to US$ 7,830 a ton with a contango of US$ 39 on the 30^th of March 2010.
    Copper prices have been supported this month by encouraging data in the OECD macroeconomic recovery, as well as an increasingly sustained trend of LME inventory draws, offering evidence of continued strength in Chinese demand and improvements in European demand. Following 8 months of consecutive net stock builds, February saw a 3% decline in total inventory levels. LME stocks have declined by 6% in March to 515,525 tons. February’s preliminary Chinese trade data showed a 10.3% m/m increase in copper imports to 322,000 tons, which surprised to the upside given the expected softening due to the Chinese New Year holidays.
    On the supply side, concerns about the effect of the Chilean earthquake continue to provide uncertainty, albeit so far unjustified by mining company statements. The ICSG unveiled that the copper market was in apparent surplus in 2009, but more interestingly, that copper mine supply did not grow at all YoY in the 4Q09, mainly because of unanticipated disruptions. Over the past 3 years, copper mine supply disruptions have represented around 6-8% of copper mine supply forecasts. Disruptions over this period have come from technical issues (~23%), slower-than-expected ramp-ups (21%), strikes (16%), pit problems (12%), weather-related issues (7%) and other problems (21%).
    In Peru, workers at Freeport McMoran's Cerro Verde copper mine have started an indefinite strike on March 31 to press for higher wages and share of profits. Peruvian law requires mining companies to share 8% of prof its with workers and union leaders claim that the company has understated its earnings in order to reduce its obligations. Cerro Verde produced around 310,000 tons of copper-in-concentrate in 2009 (~2.5% of world output) and expect output volume to remain the same in 2010.
    In Botswana, Transamine will buy all the copper con-centrate produced at Discovery Metals’ Boseto copper mine over five years as well as take a 9.76% stake in the company. Boseto copper resources are estimated to be around 846,000 tons of copper.
    In China, Tongling Nonferrous is building a 400,000 tons copper plant that will boost its capacity by half to 1.2 million tons a year by 2012, making Tongling the top producer in China.

   In London, the tin settlement price rose by 10% to US$ 18,355 per ton with a contango of US$ 70 on the 31st of March 2010.
    Market fundamentals have shown clear strength over the past month. Primarily this has been expressed through LME inventory trends, which have declined from a peak of close to 28K tons at the end of January to now stand at just under 24K tons, a fall of 15%. This consistent trend of declining stock levels has been accompanied by reports of improving demand levels. First, China continues to offer a robust picture of manufacturing activity, and analysts expect the continued rolling out of the government’s replacement of household electrical appliance programme’ to support domestic electronic demand hence soldering well into 2010. The strength of domestic prices versus LME supports this view of healthy domestic conditions. Second, reports indicate OECD demand levels are improving as evidenced by higher premiums. The supply side of the tin market offers few signs of improvement with mine output expected to continue to fall in 2010.
    In Indonesia, Bangka-Belitung Timah Sejahtera (BBTS) stated that new mining laws may result in production being as much as half the government target of 105,000 tons because small-scale miners are being unfairly targeted. Indonesia supplies 30% of the world's tin consumption, mostly from the Bangka-Belitung islands, where about 40% of the workforce is involved in tin mining.
    In China, Yunnan Chengfeng Nonferrous, one of the country’s biggest tin producers, has cut output in half as a drought starves metals smelters in the province of hydro-powered electricity. Indeed, the 20,000 tons per year smelter has struggled to produce 1,000 tons since the start of the year.
    In Bolivia, tin smelter Vinto expects to conclude its 8,000 tpy expansion in March next year, with full production of 18,000 tpy expected from 2013 onwards. The state-owned company will install a new Ausmelt furnace, which will almost double its capacity from the current 10,000 tons per year level. In 2009, Vinto operated above capacity and produced 11,800 tons of tin, 19% more than in 2008.

    In London, the Gold P.M fixing closed the month mostly flat at US$ 1,115.50 per ounce on March 31st, 2010 (MTD: -0.11%, YTD: +1.79%), while Silver climbed to US$ 17.5 per ounce (MTD: +8.00%, YTD: +2.47%). 
    The big story of the month was the Greece situation.   At the beginning of the month, gold had benefited from safe-haven buying related to Greece's debt problems, but profit taking as well as frequent rebounds in the dollar erased some of the gains. On March 19th, Gold fell toward $1,100 an ounce, after a surprise interest-rate increase in India. At the end of the month, the apparent agreement on the Greek situation drove the euro higher and helped out gold. In fact, the foreign-exchange moves bolstered gold since investors often buy the metal as a hedge against dollar weakness, plus a softening greenback helps commodities generally by making them cheaper in other currencies. Finally, gold prices closed lower, unable to recover with the euro and as interest-rate concerns weighed on the market.
    On the demand side, China’s gold consumption intensity and demand is expected to double within 10 years according to the World Gold Council. However, demand is set to outstrip supply as WGC estimates suggest that China could exhaust its known gold mining reserves in six years from now. Demand from China's two largest sectors, jewellery and investment, reached a combined total of 423 tons in 2009, with 314 tons supplied by domestic mines.
    On the supply side, Peru’s gold output increased 5.5% on the year to 476,100 ounces in February. Peru is fifth largest gold producer and the largest silver producer (silver output decreased 11% on the year to 8.7 million ounces in February).
    In March, Silver saw much more action under review than gold. Silver has outperformed gold, implying that expectations of improving industrial demand has buoyed sentiment.
   The price of gold and silver tend to move in the same direction, but silver benefits from a split personality. One is gold-like, and another is it is very much an industrial metal (54% of silver's demand is industrial). Demand for silver should remain strong as a result of both investment interest and increased use in electronics and other products as the economy recovers.

    In London, Nickel was the best performer among the base metals this month, rising by 19% to US$ 24,950 per ton, with a contango of US$ 25, on the 31st of March 2010. On the same day, Cobalt min. 99.8% traded at US$ 22.75 per pound and Cobalt min. 99.3% at US$ 20.125 per pound. 
    Three key developments so far in 2010 have sup-ported this hike in nickel price. First and foremost, LME inventories have begun to decline on a sustainable basis. Total stocks have fallen by 3.4% to 156,348 tons this month, hence signalling that the nickel market was in deficit.
    Second, according to reports, production levels in global stainless steel sector as well as merchant pre-miums have been rising in Asia and in the US. More unexpectedly, in Europe, as end user demand also showed signs of improvement, February orders for stainless steel in Germany rose 18% month-on-month to 150,000 tons. Third and finally, on the supply side, no agreement has been reached at Vale’s substantial Sudbury and Voisey’s Bay facilities in terms of recent new contract negotiations. In addition, progress at the Goro HPAL mine in New Caledonia appears to have been delayed yet again.
    In Australia, First Quantum Mineralshas started re-trofitting the Ravensthorpe nickel operation and hopes to commission the troubled nickel laterite operation in about a year. The company is forecasting average an-nual nickel metal production of approximately 39,000 tons for the first 5 years and 28,000 tons over the ex-pected mine life of 32 years. However, producers like Minmetals or Norilsk are still waiting for more stable and profitable price before relaunching their Australian operations.
    In Zambia, Chinese-owned Munali nickel mine re-sumed operations and plans to raise annual output of nickel ore to 1.2 million tons by 2012 from the current 900,000 tons per year.
In the Democratic Republic of Congo, Junior miner Cuco Resources, will expand its cobalt concentrates production to 160 - 200 tons per day.