Concerns about the impact on demand for commodities from a slowdown in the global economy continue to overshadow the base metals sector and ensured downward pressure on the metals prices. Copper fell to a 9 month low following an increase of 8,650 tons in LME stocks and got a boost towards the end of the year after China said it was to abolish import duties on copper cathode and anode from January 1. This move by China is the latest effort to encourage more overseas buying to meet strong demand. Gold prices sank below the US$ 800 an ounce as the US dollar strengthened against the euro and have ended the year around US$ 850 an ounce. In the Nickel market, there were hopes that lower prices may encourage Chinese buyers to switch back to refined nickel rather than using nickel pig iron.
According to figures released by the US Department of Commerce, US consumer spending in November rose 1.1 percent from October, the biggest monthly increase since July 2005.
Turmoil on the global credit markets has pushed German investor confidence to its lowest level for almost 15 years. The ZEW Centre for European Economic Research in Mannheim said its December survey of institutional investors and analysts fell to -37.2 points, lower than the previous month’s count of -32.5 and the lowest since January 1993.
Japanese consumer confidence fell in November to its lowest level. The Cabinet Office’s sentiment index fell by 3 points since October to a reading of 39.8. Reading below 50 suggest consumers are pessimistic about economic conditions. Growth for the third quarter was revised down to an annualised 1.5 percent from the original estimate of 2.6 percent.
China raised interest rates for the sixth time this year to prevent its economy from overheating.

In London, the Lead cash settlement price was US$ 2,532 per ton while the Zinc cash settlement price was US$ 2,290 per ton on December 31, 2007.
In China, the majority of lead producers in Gejiu City in southwestern Yunnan Province have been forced to shut down lead smelting and refining facilities since December 15, due to falling prices in the markets and changes in the tax structure. Gejiu is one of China’s major lead production bases and has a capacity of between 600,000 tons and 700,000 tons of refined lead per annum. However, due to insufficient raw material supply, actual production is estimated to fall to between 300,000 and 400,000 tons this year, according to the CHR Metals Ltd., a global lead and zinc industry consultancy. The production. The production stoppage, which is expected to last at least one month, will reduce lead output by China, one of the world’s largest lead producers, which may support lead in the future.
India’s Hindustan Zinc has completed the commissioning of its 170,000 tons per year zinc smelter at Chanderiya, Rajasthan. The new smelter takes HZL’s zinc metal capacity to 670,000 tons per year. The company is estimated to have spent US$ 470 million on expanding capacity to 670,000 tons of zinc metal from 411,000 ton per year.

In London, the Copper settlement price was US$ 6,676.50 a ton with a contango of US$ 38.50 on December 31, 2007.
China imported 103,410 tons of refined copper in November, up 5.3 percent from a month earlier, according to statistics released by China customs. The figure is also 55.8 percent up from the corresponding period last year. In the January-November period, China imported 1.38 million tons of refined copper, a year-on-year increase of 89 percent. China’s demand for the metal has remained robust, given that the country’s stock inventory has continued to decline in the past few weeks. According to statistics released by the Shanghai Futures Exchange (SHFE), copper stocks in the SHFE warehouse declined by 55 percent in the past seven weeks since November 16, standing at 25,5957 tons.
Anglo American is planning to increase production at the Los Bronces copper mine in Chile in a project that will raise capacity at the operation by more than 75 percent. The project is expected to boost the site’s capacity to around 400,000 tons per year of copper from 226,000 tons per year, representing an increase of some 170,000 tons per year by 2011. The company estimates that the development will cost around US$ 1.7 billion and the works are expected to be completed within three years.

In London, the tin settlement price was US$ 16,380 per ton with a contango of US$ 120 on December 31, 2007.
Indonesia’s tin production will surge as booming commodity markets drive mining investment, the government forecast. Tin is expected to soar by more than 40 percent to 90,000 tons. Indonesia is the world’s second-largest producer of tin, used in electronic solders and for corrosion resistance for other metals, after China. Indonesia’s state-controlled tin company is to invest in the production of downstream products. The feasibility study for such industries had already been conducted. Total capital expenditure for 2008 is expected to rise Rp. 800 billion (US$ 86 million), from Rp. 300 billion in 2007. Around Rp 400 billion is to be spent on the acquisition of six new tin dredges, while Rp 300 billion is allocated to the construction of two solder plans on Bangka and Kundur islands and a tin chemicals operation on Bangka. All the downstream tin units are expected to start production in 2009.
Yunnan Tin Company’s tin production has grown by 18.7 percent in the year to date, while total non-ferrous metals output has risen by 6.7 percent. Meanwhile the company’s production of tin semis and tin chemicals has exceeded 10,000 tons this year.

In London, the Gold AM fixing was US$ 836.50 per ounce and spot Silver traded at US$ 14.76 per ounce on December 31, 2007.
Gold has risen more than 30 percent this year, the biggest annual gains since 1979, as a number of factors, including a weak US dollar, record-high crude prices, credit market turmoil and falling US rates, boosted its safe-haven appeal.
Coeur d’ Alene Mines Corp has completed its US$ 1.1 billion acquisition of Bolnisi Gold NL and Palmarejo Silver & Gold Corp., Quebec. The transaction creates the world’s largest silver producer, according to Coeur, with silver production forecast to reach about 32 million ounces by 2009 and 290,000 ounces of gold. Bolnisi and Palmajero jointly owned the Palmarejo project in Chihuahua, Mexico which is expected to come online in 2009. Annual production is forecast to average 10.4 million ounces of silver and 115,000 ounces of gold during the first five years of production.
Oxiana Ltd’s board has approved the proposed Martabe gold project in Indonesia, which is estimated to cost US$ 310 million to develop. The project looks set to produce 200,000 ounces per year of gold and 2 million ounces per year of silver over a nine-year mine life. Construction of Martabe’s processing plant will start in July, with commissioning expected in December 2009. The project is expected to start its full year of production in 2010.

In London, Nickel traded at US$ 25,805 per ton, equivalent to US$ 11.70 per pound on December 31, 2007. Cobalt min. 99.8% traded at US$ 41.25 per pound and Cobalt min. 99.3% at US$ 39.25 per pound on December 21, 2007. Concerns over the outlook for stainless steel demand continue to weigh on sentiment in nickel market. Nickel has lost 50 percent of its value since record high of US$ 51,800 per ton in May this year. Major Chinese stainless steel mills have all cut production in December as orders decline in an attempt to boost sluggish market prices. China imported 1.17 million tons of nickel ore and concentrate in November, up 10 percent from a month ago, according to the latest statistics from Chinese customs data. The nickel prices on the LME appeared comparatively stable from mid-September till end of October, which could have encouraged more imports of nickel ore and concentrate into China in November. But market participants expect imports to drop in the coming months as the nickel prices fell again in November and the stainless industry has remained weak. Gladstone Pacific Nickel of Brisbane is looking to China for investment in its nickel complex in this Australian province. The company has proposed building a nickel-cobalt processing complex at Gladstone. The project carries a US$ 3.4 billion price tag and would produce 126,000 tons of nickel and 10,400 tons of cobalt per year. Negotiation has begun with Chinese state-owned companies to supply a turnkey EPC contract for construction, access to Chinese project funding, long-term nickel sales contracts, and possible participation by the Chinese in “Gladstone share capital”.