Significant new investor inflow into commodities markets have been reported since the start of the year and these had been reinforced by a rise in hedge fund interest and speculative buying. Commodities prices rose primarily because funds chose to divert more money into an asset class seen as having better prospects in the current downbeat economic climate. Strong inflows into gold exchange traded funds have helped gold prices rise 14.4 percent this year. Copper surged through the USD 8,000 a ton level on a combination of falling LME inventories and a massive inflow of fund money into commodities.
The US Commerce Department said housing starts rebounded modestly in January, rising 0.8 percent to a 1.012m unit annual rate.
The Conference Board said the US consumer confidence index fell to 75 in February from 87.3 in January, the worst reading in five years.
German business confidence has risen unexpectedly, as measured by the February Ifo business climate index. It rose to 104.1 from 103.4 in January. The increase in Germany’s Ifo business climate index was powered largely by an improvement in retailers’ confidence.
China’s monthly trade surplus hit US$ 19.5 billion, a 23 percent year-on-year increase. Exports grew year on year by 26.7 percent, but imports rose by 27.6 percent.
China’s inflation rate was up 7.1 percent in January from a year earlier, setting an 11-year high. Inflation has mainly been driven by high food prices, but rising ex-factory prices are also helping to spread inflation.

In London, the Lead cash settlement price was US$ 3,339 per ton while the Zinc cash settlement price was US$ 2,665.50 per ton on February 28, 2008.
Lead prices extended their rally influenced by a fall in LME lead stocks and the perception that the lead market is likely to remain tight. China’s Yunnna Chihong Zinc and Germanium said it had reduced its lead output at its 60,000 tons per year Qujing works since February 11 on the back of limited power supply.
Zinc prices were boosted by expectations of a supply shortfall after winter storms reduced China’s output. Many smelters have resumed full or partial production, including the country’s top zinc producers, Zhuzhou Smelter, Shuikoushan Nonferrous Metals or Zhuye. Zhuye has 400,000 tons of zinc metal capacity and 100,000 tons of lead metal capacity and is a subsidiary of Hunan Nonferrous Metals.
Global lead mine output in 2007 totalled 3.69 tons, some 4.1 percent than in 2006, while global zinc mine output increased 9.2 percent to 11.4m tons in 2006, according to the latest report by the International Lead and Zinc Study Group. The world lead market saw a 70,000 tons deficit in 2007, as demand for the year amounted to 8.22m tons, a 2 percent increase over 2006.

In London, the Copper settlement price was US$ 8,470 a ton with a backwardation of US$ 30 on February 28th, 2008.
In China, copper demand is expected to surge after severe winter weather damaged numerous power stations and electricity supply networks. Jiangxi Copper, China’s largest copper smelter is still running at 70 percent of its 700,000 tons a year capacity, due to transport problems.
China, the world’s biggest consumer of copper, imported 158,073 tons of refined copper and copper alloys in January, up 19 percent from last December, said China customs. Rapid growth in the power generation, air-conditioning and automobile industries will support the continued growth of copper consumption this year. Chile’s Collahuasi copper mine, jointly owned by Xstrata and Anglo American, is expected to boost output 20 percent in 2008 from last year’s 453,100 tons.
Despite the power shortages experienced by Zambia which had led to suspension of operations at copper mines in January, First Quantum Minerals has projected its 2008 copper output from its Zambia operations to rise 37 percent to 310,000 tons year on year. FQM expects an output of 181,000 tons from its largest mine, Kansanshi, in Solwezi, northwest Zambia, up from 163,824 tons in 2007.

In London, the tin settlement price was US$ 18,425 per ton with a contango of US$ 75 on February 28, 2008.
Tin recorded an all-time high above the US$ 18,000 a ton basis 3 months amid expectations supply will continue to tighten throughout the year. Events in the Democratic Republic of Congo (DRC) have added to growing supply concerns as the mining ministry has suspended all operations in the tin ore-rich Walikale district of the Northern Kivu province. LME tin stocks continue to hover close to their lowest levels since June 2007.
China’s Yunnan Tin Company (YTC) produced 61,129 tons of refined tin, up 17 percent. The YTC total includes production from its wholly-owned Chenzhou smelter in Hunan province and the Singapore Tin Industries joint venture refinery in Singapore. The company said that the rise in output is due to facility upgrades which improved production efficiency. YTC plans to produce 111,000 tons of metal in 2008. Although two further tin export licences have been issued by Indonesia’s Ministry of Trade recently, officials expect the volume of tin exports to fall this year. The total export volume of tin ingot this year is estimated at 85,000 tons, down from 118,555 tons in 2006 and approximately 92,000 tons in 2007. PT Timah would export 60,000 tons, PT Koba Tin 15,000 tons, and small smelters only 10,000 tons.

In London, the Gold AM fixing was US$ 957 per ounce and spot Silver traded at US 19.24 per ounce on February 28, 2008.
Gold hit a record US$ 964,50 an ounce as oil’s move above US$ 100 and inflation fears provided fresh upward momentum. At the end of the month, gold dropped after a Treasury official said the US supports the proposed sale of a part of the gold reserves held by the IMF. IMF’s estimated gold stocks are at 103.4m ounces. Silver reached a 27-year high above the US$ 19 an ounce, as investor buying picks up following gold and platinum’s record breaking runs.
Insufficient power generating capacity in South Africa means the domestic mining industry is set for production growth constraints. Gold Fields, the country’s largest gold miner said its operations were cautiously moving towards the 90 percent level. The company has warned that six of its 21 mines shafts in the country are under threat of closure.
Pan American silver, the Canadian miner, produced 17.1 million ounces of silver in 2007, up 31 percent from 2006, and expects production to rise further this year. In 2008, the company expects to increase silver production14 percent to 19.5 million ounces

In London, Nickel traded at US$ 30,325 per ton, equivalent to US$ 13.76 per pound on February 28, 2008. Cobalt min. 99.8% traded at US$ 50.625 per pound and Cobalt min. 99.3% at US$ 47.525 per pound on February 27, 2008.
Cobalt hit US$ 50 a pound following further price increases by BHP Billiton and Norilsk Nickel. Demand is especially strong at battery makers in Japan. Currently, most consumers are buying in lots of less than 5 tons, but there is steady demand from the steel, aerospace and battery sectors.
Norilsk Nickel, the world’s largest nickel producer, said it expects nickel production to rise to 300,000-305,000 tons. The company said its nickel production grew 13 percent to 276,339 tons last year on acquisitions. Compania Vale de Rio Doce, the world’s second largest nickel producer, is negotiating for the removal of a royalty provision attached to a permit for the Goro nickel project in New Caledonia. Construction at Goro is more than 70 percent complete and mine operations are expected to begin by the end of this year. Goro, will produce 60,000 tons per year of the metal at full capacity.
Zambian cobalt producers Mopani and Chambishi anticipate lower production in February as a result of recent power disruptions. Mopani’s output will be 40 percent lower a source close to Mopani said, while Chambishi expect a 20 percent decline, according to a company official.