Copper weakened towards the end of May as investors fear the bleak economic outlook in the US will crimp demand for copper, which is used extensively in construction, industry and manufacturing. Meanwhile the price differential between copper traded in London and Shanghai points to relatively lacklustre demand from China, which it was hoped would continue to support copper.
Tin made a significant push higher, supported by concerns over falling supply from China and Indonesia and dwindling stockpiles. US consumer confidence sank to its lowest level in 28 years in May. The Reuters/University of Michigan consumer confidence index plunged from 62.6 to 59.5 in May, the lowest reading since June 1980.
A separate report revealed new construction of single-family homes dropped to the lowest level in 17 years. German gross domestic product rose by 1.5 percent in the first quarter, the fastest quarterly rate in nearly 12 years. The German figures helped the 15-country eurozone grow by 0.7 percent in the first quarter, up from 0.4 percent in the previous three months.
In Germany, the Ifo Institute’s business climate index rose to 103.5 in May from 102.4 in April, beating forecasts for a slight dip. Japan’s economy grew by just 1 percent (annual basis) in the first three months of this year, its slowest pace in three years, as strong exports to China and other emerging economies failed to offset weak capital spending.

In London, the Lead cash settlement price was US$ 1,940 per ton while the Zinc cash settlement price was US$ 1,979.50 per ton on May 30, 2008.
According to the International Lead and Zinc Study Group, the global zinc production exceeded the demand by 72,000 tons in the first quarter of 2008. The world refined zinc usage in the quarter dipped 2.76 million tons from 2.79 million tons a year ago, while the output remain stable at 2.84 million tons.
In 2008, production is forecast to increase 6.47 percent to 12.06 million tons while the consumption is likely to increase 4.7 percent to 11.85 million tons. Two of Russia’s larger copper producers, Urals Mining & Metallurgical Co (UMMC) and Russian Copper Co (RCC), have joined forces to enter zinc production.
The companies will build a plant, which could produce some 300,000 tons per year of metallurgical zinc. Construction is scheduled to begin by the end of this year with commissioning anticipated some time in 2012.

In London, the Copper settlement price was US$ 8,105 a ton with a backwardation of US$ 150 on May 30, 2008. Chile’s state copper company Codelco said its Gabriela Mistral (Gaby) mine had begun to produce copper cathode. The open-pit mine and SX-EW operation, which cost US$ 967 million to build, is expected to reach capacity in August and produce 150,000 tons per year of copper cathode over the next 15 years. The deposit contains 618 million tons of oxide ore, with an average grade of 0.41 percent. Rio Tinto, the mining group, has announced a resource increase of 628 million tons over the December 2007 resource statement at its Kennecott Utah copper mine. The resource is located beneath the current Bingham Canyon pit, and is currently under study for extraction by open pit mining methods. Every year, Kennecott produces approximately 272,000 tons of copper, along with 500,000 ounces of gold, 4 million ounces of silver. As the second largest copper producer in the USA, the mine provides about 13 percent of US Copper needs. China imported 1.87 million tons of copper concentrates in the first four months this year, up 23.2 percent year on year, according to Chinese customs. Local traders said that China’s demand for copper concentrates remained strong, despite low treatment and refining charges.

In London, the tin settlement price was US$ 21,175 per ton with a backwardation of US$ 75 on May 30, 2008.
For the third month in a row China’s official customs figures show extremely low tin exports in April. Data indicates that shipments were again 99 percent down on year-ago levels, at only 15 tons of refined tin and alloy. Meanwhile refined tin imports were 1,254 tons, up 85 percent on April 2007. China has been a net importer of tin in seven of the last eight months since September 2007.
China’s April production of refined tin was 11,703 tons, 10.5 percent lower than in the same month of 2007, while cumulative production in the first four months of this year, at 42,183 tons, was 11.9 percent down, according to China’s National Bureau of Statistics.
The decline in tin production was partly due to extreme bad weather in January-February, but also reflects a continuing shortage of concentrates and scrap for smelters. Indonesian tin major PT Timah produced 11,523 tons of refined tin in the first quarter, down 20 percent from 14,350 tons in the corresponding 2007 period.

In London, the Gold AM fixing was US$ 879.50 per ounce and spot Silver traded at US$ 16.85 per ounce May 30, 2008.
The gold market ignored news that demand for physical gold fell 16 percent in the first quarter compared with the same period of last year to its lowest level for 5 years. Investors looking for protection from inflation and the weakness of the US$ piled into the precious metal in the first quarter but that dented physical demand for jewellery and coins.
The silver market has lost some of its shine with prices dropping 22 percent since mid-March to US$ 16.6 an ounce, and further weakness appears likely over the medium term according to GFMS, the precious metals consultancy. Industrial silver demand rose 7.2 percent to 455.3 million ounces in 2007 but GFMS warns consumption is likely to fall this year, mainly due to weakness in the electronic sector.
On the supply side, mine production of silver has soared over the past 4 years, rising 11.6 percent since 2001 to 670.6 million ounces last year and a further 6 percent increase in 2008 is forecast by GFMS.
Pan American Silver produced 4.5 million ounces of silver in first quarter 2008, up 36 percent year on year, the company said. The company expects to produce 19.5 million ounces of silver in 2008, topping its record 17.1 million in 2007.

In London, Nickel traded at US$ 22,130 per ton, equivalent to US$ 10,04 per pound on May 30, 2008.
Cobalt min. 99.8% traded at US$ 47.50 per pound and Cobalt min. 99.3% at US$ 46.875 per pound on May 29, 2008. BHP Billiton of Australia, the world’s biggest mining company, will honor its agreement with local partner Asiaticus Management Corp. to develop a US$ 1.5 billion nickel project in Davao Oriental province despite delays.
The area has an estimated nickel reserve capacity of 150 million tons at 1.3 percent concentration. The nickel processing plant, once operational, is expected to have an annual capacity of 50,000 tons. China’s cobalt consumption will grow by 11 percent to 14,291 tons in 2008 powered by growing demand from the battery sector, according to the Chinese information agency Antaike.
China’s battery sector which accounted for 52 percent of consumption last year, will consume 7,655 tons of cobalt in 2008. This is a rise of 15 percent. Brazilian metals and steel producer Votorantim Metais plans to more than double cobalt production to 3000 tons per year by 2012.