Metals prices have recently been following the euro/dollar movements, due to little fundamental news and lack of demand from the largest consumer China. Nickel prices rose strongly, standing strong in the face of weakness across the rest of the base metals sector. Supply disruptions in Australia pushed nickel up to as high as US$ 24,950 a ton. Copper traded above the US$ 8,000 mark helped by the national Peruvian miners’ strike. Prices have also found good support from the dollar’s weakness and a further decline in LME inventories keeping concerns over tight global supplies. Rising oil prices and weakness in the US dollar tend to fuel investment demand for precious metals. In the US, retail sales rose 1 percent in May, or twice the forecast rate and the biggest monthly increase since November 2007. Also, the latest measure of existing home sales produced by the National Association of Realtors showed a 2 percent rise in May to an annual rate of 4.99m units. Following its last meeting, the US Federal Reserve kept its interest rates on hold at 2 percent. Annual inflation in the Eurozone was 3.7 per cent in May, its highest level for 16 years, according to Eurostat, the European Union’s statistical office. Inflation has been driven up by sharp rises in oil and food prices. Recent data pointed to a slowdown in the Eurozone manufacturing sector and a weakening business climate in Germany. The purchasing managers’ index dropped from 50.6 in May to 49.1 in June. Germany’s Ifo economic institute reported its business climate index fell to 101.3 in June from 103.5 in May. Chinese exports rose 28.9 percent in May, up from 21.9 percent in April, while imports surged 40 percent. The figures indicate that the global slowdown has not seriously hurt China’s export sector.

In London, the Lead cash settlement price was US$ 1,735.50 per ton while the Zinc cash settlement price was US$ 1,875.00 per ton on June 30, 2008. Zinifex shareholders approved the US$ 4.3 billion takeover by Oxiana, which will create Australia’s third largest diversified mining group after BHP Billiton and Rio Tinto.
The merger, to be called OZ Minerals Ltd., will create the world’s second largest zinc producer. The combined group’s portfolio mainly comprises of base metals such as zinc, copper lead, gold, silver and nickel.
Oxiana said production at its Golden Grove mine in Western Australia has resumed following power outages due to an explosion at a gas plant.
The mine is forecast to produce 140,000 tons of zinc in concentrate this year. In China, Yunnan Metallurgy Mining Development Co said construction has started at its 150,000 tons per year lead and zinc smelter in Heilongjiang province in northeastern China. The project is set to be commissioned by 2009.

In London, the Copper settlement price was US$ 8,775.50 a ton with a backwardation of US$ 190.50 on June 30, 2008.
Copper hit a seven-week high on strong fundamentals and falling stocks, but analysts expect slow Chinese demand over the third quarter to cap gains. Stocks of copper in LME stand at around 122,000 tons, while copper monitored by the Shanghai Futures Exchange ended the month at 32,000 tons. Chinese copper imports have fallen by 22.3 percent in the first five months of the year to 611,306 tons, according to statistics released by the General Administration of Customs.
Chinese stockpiles have recently decreased with more consumers looking for material in the domestic market instead of overseas, industry sources said. Yet, a rebound in import demand from China can be expected before too long as tight global concentrates market will constrain domestic refined production growth. Currently, prices on the Shanghai Metal Exchange are around US$ 500 a ton below the prices on the London Metal Exchange.
China’s Jiangxi Copper will receive 50 percent of the copper concentrates produced at the Aynak deposit in Afghanistan, which it will jointly develop with China Metallurgical Construction Group Corp. (MCC). Aynak is expected to produce 200,000 tons of copper concentrates at the first stage of the development.

In London, the tin settlement price was US$ 23,310 per ton with a contango of US$ 90 on June 30, 2008. Indonesia has recently issued its nineteenth tin export licence to PT Belitung Industries Sejahtera, according to Bloomberg.
The export licensing system was introduced in February 2007 with licences granted only to companies paying royalties, meeting minimum tin metal quality standards and sourcing concentrates from legitimate mining operations. In the 12 months to end-May 2008, 106,516 tons of refined tin have been checked and approved for export under the scheme. Indonesia’s Timah, the world’s largest tin-producing company, is considering acquiring tin mines in Myanmar and Vietnam in 2008 to boost its reserves, according to the official news agency Antara.
Meanwhile, Timah’s refined tin output was 58,325 tons in 2007. Total tin-in-concentrate production in 2007 was 58,086 tons. Customs data showed that in the first five months of the year, China exported just 386 tons of unwrought refined tin and alloy compared with the 13,606 tons exported in the same period in 2007. China imposed a 10 percent tax on exports of refined tin in January 2008, eroding smelters’ export margins.

In London, the Gold AM fixing was US$ 932.75 per ounce and spot Silver traded at US$ 17.65 per ounce on June 30, 2008.
Coeur d’Alene Mines has announced that its new San Bartolomé mine in Bolivia, the world’s largest pure silver mine, has poured its first silver doré. San Bartolomé is expected to produce six million ounces of silver this year and nine million ounces in 2009, its first full year of production. Vietnam, which is now the world’s largest market for gold bullion (surpassing India and China), ha suspended all gold imports in an effort to reduce the country’s trade deficit.
According to World Gold Council, Vietnam’s first-quarter gold imports were 36.8 tons, up 71 percent from the first quarter 2007. Of that, 31.5 tons were gold bars, up 110 percent over the same period last year.
In Australia, the world’s third largest gold producer, gold production is expected to fall 7.8 percent to 231 tons in the year to June 30, according to the Australian Bureau of agricultural and Economic Resources.

In London, Nickel traded at US$ 21,675 per ton, equivalent to US$ 9,83 per pound on June 30, 2008. Cobalt min. 99.8% traded at US$ 44.00 per pound and Cobalt min. 99.3% at US$ 42.50 per pound on June 20, 2008. BHP Billiton, the world’s third largest producer of nickel, said it would shut its Kalgoorlie nickel smelter for four months for repairs.
The repairs will also force BHP to close the Kwinana nickel refinery for about four months, reducing the company’s nickel sales by about 28,000 tons, cutting world nickel supplies by almost 2 percent. An explosion at a gas processing plant in Western Australia cut local gas supplies by 30 percent and forced other mining groups to cut production targets.
Due to the explosion, Minara, Australia’s second largest nickel miner, said it expected full-year production from its Murrin Murrin nickel mine to be up to 7,000 tons lower than its 38,000 tons forecast. Traders said a sustained recovery in nickel prices remained dependent on improved demand from the stainless steel industry, which accounts for 66 percent of nickel’s en-use.
Sumitomo Metal Mining Co, Japan’s only domestic cobalt producer, plans to increase production of cobalt by around 80 percent to 1,800 tons, early next year to meet growing demand for the rare metal.