Confidence builds with hopes of a sustained recovery in the global economy fuelled by news that the eurozone’s recession may be coming to a close. In August the S&P and oil rose to their highest levels within the last 10 months.
Investors have been caught slightly off guard as the usual relationship between US equities, government bonds and commodity prices seem to splinter. Base metals have been the clear beneficiaries of an improved risk appetite as they move higher.
The commodities market has rallies after receiving better than expected economic data. Nevertheless investors seem to have one overarching fixation as they look to the east at a possible “Bull in a China shop” effect.
Could Chinas volatile stock market trigger a global correction that may eat up much of the stock gains since March? This is a change from the typically sluggish August with thin trading volumes. Leading to a strange and exciting summer as base metal prices seem to rollercoaster pulling back early in the month just to smash through some of its highest levels.
The upbeat housing data to come out of the US and optimistic comments from world key central bankers encouraged investors towards the end of August to buy riskier assets and powering world stocks to a 10-month high.
Mid August aluminium rose 4% at $2,065 a tonne; copper added 3.6% at $6,410 at tonne after hitting $6,450; lead gained 4.3% at $1,925 a tonne; nickel went up 4.9% at $20,605 a tonne after touching $21,225; tin lagged behind a bit rising 1.7% to $15,100 a tonne; zinc rose 3.2% to $1,910 a tonne after reaching $1,945.
Some metals finding support from increasing Chinese imports, due to the government stimulus package that has prompted many infrastructure projects to go fast track to completion. Transamine has secured a strategic partnership with Citadel acquiring approximately 5% of Citadel on a fully diluted basis and obtaining a five year offtake agreement for 50,000 dry metric tons per annum of copper concentrates from the Jabal Sayid copper project.

In London, the Lead cash settlement price rose by 9% to US$ 2118 per tonne while the Zinc cash settlement price rose by 0.5% to US$ 1820 per tonne on August 28, 2009.
Zinc Mines are performing well the industry post a strong Q2 in production results. A higher average price helped raise industry profitability and the continued rally during last month has lifted it further and made idled mines economic again. Projections for Western mine output have been raised from 1,761,000t to 1,823,000 for Q2. In contrast Western lead mine productions have fallen 11,000t short of previous expectation. This is partially due to a disruptive severe wet season earlier this year and output did not recover as much as it was initially thought to.
A decision will be made next month regarding Nyrstar’s Balen production plant in Belgium as they considers reopening their idled operations, which have been on care and maintenance since November and produced around 284,000 tonnes of zinc last year. This comes in light as the company announced a 97% plunge in profits for H1.
Amid the global economic crisis, China has been actively buying foreign resources, investing in hard assets and commodities to fuel their economy. Most zinc related acquisitions have been focused on Canadian and Australian miners, where it is estimated Chinese companies have spent US$ 2.9 billion in purchasing these assets, that together produced 1.43MT of zinc concentrates last year.
However the spotlight is on China’s lead poisoning as it pushed the price above $2,000 per ton in the LME with news of production suspension. The recent crack down on lead smelters in China could have an effect on zinc operations, if the authorities decide to shut zinc smelting for similar safety checks later this year.

In London, the Copper settlement price rose by more than 8% to US$ 6490.50 a tonne with a contango of US$ 9.5 on August 28, 2009.
Copper has three main reasons to jump. The trifecta effect of lower US dollar, rising equities and oil, and positive news from the housing market raised the copper price 5.1% Friday the 21st of August on the Comex division of the New York Mercantile Exchange. Copper for September delivery settled at $2.8805 a pound on the Comex, up from $2.7415 the previous day, while three-month copper ended second-ring trade on the London Metal Exchange at $6,160 per tonne, up just 0.6 percent from $6,122 Thursday.
Three-month copper prices have been volatile in the first half of the year on the LME, rising as high as $6,400 per tonne last week, but also trading down to lows of $3,085 in January. Copper prices on the London Metal Exchange are expected to trade between $5,500 and $7,000 per tonne in the second half of this year amid continued volatility in the market.
Metorex and Central African Mining & Exploration Co (Camec) has cut daily output to 130 tonnes on it copper and cobalt project near Lubumbashi in Katanga province as it is only receiving a third of its usual electricity supplies.
In Peru Doe Run files with INDECOPI for protection on account of their huge debts (USD 120 million to suppliers, and USD420 million for common debts).
Xstrata has been approached about selling all or part of its 70% stake in the El Morro greenfield copper project in Chile, thought to be worth about $700 million, the remaining 30% are held by its project partner New Gold.
In Chile Codelco has submitted an environmental request for a $220-million project, which aims to produce 30,000 tpy of copper fines during 20 years in San Antonio in the Valparaíso region .
Transamine acquires approximately 5% of Citadel on a fully diluted basis and secures a five year offtake agreement for 50,000 dry metric tons per annum of copper concentrates from Jabal Sayid copper project.

In London, the tin settlement price slightly declined to US$ 14,400 per tonne with a backwardation of US$ 300 on August 28, 2009.
At the very start of this month the tin price rose above £15,100 per tonne on a three month basis finally settling at $15,075/80. This is the highest price since mid June, when opening at $14,400 per tonne and trading as high as $15,150 per tonne, and complete reversal from the end of June where the price collapsed to $13,500 per tonne. The sudden flaring of the spreads, widening to a backwardation of as much as $600/650 per ton though then narrowing to $335 per ton, and the volatility in tin prices stirs concerns among market participants.
The International Tin Research Institute (ITRI) announced the opening of their office in China as part of its long-term objective to improve communications with the industry.
At mid month the Indonesian tin consortium, Bangka Timah Sejahtera (BBTS), was expecting a 20-30% increase in its monthly production of 2,000 tonnes during the Muslim fasting season, since workers tend to work extra hours to finance a trip for the Hari Raya holiday.
However the Indonesian Police crackdown, at the end of this month, on illegal tin mining has cut supplies forcing seven smaller smelters in the Bangka-Belitung islands to shut temporarily due.

In London, the Gold AM fixing was traded at US$ 950.75 per ounce and spot Silver rose by around 2% to US$ 14.54 per ounce, on August 28, 2009.
Towards the end of the month precious gold inches up to trade around $950 per ounce lifted by strong oil prices and a weaker US dollar. Typically robust oil prices boost the price of gold, which has fanned worries of an inflation hedge.
In India the price of gold has risen over the past four years as invertors opted for gold and divested rupees. The high price could mean that for India, the number one gold buying country, less gold jewelry will be purchased.
Silver has been enjoying a rare moment of industrial and investor demand, as the economic recovery boosts industrial demand and wary investors keep buying silver as a economical proxy for gold. This combination has propelled spot silver prices to $15 per troy ounce in London, up nearly 33% since January. Analysts warn that the silver sweet spot might not last too long.
Slightly tarnished but maintaining most of its luster Fresnillio, the largest producer of primary silver, beat expectations in the first half of the year by reporting a decline in sales and profits that was less than the drop in silver price over the same period.

In London, Nickel rose by 5.5% to US$ 19,595 per tonne, with a backwardation of $40, on August 28, 2009. Cobalt min. 99.8% traded at US$ 19.50 per pound and Cobalt min. 99.3% at US$ 18.00 per pound on August 28, 2009.
The prices for Cobalt are poised to see modest further gains in September, after a steady rise this summer, due to increased buying from battery producers and tightness in high-grade metal. Since mid August low-grade cobalt has been trading at $17.50-18.50 per lb and high-grade cobalt has been trading at $18.80-20.20 per lb. This is a clear increase from the start of June, where low-grade cobalt has been trading at $17.50-18.50 per lb and high-grade cobalt has been trading at $18.80-20.20 per lb. Following the continuous gains through the European summer cobalt prices are expected to still rise between $1 and $2 per lb by the end of September. In spite of the Bullish forecasts from most of the trade consumers seem to remain cautious.
High-grade Cobalt has also taken support from the early August declaration of force majeure at Vale Inco’s nickel-cobalt operations from Sudbury and Voisey's Bay in Newfoundland Canada. Where workers have gone on strike and according to the United Steelworkers (USW) union, it may be four to five months before both sides return to the negotiating table.
BHP Billiton’s nickel-cobalt toll refining deal with Xstrata at the Nikkelverk refinery in Norway is set to end this year. This would represent BHP’s withdrawal from the market following the sale of its Yabulu refinery, which produces between 1,500 and 1,800 tpy of cobalt, to Clive Palmer earlier this year.
In Singapore ABCOM has taken over nonferrous operations in Tata Steel, aiming to strengthen its position in the stainless steel scrap and super-alloys industry.
Canadian company First Nickel is confident it can secure financing in the fall for development work at its Lockerby Mine in the next few months. The Lockerby Mine in Ontario's Sudbury Basin was placed on care and maintenance in October last year, just before nickel prices on the London Metal Exchange sank below $10,000 a tonne . Since then the nickel prices have recovered strongly, topping $20,000 a tonne earlier this month.