The Weekly Dig - Nov 24, 2017

by Mick Carew, PhD,, Emma Boggio, MSC, CPA and CA, and The Haywood Mining Team

The Weekly Dig - Base Metal Investors Give Thanks as Copper and Nickel Rally


Precious Metals: Precious metals struggled this week as gold, silver, and platinum all recorded losses. Gold, although nearly recovering from early week losses, finished the week down 0.31% at US$1,288. Silver, however, didn’t have quite as strong of a comeback as it finished down 1.58% at US$17.04. Platinum, also exceeding a 1% weekly decline, finished at US$942. Meanwhile, palladium gained some ground as it finished Friday afternoon at US$999, and recorded a 0.24% increase week over week.

Base Metals: The base metals were all up week over week. LME nickel had the strongest week, up 4.0% WoW, with copper and zinc up 3.5% and 1.5% WoW, respectively. The price improvement in copper was driven by increased demand from China, as physical premia in the spot market continue to rise. In addition, Codelco announced that it has raised its offer for contractual supply in 2018. These events led to a run on inventories this week, as Asian stockpiles were down 20% WoW. LME copper stockpiles were down 14% WoW, marking the greatest WoW decline since 2005. Global refined zinc stocks are now below the critical 10-day pinch point, at 9 days of consumption (-51% YTD), with few signs of new supply, as Chinese domestic mined supply tightens as a result of continued environmental inspections. Unionized workers at BHP’s Escondida copper mine held a 24-hour strike on Thursday to protest recent layoffs which impacted ~3% of the mine’s workforce. Earlier this year, the Escondida mine, which produces ~5% of the world’s total copper output, was impacted by a 43-day strike. Southern Copper’s Peruvian operations (Cuajone and Toquepala) were also impacted by their third labour dispute this year, as one of the operations’ five unions began an indefinite strike on November 21 over profit-sharing. Among the base metals equities this week, the top performers were Atalaya Mining (up 9.5% WoW), First Quantum Minerals (up 7.1% WoW), Teck Resources (up 6.2% WoW) and Hudbay Minerals (up 5.7% WoW), primarily driven by the improvement in base metals prices. Imperial Metals lagged the pack, down 8.4% WoW, after being down 6.8% last week following the release of Q3/17 financials which missed consensus estimates.

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