January 23, 2018, 11:55 pm
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Metals mixed; lead up as frigid weather persists

SYDNEY- Chinese base metals were mixed in early trade on Wednesday, as the most active copper contract slipped, while lead gained the sharpest as parts of the United States braced for more frigid weather.

The peak demand period for lead, which is largely used to make batteries, is during winters when the freezing weather causes battery failures.

Commodities traders said mixed signals were also emerging over the extent of China’s demand for imported industrial metals in 2018, which was dampening activity among some local investors.

Optimism about Chinese demand was boosted overnight by an unexpected December rise in manufacturing and a pick up in new orders. But higher prices for raw materials and firms cutting staff have fuelled concerns about growth.

However, Goldman Sachs said it sees more risks to the upside than the downside for metals demand in China, playing down concerns of a sharp decline from policy changes. 

- Chinese coking coal futures extended gains on Wednesday as steel mills accelerated restocking of the raw material on concerns that snows forecast for northern regions could disrupt transportation.

Coking coal futures on the Dalian Commodity Exchange rose as much as 3 percent to 1,372 yuan ($210.90) a ton in early trading.

“The snowy weather is expected to hit more northern regions, which would interrupt the transportation of coal and promote mills to increase buying ahead of bad weather,” said a trader in Shanxi.

Some coke producers in Shanxi province, China’s top coke producing region, have been ordered to raise production to increase coke oven gas that can be turned into liquefied natural gas, also boosting appetite for coking coal.

Among other steel making raw materials, iron ore edged up 0.7 percent to 543.5 yuan and coke rose 1.4 percent to 2,033.5 yuan a ton.

The most active rebar on the Shanghai Futures Exchange inched up 0.6 percent to 3,866 yuan a ton, but seasonal weakness is expected to weigh on prices.

“Physical market remains soft and transactions are tepid. Prices are expected to weaken further,” said a futures broker in Shanghai.

Iron ore for delivery to China’s Qingdao port rose $2.10 to $74.71 a ton on Tuesday from Dec.29, according to Metal Bulletin.

Meanwhile, India’s top iron ore state is likely to produce 100 million tons of ore in the 2017/18 fiscal year, in line with its target, despite authorities ordering the closure of some mines, a senior government official told Reuters on Tuesday.

The eastern state of Odisha suspended operations of seven mines after leaseholders failed to meet a deadline on Dec. 31, fixed by India’s Supreme Court, for paying penalties for illegally extracting ore between 2000 and 2011.

The Odisha state accounted for more than half of India’s total 192 million tons of iron ore produced in the fiscal year to March 2017.

Between April and December, the state generated 78 million tons of iron ore, including 14.57 million tons produced by the seven mines that have now been shut down, Deepak Kumar Mohanty, Odisha’s mining director, told Reuters.

“Even if these mines are closed, there is scope to reach to 100 million tons because other operational mines can enhance production,” Mohanty said.

The mines that were forced to close down include those operated by state-owned Industrial Development Corporation Of Odisha Ltd.

After finding 131 miners guilty of violating environmental and other guidelines, India’s Supreme Court last year levied penalties on them.

But the state government of Odisha has so far recovered only 82.49 billion rupees ($1.3 billion) as against 190 billion rupees of combined penalties.

Some miners had petitioned the Supreme Court to extend the deadline, but the court rejected this. – Reuters
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