Darren – Weekly Market Report 51 (Period from 13 September 2023 to 19 September 2023)

14/9

- Vedanta Resources has appointed South African mining veteran Chris Griffith to run its base
metals unit, including its recently regained Zambian copper mines. Griffith stepped down as
chief executive of Gold Fields in December, after a short stint at the Johannesburg-based
gold producer, following an unsuccessful bid to buy Canadian Yamana Gold.
- Chile’s Finance Minister Marcel said Chile is continuing to see strong demand for its top
export Copper despite the slowdown in the Chinese economy, which is the nation’s biggest
trading partner. “we are seeing very strong demand for copper that comes from more
structural changes all over the world, toward electro-mobility," Marcel said," In terms of
pricing, things look much better than usually at times when larger economies are
contracting. When asked whether Chile would one day have to choose between china and
Western nations in terms of where it sells raw materials like lithium and copper, Marcel said
his country doesn't "usually pick sides "
- Copper stockpiles immediately available to withdraw from the world’s top metals bourse hit
the highest in almost two years, adding to evidence of flagging demand. On-warrant copper
inventory held by the London Metal Exchange rose on Wednesday by 5.7% to the highest
since September 2021, according to bourse data. That’s a sharp turnaround from just three
months ago when stocks fell to the lowest in almost two years. Copper bulls have been
disappointed by the metal this year after predicting a rally driven by a revival in Chinese
demand, consumption by green technology and tight supply. Instead, prices are close to
little changed year-on-year, after giving up earlier gains.

15/9

- Codelco is ending long-term contracts to sell copper concentrate to Chinese clients from
2025, bidding to broaden its product offering to them after evaluating its production
outlook, five sources with direct knowledge of the matter said. The sources said Codelco is
aiming to replace exclusively copper concentrate deals with others that include concentrate
and value-added intermediate products such as blister and anode which are derived from
concentrate and can be turned into copper metal or cathode.
- Copper prices rose on Friday and were on track for their biggest weekly growth since late
July after data from top metals consumer China showed signs of a stabilising economy.
Three-month copper on the London Metal Exchange (LME) was up 0.1% at $8,425 per metric
ton in open-outcry trading after touching its highest since Sept. 4 at $8,507.50. China's
factory output and retail sales grew at a faster pace in August, though tumbling investment
in the crisis-hit property sector threatens to undercut a flurry of support measures.
- The annual contracting season for aluminium supplies got off to a slow start at a key industry
conference this week, in a sign of mounting concern from manufacturers about the outlook
for demand. The Fastmarkets aluminium conference, which took place in Barcelona this
week, traditionally kicks off the annual ritual of negotiating supply contracts for the
following calendar year. It’s still early in the process — and the bulk of the deals typically
come later in the year — but buyers tend to conclude at least some initial deals during the
event, or agree on volumes to buy while the discussions over price are ongoing. This year,
however, six different producers, traders and end buyers of commodity grade aluminium
said that they had booked very few, if any, deals. A bearish mood about the outlook for next
 year weighed on discussions, the people said, asking not to be identified discussing private
information.

17/9

- For recyclers of nickel and stainless steel, global market fundamentals continue to pose
challenges. Excess nickel supply, China’s sputtering economy, diminished stainless steel
demand in the West, and lack of confidence in exchange trading continue to weigh on
sentiment. Nickel prices remained under pressure late in the third quarter with nickel
futures at the London Metal Exchange trading around US$ 20 000 per tonne in early
September, down more than one-third from the beginning of the year as nickel stocks in
LME warehouses hovered around 37 000 tonnes. Softer economic indicators in China, along
with rising nickel output in Indonesia, have been major sources of concern. Macquarie
reports that ‘the impact of Indonesia on the global nickel markets is overwhelming, with
exports of nickel in the second quarter hitting the 450 000 tonne mark, equal to 53% of
global supply’. Indonesian nickel production in all forms is reportedly surging 40% higher this
year, prompting the International Nickel Study Group to estimate global nickel supply will
exceed demand by more than 200 000 tonnes in 2023.

18/9

- South Africa’s largest wildlife reserve and some local businesses are opposing a new plan by
a private company to build and operate a trucks-only border crossing aimed at speeding up
mineral exports through neighbouring Mozambique. Kruger National Park officials are
worried that the logistics hub could harm the biodiversity of the wildlife bloc, a
spokesperson was citing by Bloomberg on September 14 as saying.
- Goldman Sachs Group Inc. cut its price targets for aluminium for this year and next on weak
ex-China demand. Outlook for 2023 reduced to $2,300/ton vs $2,431 previously, and
$2,500/ton for 2024 vs $3,000The bank’s 3/6/12 month targets are $2,300/ton, $2,400,
$2,600. NOTE: Metal traded at $2,217/ton on LME on Tuesday; YTD average of ~$2,312
Global deficit seen 634kt this year vs 997kt projected in June; that reflects 1.1m ton deficit in
China vs 450kt surplus ex-China The main adjustment for the supply-demand balance has
come from a sustained downgrade to ex-China demand expectations

19/9

- The Philippine government will step up support for the local mining industry via exploration
activities starting next year to identify more areas where critical minerals such as nickel and
chromium can be extracted, a senior official said on Tuesday. The government-led
exploration, which should help minimise risks for investors and provide necessary data for
investment decisions, is the latest government measure to revitalise the Southeast Asian
country’s still vastly undeveloped mining sector. The Philippines, one of the main nickel ore
suppliers to top metals consumer China and which also produces copper, gold and other
minerals, is seeking to attract more investment in mining to support economic growth. The
government has removed restrictive mining policies, including a ban on open-pit mining, and
is working to draw investment into its domestic nickel processing sector to squeeze value
out of its metals and minerals industry.
- Refined Copper demand rose 6.3% in the first half of 2023, according to Bloomberg
Intelligence. That’s a fair clip, albeit from a low base after the constraints imposed by the
pandemic. Much of the growth has come from clean energy and appliances like air-
conditioners, which are increasingly necessary as the summers get hotter. But the outlook
for the second half is less promising. Demand growth could fade to 3.9% as China’s solar
expansion slows and households scale back on purchases, said Ji Xianfei, an analyst with
Guotai Junan Futures Co. More aggressive stimulus from Beijing could change the equation,
but over the longer term it’s likely that China’s economy will be consigned to a phase of
slower growth, said Eric Liu, head of trading at ASK Resources Ltd. There aren’t any engines
to replace the property sector and renewable energy still isn’t big enough to make a
dramatic difference, he said. For the first seven months of a year, Chinese base metals
smelters and processors recorded their worst cumulative drop in profitability in over a
decade, according to the National Bureau of Statistics. Hai at Henan Yuxing said fees for his
firm have fallen from previous years even as the company has managed to increase sales by
launching new products to expand its customer base. The problem, according to Guotai
Junan’s Ji, is that customers are tightening their belts and seeking out less expensive options.
So even as demand ticks along, prices are kept low and margins are held down
LME Copper warehouse stocks grew by 6200mt over the week to 149600mt. The forward curve
grew greater in contango, reaching a high of 59.7c. LME continues to see large deliveries of
warrants. Volatility was moderate this week, with no major trends and metals trading within their
expected ranges. Copper’s Settlement price volatility at 0.83%

 Price
 Warehouse stock
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Options:

Copper notable options trade data

Oct23 : call volume of 120 lots vs put volume of 1720 lots
Nov23 : call volume of 850 lots vs put volume of 1100 lots

- Oct23 $8300 put traded 870 lots

- Nov23 $8000 put traded 850 lots
- Nov23 $8400 put traded 250 lots
- Nov23 $9000 call traded 400 lots

IV and Premiums for Copper options remain similar to last week with slight increase in trade volume.
Technicals (Copper):

Past week expectations and results (06 Sep – 12 Sep):

We see Copper being tested on the downside this week, with a multiple candles closing below the
$8301 support. This area of $8100-$8300 has been an area of buying in the last few months, it
represents a level where buying is relatively strong, as participants would consider it “cheap”. The
reversal back above $8301 this round also strengthens this. The major spike on 11/09 was due to
chinese stimulus and good credit data.

This week analysis and expectations (13 Sep – 19 Sep):

Copper experiencing sideway trading for the week until 15 Sep. However as Monday came around,
with the cash pricing for Sep prompt, we start seeing a big sell off pushing prices below the $8301
level. Historically at the 3rd Wednesday LME prompt, we can expect increased volatility as traders
typically place positions at the monthly prompts. News over the week are starting to be bearish for
Copper, though I still believe the $8300 and at least the $8100 level to hold for the short term.
Technicals (Aluminium):

Past week expectations and results (06 Sep – 12 Sep):

Going through a period of low volatility, prices have traded in a tight range of of $40. Fundamentally
there has been little news regarding aluminium this week, and even the chinese stimulus news on
slightly moved prices. Low volatility is continued to be expected.

This week analysis and expectations (13 Sep – 19 Sep):

Aluminium experiencing increased volatility this week as well as we approach the September
prompt. It seems fairly clear this week as well that the market is undecided on where Copper should
go.
Technicals (Nickel):

Past week expectations and results (06 Sep – 12 Sep):

The large growth in Nickel production from both indonesia and China is seeing some impact. As
supply starts to hit the market, we can see that prices have been weak the last few months. Even the
Chinese stimulus news did not impact the prices. There are also news highlithing new battery
technologies that will not require Nickel, or use much lower quantities. Nickel is expected to
continue a slow downward trend. Expecting prices to hit $18500 around year end.

This week analysis and expectations (13 Sep – 19 Sep)

Nickel pushing a new low seen in August of $19758. Prices remain bearish for nickel, and the market
seems adamanat on testing new lows. $19197 is the lowest support level, which was last hit in Jul
2022.