Resource World Magazine

INDUSTRIAL METALS Copper is often referred to as the master of the base metals due to its widespread use. Analysts predict that the price of copper, in 2014, will be heavily dependent on supply-side fundamentals. Markets may be oversupplied by about 158,000 tonnes next year if the demand growth rate remains below 4.4%. However, the copper market surplus next year may be smaller than currently forecast due to limited availability of the metal, according to Hamburg-based Aurubis AG, the world's second-biggest producer. Imports of the red metal into China rose 27% in October 2013 amid shortages of scrap copper and restocking. In addition, Typhoon Haiyan damaged a Glencore Xstrata PLC smelter when it recently hit the Philippines. either reaching the end of their lives or struggling to maintain output levels. CPM Group sees tin averaging $21,815/ metric tonne in 2014, while INTL FCStone lists $22,700. BNP Paribas says the metal could top $25,000, while INTL FCStone forecasts a 2014 high of $26,000. Lead forecasts include CPM Group of $2,200/metric tonne; INTL FCStone, $2,250; and BNP Paribas, $2,345. Zinc forecasts include CPM Group, $2,005; BNP Paribas, $2,060; and INTL FCStone, $2,100. Nickel, on the other hand, continues to be in oversupply and Barclays downgraded its nickel price forecast to an average $14,000/ metric tonne. The Iron ore market is poised for at least four years of excess as producers from Rio Tinto to Vale increase supply. According To Goldman Sachs, the surplus will reach 82 "Platinum and palladium markets show the tightest supply and demand among precious metals" According to Bloomberg, stockpiles, monitored by the London Metal Exchange, the Shanghai Futures Exchange and the Comex in New York, have dropped to the lowest level since January at 604,795 tonnes. Bart Melek, head of commodity strategy at TD Securities in Toronto, said that he expects an average copper price of US $7,200/ton in the first quarter and it may trade has high as US $7,525/ton in the first half of 2014. Catherine Virga, director of research with CPM Group, is "positive" on most of the base metals over the next half year, although she feels copper will be flat. Demand prospects are improving for metals, and the CPM Group anticipates growth in global gross domestic product to 3.2% in 2014 from 2.8%. BNP Paribas and INTL FCStone say tin, lead and zinc could be the best-performing base metals next year. There has been little growth in production over the last few years and existing producers are DECEMBER/JANUARY 2014 RW December 2013.indd 7 million tonnes in 2014, the most since 2008, and this glut is expected to keep growing through 2017. Iron ore is anticipated to average US $115/ton in 2014 based on the median of 10 analyst estimates, compiled by Bloomberg. Global Aluminum markets are oversupplied by 1.56 million tons, according to Bloomberg statistics. Aluminum is seen languishing due to large inventories and annual supply/demand surpluses. TUNGSTEN Tungsten (a billion dollar market) is used for carbide parts for cutting, wear-resistant materials, alloys and other applications. The US Geological Survey notes that China dominates world tungsten production and exports. As China's domestic tungsten needs are growing and some of its mines are reaching the end of their lives, it is expected exports will decrease. Roskill Information Services forecasts global demand to increase. Tungsten has the highest melting point of all metals, making it hard to substitute. URANIUM Many analysts expected 2013 to be the turn-around year for the uranium market; however, the price remained in a steady range between US $35 and US $45 per lb for uranium oxide. Rob Chang, a Metals and Mining Analyst for Cantor Fitzgerald Canada, remains bullish on uranium forecasting an average 2014 uranium spot price of US $49.50 per lb. "We believe the uranium spot price is currently below the marginal cost of production and therefore unsustainable, as half the producers around the world are losing money," said Rob Chang in an interview with Streetwise Reports. "What's really going to drive the price higher is utility demand. Most utilities will go back into the market at some point to buy more material." Chang believes this utility buying spree will commence in the first or second quarter of 2014. He also pointed out that most investors primarily look at the spot price, when they should be watching the longterm price instead, reasoning that most significant transactions occur as longterm contracts and the spot market only accounts for a small portion of short-term buying. In November, the Russians made their final shipment of LEU (Low Enriched Uranium) under the megatons to megawatts program – also referred to as the Highly Enriched Uranium (HEU) treaty which commenced in 1994. This program supplied 13% of the world's annual uranium needs. Many investors see this as an important milestone and a catalyst to start looking at uranium. Rob Chang feels that the completion of the HEU treaty has been built into the long term price assumptions already. He believes the start-up of Cameco's highgrade Cigar Lake Mine will fill the gap in supply provided the company can ramp up production quickly. In the wake of the Fukushima disaster, the Japanese government's Nuclear Regulatory Agency has been evaluating applications to turn its reactors back on. Chang expects that 50 reactors (about twothirds of the countries reactors) will be www.resourceworld.com 7 12/11/2013 6:11 PM

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