Phoenix Global Mining Share Discussion Threads

[pecker1] 08/1/2007 19:05

Ash,

Thanks. I'm beginning to think that we might see a bit of Russian natural resource mercantilism here, with a delay on abolishing the quota leading to a spike in palladium prices as speculators start calculating just how much palladium is left in Zurich. Wishful thinking perhaps but I'm very glad I'm loaded up with PLAA.

[mr ashley james] 08/1/2007 18:48

Gold sell off may have been overdone and hides better prospects for base metals
By: Lawrence Williams
Posted: '08-JAN-07 08:00' GMT © Mineweb 1997-2006



LONDON (Mineweb.com) --Friday's gold sell off when the metal's spot price fell by nearly $24 an ounce from its daily high of around $626 in reaction to better than expected US labour figures, which in turn boosted the value of the dollar on the forex market, may have been overdone. That at least seems to have been the reaction of the market in the Far East when trading resumed after the weekend. However the tenor of trading remained cautious waiting for the opening of the London market.

Friday's sell-off was put down to a number of factors, but seems to have been triggered by the new job figures in the US which showed the creation of 167,000 new positions in December – well above the 100,000 anticipated by the market. A subsequent fall in the gold price seems to have triggered stop loss selling by funds, which pushed the price down quite dramatically. Other precious metals platinum, palladium and silver, all followed the gold price down – and here again some recovery has been seen in early trading Monday.

The fall in the gold price also seems to have triggered an increase in purchases from the jewellery sector taking advantage of what they see as a 'good price.'

Even so, traders feel that precious metals prices may struggle to get back to their early December levels, although they view downside as limited.

Gold's recent increase up to just short of $650 at the beginning of December had largely been seen as being based on dollar weakness, in turn as a result of the perception that U.S. economic growth was in a decline. Should the latest US new job figures mean that this decline is less severe than many analysts had been predicting, then the correlating fall in base metals prices seen recently, particularly of copper, may also prove to have been more severe than warranted. If the US economy is heading for a soft landing, then any decline's impact on the world economy, and on Chinese output in particular may also be less than anticipated. That has to be positive for the general sentiment on base metals and particularly for nickel, zinc, lead and tin, which are all seen to be in short supply.

Mineweb always carries details of at least 20 independently written top mining, mining finance, metals and mining sector analysis articles on its homepage as well as a fast news feed to keep you right up to date with what is going on in the mining and metals sectors worldwide. These are continuously updated through the day. Click here to go to Mineweb's home page and access the latest news and comments on developments in mining and metals worldwide.

[pecker1] 08/1/2007 18:35

Ash,

The Mineweb item you posted seems well-informed and is particularly interesting as it implies Norilisk will meet orders from its Swiss stockpile, whose size is a Russian state secret. Customs data will tell us what goes out - I wonder if old data would tell us what went in in the first place.

Know any gnomes? Can't help feeling the size of this stockpile will determine whether palladium reaches the prices and timescales you are projecting.

[mr ashley james] 08/1/2007 02:12

Platinum Group Metals

Norilsk Nickel platinum group metal exports halted by Kremlin deliberate procrastination
By: John Helmer
Posted: '06-JAN-07 19:00' GMT © Mineweb 1997-2006



MOSCOW (Mineweb.com) --The London bullion market was busy cutting platinum $16 per ounce, and palladium $2 per ounce, in Friday trading, in lockstep downwards with gold -- apparently oblivious of a serious supply disruption in Moscow.

Starting from January 1, Norilsk Nickel, the single largest exporter of palladium in the world, is unable to obtain the government export quotas it requires to ship abroad platinum, palladium, or rhodium. The only source of Russian palladium that may reach the market for the time being is the metal which the state stockpile agency Gokhran has been holding for years now in a bank vault in Zurich.

Norilsk Nickel spokesman, Viktor Borodin, acknowledged there has been a delay in export quotas for platinum group metals (PGMs). He told Mineweb this has happened before, with delays that have in the past stretched for five months or longer. The "company will fulfill its obligations to traders and customers,"he noted, without explaining how timely delivery can be effected. There is no predicting when exports may resume, Borodin added.

What has happened to delay Russian PGM exports is easier explained than mended, because the quotas are linked to the slowness with which the United States, then a handful of other states, have tried to slow down Russia's accession to the World Trade Organization (WTO).

Several months ago, President Vladimir Putin received the text of a draft decree abolishing the traditional Russian mechanism for annual export quotas on PGM and diamonds. The gold trade was deregulated several years ago, but the government hung on to the restrictions for PGM and diamonds, because they gave leverage, and more, to state officials who supervised the process; and because Russia's trade negotiators wanted to use an offer to abolish the quotas as a bargaining card in the WTO negotiations.

It was for the latter reason, more than the former, that there has been a delay in Putin's signing the decree. In parallel, and anticipating problems with the WTO, Norilsk Nickel says it filed its annual application for an export quota for the year 2007 back in October. That has been approved at the Finance Ministry, but not by the Prime Ministry, which has been taking its cue from the Kremlin.

In the first half of 2006, Norilsk Nickel reports that it sold 1.5 million oz of palladium, almost all to export markets, for $559 million. The physical volume was down 1%, compared to H1 2005, but the revenues were up 37% year on year. Platinum volume in the same period was 336,000 oz and sold for $474 million -- volume was up 34%, revenues 26%, compared to the year before.

Rhodium production and sales data are not released by the company. Reporting the market consensus, Rob Edwards of Renaissance Capital estimates Norilsk's annual production of rhodium at 115,000 oz'; at current rhodium price highs in the marketplace, company revenues from rhodium may exceed the totals for palladium and platinum. Altogether, PGM sales account for about a third of Norilsk Nickel's revenues.

Delaying these sales for weeks or months will not matter to the revenue bottom-line for Norilsk Nickel if deliveries eventually catch up, and in the meantime prices rise on speculation of a lengthy period of disequilibrium between demand and supply. Upward pressure on the platinum and rhodium highs will be problematic for physical speculators, because there is no telling when a Putin signature will put an end to the delay.

Russian negotiators for accession to the WTO have already agreed to abolish the trade restriction on gems and precious metals, and in 2004 formulation of the presidential decree dismantling the old quota system started at the Ministry of Finance, headed by Alexei Kudrin. Kudrin is a safe pair of hands for a bureaucrat, but his knees turn to water when he passes through the Kremlin gate. He has not been able to persuade the president's advisors to move ahead of WTO accession with the quota abolition decree.

When resistance to Russia's joining the trade body by some WTO member states, led by the US, delayed agreement on accession, the presidential staff pigeon-holed Kudrin's draft decree. The Bush administration finally agreed to accession a few weeks ago, but there remain other, mostly procedural obstacles to completing the accession process. A source at the Ministry of Economic Development and Trade confirmed it has approved the abolition of the quotas. Lower-level government officials are hopeful the hold up at the Kremlin will end with Putin's signature during January -- unless further delays materialize in the WTO process.

A new spokesman at the Finance Ministry, Andrei Saiko, claimed the draft decree has been accepted in the Kremlin, but he could not say when the signature will be attached. He referred the question to Gokhran, which is an agency subordinate to Finance, but with a mind of its own. Olga Medunova told Mineweb she hasn't heard anything about the fate of the decree.

Gokhran remains the last relic of the Soviet system of PGM control, and it jealously and secretly guards its prerogatives. The size of the palladium stockpile in Switzerland remains a Russian state secret, even if Swiss bankers know the number precisely, and Swiss Customs publish regular bulletins when the palladium is sold out of the vault, and is exported from Switzerland to the US, Japan, or other destinations.

Even more secretive is another Finance Ministry agency in Moscow called Almazjuvelirexport (Almaz for short). It used to house the trading brains of the Soviet Union's PGM sales department; one man, Sergei Gorny, a deputy chief of Almaz, was the powerful figure in charge of releasing the metal -- Norilks's annual production, other mined platinum, and stockpiled PGM -- on to the market. For a time in 2002 and 2003, Gorny had hopes of obliging Norilsk Nickel to work with Almaz in a joint venture for marketing PGM in international markets. But the joint venture didn't suit the two oligarchs, Vladimir Potanin and Mikhail Prokhorov, who think of Norilsk Nickel's sales revenues as iintimately connected to their own pockets. Putin understood as much, and they were never powerful enough to persuade the Kremlin to privatize Almaz's US subsidiary and allow them to buy it.

Gorny hung on to his restricted sales function, but he has been slowly slipping on the deregulation banana-skin ever since, kept upright only by the intransigence of the US in the WTO negotiations.

Almaz retains its power to trade state stockpiled PGM on behalf of Gokhran, and if the export delay continues, Almaz might tempt the market into bidding higher for the Zurich stocks. Almaz is not talkative about its intentions. The last time Gorny spoke to Mineweb was in July 2003, when he claimed the joint venture with Norilsk Nickel "is still in the process of establishment. It doesn't carry out any operations yet." Asked to comment on whether there had been a change in government policy regarding coordination of sales of PGM between the government and Norilsk Nickel, Gorny replied that coordination is going on "in a working order". Both remarks were obfuscation.

When Almaz was recently asked to say what it planned to do about the delay in abolishing PGM quotas and the parallel delay in issuing export quotas, an Almaz official, who refused to give his name, referred the question to ""the person you need [who is] currently away, and he may not appear today and tomorrow." Asked to identify him by name, the source said he "does not know him." Asked how it is possible to know his movements, but not his name, the source claimed "our company is a big one". That's wishful thinking -- if and when Putin signs the abolition decree, Almaz is likely to shrink to the vanishing-point.

[mr ashley james] 08/1/2007 02:04

The Sunday Times January 07, 2007


Metals tipped to shine in 2007
Commodities have soared for five years, but you may have to tread more carefully in 2007. Philip Scott offers some advice


COMMODITIES shone bright in 2006, posting their fifth year of gains, and many analysts expect the bull run to continue as demand from emerging economies, such as China, drives prices higher. But investors will need to be more picky about which commodities they back.
Zinc took the top spot among the metals in 2006, with a gain of 137%, followed by copper at 83% and nickel up 65%, according to Barclays Capital, the investment bank.



Agricultural commodities also posted strong gains as scorching summer temperatures and growing demand for biofuels pushed prices higher. Orange juice finished the year at a 10-year high, corn soared more than 80% and soybean commodities were up 140% Funds investing in companies that mine commodities, such as Rio Tinto and BHP Billiton, have also boomed. The average investment trust in the sector has surged 33% over 12 months and 380% over five years.

After this strong run, some advisers say investors should not expect such a good year in 2007. The global economy is expected to slow, led by the US, meaning demand for some commodities is likely to drop.

Copper, one of last year's star performers, has already had a tricky start to the year. It fell below $6,000 a tonne for the first time in nine months last week, and is down 10% since January 1.

Oil also fell sharply, with prices in London and New York dropping below $56 a barrel for the first time since 2005.

But even if the next 12 months are not as spectacular as 2006, many analysts think double-digit returns are still on the cards. Kevin Norrish at Barclays Capital said: "We expect 2007 to be another strong one for commodity prices. Nevertheless, overall percentage gains are unlikely to match those made in 2006."

Barclays Capital expects zinc and nickel to post the biggest price gains. Stocks of both metals are low, so demand is likely to outstrip supply.

Other strategists predict some of the less well-known commodities will be winners in 2007. Ian Henderson at JP Morgan Asset Management favours platinum. Although its price has already shot up, doubling in the past five years to about $1,130 an ounce, he expects excellent returns.

Platinum is used in catalytic converters, which are fitted to all new cars across the developed world to reduce toxic emissions. US legislation, which came into force on January 1, means they will be installed in all new trucks in America as well.

Leading platinum producers listed on the London stock market include Lonmin and Aquarius Platinum.

Uranium, needed for nuclear power, is also hotly tipped. As with most commodities, China will be one of the main sources of demand. It has nine nuclear reactors, and another six will soon be up and running.

Some of the agricultural commodities, or softs, are also expected to have a good year. Corn is in high demand because of its use in the production of ethanol, an alternative fuel. In Brazil half of all cars run on ethanol.

The British government wants 5% of all fuel sales to be biofuels by 2010 - a twentyfold increase on today's levels.

Cotton is also being tipped because China is importing large amounts for its burgeoning textile industry.

The commodity market is not for the faint-hearted. It should account for only a small portion of your portfolio - about 5% - because the risks are high.

The easiest way to get exposure to the market is through a fund. Mark Dampier of Hargreaves Lansdown, an adviser, recommends First State Global Resources, JP Morgan Natural Resources and the Blackrock Merrill Lynch Gold & General fund. Commodity investment trusts include Merrill Lynch Commodities and Merrill Lynch World Mining.

Exchange-traded funds can give you exposure to individual commodities. Etfsecurities.com offers a number of commodity-based products including corn, cotton, nickel and zinc funds. There is no platinum-based ETF, but there are rumours one is about to be launched. The best way to tap into uranium is to buy Urasia Energy, listed in London.

[pecker1] 08/11/2006 08:52

Despite the title, this article by Frank Veneroso has a section on palladium (pages 16-19) which is exceedingly bearish because of supposedly huge stockpiles. Who is right? Ashley, any comments welcome.

[trade 0utta here] 06/11/2006 06:56

LOL
Thanks for your reply.
I have started building a position and will watch the thread and chart

Pd and Gold have had a good start this morning ;~))

[trade 0utta here] 06/11/2006 06:16

Morning AJ
Any views on Palladium?
WHat's that latest - all the fundamentals still adding up.
I see JPL has dipped on losses, but still funded and still exploring
[I know you always preferred Canadian companies]

[Abuse team] 05/10/2006 03:19

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[Abuse team] 05/10/2006 03:18

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[Abuse team] 25/9/2006 03:45

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[energyi] 30/8/2006 04:59


POEM - by Semaj Yelhsa :
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[Abuse team] 30/8/2006 01:54

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[trade 0utta here] 29/8/2006 23:41

Thanks AJ
What are your views on Pd right now?
Are we going down to 320 50 DMA or will 330 hold on 14 DMA?
Or are there other supports out there?
TIA your thoughts greatly appreciated - currently long £180/$ movement

[Nat Gas is more hairy for me right now with £24k/$ movement (mostly in sub $6) will consider reducing this position!!]

[mr ashley james] 24/8/2006 03:31

TOH, yes Long Term positions not adding ex Palladium at Moment.

Looking for Beartooth Platinum Limited TSX:BTP Exploration Results to show me way Stillwater Mining Inc NYSE:SWC Half Year were a disaster.

You can not deal with incompetant management never forget that.

All IMHO, NAG, DYOR etc

Cheers

Ash:)

[trade 0utta here] 23/8/2006 23:15

Where is the new PGM thread!!??

AJ - anyone still in PGMs.....

[mr ashley james] 19/7/2006 19:04

GSands,,

Look at Stillwater Mining Company NYSE:SWC Go up 8.00%!

[mr ashley james] 13/7/2006 19:18

Palladium, Inverted Head and Shoulders breach of neckline heralds a US$19.50 move North to US$352 by the look of things.