NONFERROUS METALS

GLOBAL MARKET

Aluminum

Starting from January 2001, aluminum prices tend to decrease each month. The most notable reduction was reported in March, when average monthly price plummeted by USD/mt 95 as compared to February 2001. In the fourth month of 2001, aluminum prices averaged USD/mt 1,497.26, which is USD/mt 12 down from March 2001’ figure. Fluctuation range of aluminum prices in April 2001 was USD/mt 1,446-1,554.

LME quotations for aluminum alloys in April 2001 were heading down. Reduction of average quotations in April outran USD/mt 17 as compared to the figure of March. April quotations ranged within USD/mt 1,216-1,255.

The lowest quotations for aluminum were registered at the beginning of April. In the second half of April, aluminum price kept on growing and outran the indicator of USD/mt 1,500; thus, stopping the downward movement, which began in late February-early March. Price recovery, and therefore, demand for the product deflated warnings about high rates of decline in the U.S. economy, which started showing some improvement recently. At the beginning of April, many producers enter supply contracts for summer period, hence, driving prices up. Therefore, price increase is a natural trend at the moment.

Another factor, which positively affected aluminum prices in April, was weakening of U.S. dollar against Euro. This fostered increase in metal purchases in European countries and encouraged market operators concerning increased construction volume in both Europe and the USA.

One more factor to be mentioned is the end of Presidential campaign in the U.S.

However, both aluminum producers and main trading companies should not be very excited. On-going decrease in aluminum consumption holds back development of aluminum market. Even the news of suspended aluminum production at most of enterprises in northwest of the USA, which resulted from problems with energy supply and its tariffs, failed to zoom aluminum prices. State governments of the northwest coast of the USA required the 10 top leading aluminum producers to stop manufacturing for a period up to two years due to power-supply problems in the region. Should this be implemented, aluminum output in the U.S. would curtail by 40%, which equals 5% in global aluminum production.

Strike at India’s Balco enterprises was ignored as well. It may turn out, therefore, that considerable reduction of production facilities in the U.S. will be evened by weak demand for aluminum.

Because of such situation, production forecasts for 2001 are being revised. According to some Western analysts, "visible" metal stocks keep stable presently, whereas demand maintains the level of 2000. In the second half of 2000, aluminum market may recover (due to events in the U.S.), and prices would start heading up.

In January-March 2001, Rotterdam premiums for aluminum originated from the CIS were as follows:

– for A5 aluminum – USD/mt 5-15;

– for А6 aluminum – USD/mt 15-25; and

– for А7 aluminum – USD/mt 23-30.

According to the recent forecast, aluminum prices in 2001 will settle at USD/mt 1,520.

Copper

As compared to March 2001, average copper prices in April diminished by USD/mt 75 to reach USD/mt 1,664.16, whereas March price equaled USD/mt 1,738.77. Prices for copper in the third month of 2001 fluctuated within USD/mt 1,632-1,693.

One of the main technical factors that influenced copper prices in April 2001 was announcement by Phelps Dodge Company about changing of production techniques at its Arizona-based mine and reducing of staff by 500 men. Besides, the company informed about an 80 ths. tpy reduction in copper output, which somewhat discouraged key market players, who expected production to go down by 100-200 ths. tons. Still, the event had its effect on the market.

Copper market remains significantly influenced by decline in the U.S. economy, as well as by worsened economic situation in SEA, and particularly in South Korea.

Further on, situation on copper market will greatly depend on the reduction of export of copper and alloys (including electrical products, household appliances, etc) from countries of SEA to the USA because of downturn in the U.S. economy.

No surprisingly with increased copper stock in warehouses and weakening demand, talks are about dark prospects on copper market, at least, for the short-term. At this, American economists estimate that during summer months, construction business should reveal some upturn, although interest rates will remain low. Besides, inflation rate is also expected to keep low, and interest rate will maintain downward movement, which will bring some recovery to the U.S. economy, and in turn, will have auspicious effect on copper market.

Attention of main market players was also focused on the market for copper concentrate. According to experts, global demand for copper concs is likely to grow from 3.7 mln. tons in 2000 up to 4.4 mln. tons in 2003. Supply of copper concs on the market should also head up to 4.2 mln. tons by 2003, which will foster relative balance on the market. Dynamics of copper concs market will mostly depend on dynamics of production facilities in the USA and Europe.

Table 1. LME quotations for aluminum in 1999-2001 (January-April), USD/MT

* Hereinafter, prices of future contracts are given with delivery in 3 months.

Table 2. Average LME prices for aluminum in 1995-2001 (January-April), USD/MT

Table 3. Average LME prices for А380.1 aluminum alloy in 1995-2001 (January-April), USD/MT

Table 4. LME quotations of aluminum alloy А380.1 in 1999-2001 (January-April), USD/MT

Table 5. Dynamics of LME prices for aluminum in 1999-2001 (January-April), USD/MT

Table 6. Dynamics of LME prices for aluminum alloy А380.1 in 1999-2001 (January-April), USD/MT

Table 7. LME quotations for copper in 1999-2001 (January-April), USD/MT

Table 8. Dynamics of LME prices for copper in 1999-2001 (January-April), USD/MT

Table 9. Average LME prices for copper in 1995-2001 (January-April), USD/MT

UKRAINE

Foreign trade

In the first quarter of 2001, export of nonferrous metals and products from the country totaled 130.5 ths. tons worth USD 230.3 mln. As compared to the respective period of 2000, physical supplies dropped by 18.9%, though currency earnings added 34.1%. The respective figures in January-March 2000 made 98.7 ths. tons and USD 230.4 mln.

Shipments of copper and aluminum products in January–March 2001 contributed aggregate 82.4% to nonferrous metal export from Ukraine, the share of currency earnings coming to 72.3%.

Export turnover of copper and aluminum group products in the three opening months of 2001 curtailed by 27.6% in terms of physical supplies, whereas currency earnings revealed a 6.9% upturn.

In the first three months of 2001, export supplies of nickel, lead, zinc, and tin summed to 2.05 ths. tons yielding USD 2.04 mln., which were 1.57% and 0.89% respectively in physical supplies and currency earnings in the period under review. To compare with, the corresponding 2000’ figures made 2.18 ths. tons yielding USD 1.09 mln.

Export indicators of other groups of nonferrous metals, metal-ceramics and articles reported substantial increase in January-March 2001 against the respective period of 2000. Hence, the first quarter of 2001 reported the supplies of 17.2 ths. tons yielding USD 14.2 mln., while in the first three months of 2000, shipments amounted to 7.1 ths. tons only with earnings of USD 9 mln. Growth in the period under review came to 140.6% and 57.8% respectively.

Table 10. Export dynamics of non-ferrous metals and products in 2000-2001 (January-March)

Copper

In the three opening months of 2001, Ukrainian export of copper group products amounted to 28 ths. tons worth USD 47 mln. As compared to the respective 2000’ period, physical exports shrank by 15.5%, while earnings went 44.76% up.

As before, top export articles within copper group were crude ingot copper, refined copper, and copper alloys.

Shipments of crude copper in January-March 2001 amounted to 7.8 ths. tons yielding earnings of USD 13.1 mln. Export supplies of refined copper and copper alloys in the period under review totaled 17.8 ths. tons worth USD 29.8 mln. These articles jointly contributed 91.32% to physical exports and 91.5% to currency earnings from shipments of copper group products.

As compared to the respective period of 2000, growth of export turnover of the mentioned group (refined copper and copper alloys) in the first quarter of 2001 was reported at 49% (physical export) and 154% as currency earnings.

Table 11. Main articles of Ukrainian export of copper and products in 2000-2001 (January-March)

Table 12. Main importers of Ukrainian copper and products in January-March 2001

Aluminum

In January-March 2001, Ukraine exported 79.5 ths. tons of articles from aluminum group worth USD 120 mln. The mentioned figures suggest decline against the respective 2000’ figures by 31.3% and 3.1%.

Physical share of the group within export turnover of ferrous metals in 2000 came to 60.9 %, whereas in terms of earnings, the indicator was smaller – at 52%.

As ever before, primary aluminum and ingot aluminum alloys keep on topping the list of export articles contributing the total of 77.6% to aluminum product shipments from Ukraine. Total exports of the mentioned articles summed to 79.6 ths. tons worth USD 119.7 mln.

Table 13. Main articles of Ukrainian export of aluminum and products in 2000-2001 (January-March).

Table 14. Main importers of Ukrainian aluminum and products in January-March 2001

Description of supplies

The top export articles in Ukrainian shipments of nonferrous metal groups in January-March 2001 were:

- crude aluminum and aluminum alloys – 70.7 ths. tons (54.16% in total export turnover) worth USD 92.9 mln. (40.3%);

- refined copper and copper alloys – 17.8 ths. tons (13.6 %) yielding earnings of USD 29.8 mln. (12.9%).

Vyacheslav POPOV, expert of DerzhZovnishInform