Market Outlook November 2010 for Geneva

8/6/2019 Market Outlook November 2010 for Geneva

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World Mining and Metal

Sector Outlook

Curtis StewartHead of Economics and Environment

International Lead and Zinc Study Group (ILZSG)

Intergovernmental Forum

1 November 2010, Geneva


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2

The Study Groups

Three independent intergovernmental organisations set up

initially within the UN system:

International Copper Study Group (1992)

22 members

International Nickel Study Group (1990)

15 members

International Lead and Zinc Study Group (1959)

30 members


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The Study Groups

Data Provision Monthly Bulletins of Statistics on Copper, Lead & Zinc and

Nickel

Biannual/annual reporting on mine, smelter an refinery start-

ups, closures, expansions and planned development Reporting on smelting and refining capacity and other plant

details

Publication of data on principal end uses of metals

Studies on trends in downstream metals sectors Interactive data on lead and zinc accessible through internet

Historical data series available on request

Monthly press releases distributed widely

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TRENDS & OUTLOOK

Recovery from Recession

Long term grow in demand driven byAsia

Volatility (dollar weakness, fluctuationsin exploration)

More Recycling


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2009 Production of Metals

Aluminium is LargestProduction by Tonnage

Copper is Highest Value

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6

Lead and Zinc Metal Production Remains

FragmentedShare of world refined metal production, 2009

Source: Brook Hunt/ILZSG

Yuguang Gold & Lead Co

7,5%

Xstrata AG

4,9%

Nyrstar

4,4%

Korea Zinc Group

4,0%

Doe Run3,4%

Industrias Penoles

3,0%

Jiyuan Jinli Lead

2,9%

Glencore

2,7%

Hindustan Zinc

2,6%

Zhongjin Lingnan Metals

2,5%

Other

62,1%

Nyrstar

8,1% Korea Zinc Group

7,2%Hindustan Zinc

5,4%

Xstrata AG

5,0%

Votorantim

4,3%

New Boliden

3,5%

Huludao Zinc Co

2,9%Glencore

2,6%

Teck

2,3%Noranda Income Fund

2,0%

Other

56,7%

Lead Zinc


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Lead Stocks and PricesSep 2004 Sep 2010

Source: ILZSG / LME

0

500

1000

1500

2000

2500

3000

3500

4000

0

50

100

150

200

250

300

350

400

450

500

550

Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10

US$ per tonnemonthly average

'000 tonnes

Stocks Lead LME Cash Settlement Pr ice

Source: ILZSG / LME


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8

World Lead Metal Usage Forecast

Source: ILZSG

ILZSG Forecast

2010 4.5 %

2011 5.8%

Annual Change


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99

Chinese Vehicle Population and Production

1979-2009

0

2000

4000

6000

8000

10000

12000

14000

16000

1979 1984 1989 1994 1999 2004 2009

0

12000

24000

36000

48000

60000

Vehicle Production Vehicle Population

000 units productionpopulation, 000s

Source: NBS/BGRIMM


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Chinas Share in 2001 vs 2011fRefined Lead Usage

2001 2011f

Source: ILZSG


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World Lead Metal Output Forecast

ILZSG Forecast

2010 4.5 %

2011 5.8%

Source: ILZSG

Annual Change


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12

World Lead Metal Output 2010

Production back to pre-crisis levels in Belgium,Germany, Japan, Mexico and the USA

Increases also expected in Canada, China,Poland and Thailand


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0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

0

200

400

600

800

1000

1200

1400

1600

Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10

US $ per tonne

monthly average

'000 tonnes

SRB+SHEFE Producers+Consumers+LME Zinc LME Cash Settlement Price

13

Zinc Stocks and PricesSep 2004 Sep 2010

Source: ILZSG / LME


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World Zinc Metal Usage Forecast

Source: ILZSG

ILZSG Forecast

2010 13.1 %

2011 6.3%

Annual Change


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15

Zinc Demand in Europe 1991-2011f

Source: ILZSG

000 tonnes

25% fall in 2009 to lowest level

since 1963


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Zinc Demand in United States 1991-2011f

Source: ILZSG

000 tonnes

Rise in 2010 will be first

for four years


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1717

Zinc Demand in China 1991-2011f

Source: ILZSG

000 tonnes

Rises of 10.6% in 2010

and 8.8% in 2011


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World Zinc Metal Usage 2010 and 2011

Sizeable recoveries also forecasted in:

Brazil

Japan

Mexico

Taiwan (China)

Further strong growth in India


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1919

Chinas Share in 2001 vs 2011fRefined Zinc Usage

2001 2011f

Source: ILZSG


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20

World Zinc Metal Output 2010

Much of capacity suspended in 2008/9 has

been brought back on stream. Notable

increases in:

Belgium

Brazil

Canada

Japan

Rep. of Korea Netherlands

USA


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World Zinc Metal Output Forecast

Source: ILZSG

ILZSG Forecast

2010 10.9 %

2011 5.6%

Annual Change


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World Primary Nickel

Productionin 1000 tonnes

600

800

1000

1200

1400

1600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f


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Usage (consumption)in 1000 tonnes

600

800

1000

1200

1400

1600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f


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Africa

3%

Europe

33%

Asia

33%America

18%

Oceania

13%

2009

(1346.8)

Oceania

12%

America

23%Asia

18%

Europe

42%

Africa

5%

1999(1023.5)


Production

in 1000 tonnes


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Oceania

0.2%

Asia

61%

Europe

26%

Africa

3%

America

10%

2009

(1241.6)

America

18%

Africa

3%

Europe

39%

Asia40%

Oceania

0.2%

1999

(1081.6)


Usage (consumption)

in 1000 tonnes


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LME prices and stocks

0

15000

30000

45000

60000

75000

90000

105000

120000

135000

150000

165000

180000

J FMAMJ JA SONDJ FMAMJ JA SOND J FMAMJ JA SONDJ FMAMJ JA SONDJ FMAMJ JA SONDJ FMAMJ JA SONDJ FMAMJ JA SONDJ FMAMJ JA S

2003 2004 2005 2006 2007 2008 2009 2010

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

55000

60000

Stocks (tonnes)

Prices (Cash, US$/tonne)

tonnes US$/tonne


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27

COPPER OUTLOOKCOPPER OUTLOOK

World copper mine production is expected to increase by

7% in 2010 to nearly 16.8 million tonnes and is forecast to

increase another 3% in 2011.

Refined copper production is expected to increase by 0.7%and 3.1% in 2010 and 2011, respectively.

Although world copper usage is expected to decrease by

1.4% this year, the rate of growth is forecast to rebound to

5.1% in 2011.

As a result, the refined surplus is expected to grow by over

380,000 tonnes in 2010 but is forecast to contract by nearly

335,000 tonnes in 2011 to less than 245,000 tonnes.


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ICSG World Copper Forecast

REGIONS

(1000 t) 2009 2010 2011 2009 2010 2011 2009 2010 2011

Africa 1,076 1,345 1,598 672 929 1,142 306 338 389

N.America 1,933 2,012 2,257 1,758 1,792 1,887 2,048 2,156 2,235

Latin America 7,036 7,438 7,561 3,937 4,039 4,136 505 560 592

Asean-10 1,180 1,215 989 544 568 615 687 734 770

Asia ex Asean/CIS 1,504 1,544 1,589 7,055 7,558 8,035 10,546 9,855 10,401

Asia-CIS 501 524 525 458 460 501 105 105 106

EU-27 729 802 836 2,511 2,656 2,715 3,096 3,224 3,349

Europe Others 774 803 826 995 1,017 1,036 775 822 861

Oceania 1,021 1,122 1,119 445 447 478 130 142 148

TOTAL 15,754 16,805 17,301 18,377 19,467 20,545 18,198 17,937 18,851

Adjustment for Primary Feed Shortage 1/ -37 -261

Allowance for Disruptions 2/ -915 -1,189

World 15,754 16,805 17,301 18,377 18,515 19,094 18,198 17,937 18,851

% change 1 .46% 6.67% 2.95 % 0.85% 0.75% 3.13% 0.79% -1.44% 5.10%

Refined Production - Usage Balance 179 578 243

1/ based on a formula for the difference between the projected copper availability in concentrates and the projected use in primary refined production

2/ Based on capacity utilisation of mines and refineries

FORECAST TO 2011

MINE PRODUCTION REFINED PRODUCTION COPPER USAGE


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ICSG World Copper forecast

WORLD COPPER BALANCE

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

2003 2004 2005 2006 2007 2008 2009 2010 2011

'000MT

-1,000

-800

-600

-400

-200

0

200

400

600

'000MT

Balance (after ajustments) World Refined Production (adjusted) World Usage


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Exploration Budgets for the Top Ten Countries

Source: Metals Economics Group


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Recycling and Urban Mining

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Physically-Backed ETFs JPMorgan and other companies plan physically-

backed copper ETFs which would invest in physicalcopper to be stored in warehouses around the globe

In Europe, there are plans for funds that physically

hold copper, aluminum, zinc, nickel, lead and tin, aswell as a basket of all six major base metals

Physically-backed funds holding industrial metalscould reduce inventories available to industrial usersof the commodities adding upward pressure to prices

The percentage of global stocks held as investmentscould soar

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World Mining and Metal

Sector Outlook

Curtis StewartHead of Economics and Environment

International Lead and Zinc Study Group (ILZSG)

1 November 2010, Geneva

Market Outlook November 2010 for Geneva

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