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February 24, 2009 Dear Friend, We estimate world aluminum consumption fell 20.5% in the current March 2009 quarter, similar to world steel output down 24% in January, and in trend with an estimated 16.9% fourth-quarter 2008 consumption decline and 19.4% estimated June 2009 quarterly consumption decline. Odds now favor a fourth-quarter 2009 decline versus the 16.9% drop one year ago. Our aluminum model estimates a drop from 10.0 mmt third-quarter 2008 to 8.1 mmt thrid-quarter 2009 global output, with China dropping from 3.5 to 2.6 mmt and and the rest of the world from 6.45 to 5.5 mmt. Further, we estimate consumption rebounds from 9.14 mmt in the March 2009 to 9.95 mmt in the December 2009 quarter. Otherwise, inventory buildups at 0.4 mmt per month will not abate. Obviously, the outlooks for Alcoa, Century and Aluminum Ltd. are very difficult. Goldcorp enjoyed the third best reserve gain among the eight larger cap gold mines, which collectively only had a 1.1% or 5.5 mm oz gain to a collective 527.53 mm oz from 521.97 mm oz in 2007. The performances ranged from 11.2% at Barrick and 8.4% at Agnico-Eagle to 2% declines at Newmont, Kinross Gold and FCX and a larger drop at Gold Fields Ltd. It is amazing that record exploration outlays, a $150 increase to $725 gold economics, lower energy and weaker production cost currencies overseas did so little to enhance reserve economics. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
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