Stockholm, Sweden — According to the new Q2/2016 report, the operating profit of the Boliden Group, excluding the revaluation of process inventory, fell to SEK 901 million, largely due to lower metal prices. The profit includes items affecting comparability and provisions for reclamation of mines yielding a net positive effect of SEK 122 million. Comprehensive maintenance shutdowns at several smelters negatively impacted the profit to the tune of SEK -210 m.
Smelters’ operating profit, excluding revaluation of process inventory, fell to SEK 397 million as a result of the deterioration in market terms, primarily in the form of lower treatment charge terms, but also in the form of lower metal and sulphuric acid prices. The treatment charges for 2016 achieved their full impact during the quarter. Production levels were generally good, despite extensive maintenance work during the quarter, and the effect on the profit of the maintenance shutdowns totalled SEK -210 m , which was approximately SEK 45 million more than planned and was due to the shutdowns at Harjavalta and Kokkola lasting longer than expected. The quarter on quarter downturn in the profit was mainly due to the maintenance shutdowns, which also accounted for the majority of the increase in costs and the reduction in volumes.
Boliden`s market performance shows the following results:
The average price of zinc in US-$ was up 14 percent, quarter on quarter, but down 12 percent, year on year. The price in SEK was up by 11 percent and down by 15 percent, respectively. The price of zinc has risen in both US-$and SEK by just over 30 percent since the beginning of the year. Global demand for zinc increased by just under 2 percent, year on year, with demand increasing in China, other emerging markets, and in mature economies. Global smelter production has continued to decline, year on year, and is thought to have fallen short of metal demand. European spot market metal premiums have remained stable.
The price of copper in US-$ rose by an average of 1 percent, quarter on quarter, but fell by 22 percent, year on year. The corresponding prices in SEK fell by 2 percent and 24 percent, respectively. Global demand for copper increased by just under 1 percent, year on year. Demand fell overall in mature economies, but increased slightly in Europe, and increased by 2 percent in China. European spot market metal premiums remained stable at the low level established since 2015. Global copper metal production increased by 3 percent, and increased by 13 percent in China. Chinese smelters increased their production from previous low levels due to the increased availability of concentrate.
The average price of nickel in US-$ rose by 4 percent, quarter on quarter, but was 32 percent down, year on year. The corresponding prices in SEK rose by 1 percent and fell by 34 percent, respectively. The price of nickel is low in relation to cost levels in the world’s nickel mines. Global demand for primary nickel increased by just over 4 percent, year on year. Production of nickel pig iron in China continued to fall, year on year. The overall supply of primary nickel fell by just under 3 percent and fell short of demand. The market’s metal stocks declined during the quarter but remain high.
The average price of lead in US-$ fell by 1 percent, quarter on quarter, and by 11 percent, year on year. The corre- sponding prices in SEK fell by 4 percent and 14 percent, respectively. Demand for and production of metal increased, year on year. There was some metal surplus. Global automotive production and demand for batteries for new vehicles continued to increase, but a mild winter resulted in a weaker than normal market for replacement batteries in Europe and the USA during the first half of the year. New vehicle production outperformed the market in China due to higher than normal stocks of lead batteries and lead metal.
Gold & Silver
Gold and silver prices in US-$ rose quarter on quarter by 7 percent and 13 percent, respectively, and by 4 percent and 10 percent, respectively in SEK. The prices in US-$ were 6 percent and 2 percent higher, respectively, in comparison with the second quarter of last year, while in SEK, the price of gold rose by 3 percent and the price of silver remained unchanged. Gold and silver prices have risen by just over 20 percent and just over 30 percent, respectively, in US-$ since the beginning of the year.
Demand for sulphuric acid remained stable in the Nordic region. European contract prices and non-European spot market prices have fallen slightly, quarter on quarter.
Source: Boliden AB