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Monthly Archives: April 2011

Copper Inventories in Shanghai Decline Most in 10 Months

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Copper Inventories in Shanghai Decline Most in 10 Months

By Glenys Sim – Apr 29, 2011

Copper stockpiles in Shanghai fell by the most in 10 months to the lowest level since December, the Shanghai Futures Exchange said in a report on its website.

Inventories dropped 7.8 percent, declining for a sixth week, to 128,268 tons, based on a survey of 10 warehouses in Shanghai, the exchange said today. That’s the lowest level since the week to Dec. 23, according to exchange data. The tonnage decline of 10,808 tons was the largest drop since the week to June 24.

Stockpiles of aluminum fell for a seventh week to the lowest level since the week to March 4, 2010. Inventories decreased by 10,103 tons to 382,966 tons, based on a survey of 20 warehouses in Shanghai, Guangdong, Jiangsu and Zhejiang, the exchange said.

Zinc stockpiles gained for a 12th week, climbing 5,003 tons to a record 394,631 tons, based on a survey of 15 warehouses in Shanghai, Guangdong and Zhejiang, the bourse said. Lead inventories increased 2,089 tons to 34,995 tons.

Natural-rubber inventories fell for a 12th week, dropping 1,775 tons to 12,942 tons, based on a survey of 10 warehouses in Shanghai, Shandong, Yunnan, Hainan and Tianjin, the exchange said.

To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

Copper Is King

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Copper Is King

Gold prices are up, but another metal connects the world—and reveals our economic future.

by Niall Ferguson

A Chinese worker hoists coils of copper tubes at a copper products plant in Nantong, China.

Copperfinger doesn’t have the same ring as Goldfinger. Nor would you be very impressed by a man with a copper gun.

Copper isn’t glamorous. Unlike gold, it is not likely to be recommended as an investment by Glenn Beck. Yet, before and after the financial crisis, copper has been one of the world economy’s star performers.

Sure, you were smart if you bought gold at the bottom of the financial crisis, back in February 2009. With gold touching a record $1,500 an ounce last week, you’re up 75 percent. But if you’d bought copper, you’d be up 181 percent.

Today the world’s copper mines are booming. I spent several hours last Tuesday sweltering nearly a mile underground at the huge Konkola mine near Chin-go-la in Zambia. It’s a powerful symbol of the new economic world order. The miners are Zambians. The technical guys are (white) South Africans. The owners and managers are Indians.

Like most Zambian mines, this particular one was not viable with prices below $2,000 a ton, as they were between 1997 and 2003. But with copper up to about $9,400, it makes sense to sink new shafts to reach the deepest ore, even though it means dealing with prodigious amounts of underground water.

Here, where the mighty mechanical drill bores into the wall of the most recently blasted stretch of tunnel, is the sharp end of the world economy. When you switch on the light, it’s copper wire that conducts the electricity to the bulb. Chances are the hot water that came out of your shower this morning arrived there through a copper pipe. From the corrosion-resistant copper carbonate that makes the Statue of Liberty green to the circuit board in your computer, the brown metal is as practical as the yellow metal is precious.

So just why has copper been trumping gold as an investment? The answer is partly that the extraordinarily loose monetary policies adopted by Western governments to combat the financial crisis have driven up the prices of nearly all commodities.

But the key to the copper story is soaring Asian demand. Asians want modern houses with Western-style wiring and plumbing. They want cars. They want electronic gadgetry. So they want copper. In 2005 China accounted for 22 percent of global copper consumption. In 2009 the figure was 39 percent. Try as they may, the copper miners can’t keep pace. And the supply of copper in the world isn’t limitless. Indeed, if the rest of the world were to consume at just half the American per capita rate (1,386 pounds a year), we’d exhaust all known copper reserves within just 38 years.

Asians were shocked by the price spike of 2004–08, which saw copper prices quadruple; hence their recent rush to invest in copper mines. The big question now is whether this new scramble for Africa is worsening the disease it was supposed to cure. Rampant Asian demand has once again driven up prices. Higher commodity prices are feeding into higher consumer prices. Inflation in China hit 5.4 percent last month. That makes the authorities nervous. The last thing they want is the kind of popular unrest that was sparked by higher prices in North Africa.

All over the world, central banks are applying the brakes. The European central bank has already raised rates. The Fed seems intent on ending quantitative easing in June. The People’s Bank of China, meanwhile, has not only raised rates but also increased reserve requirements for banks. Remember, this comes as fiscal policy is also being tightened in the developed world—even, belatedly, in the United States. Remember, too, that higher commodity prices act as a tax on consumers in importing countries. Higher prices plus lower growth equals stagflation.

So far these changes have had little impact. But brace yourself. To my eyes, global monetary and fiscal tightening is a clear sell signal for commodities. That could take the shine off copper—and send a blast of cold air down the ventilation shafts of Zambia’s mines.

Freeport bullish on outlook, pushing hard to boost production

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Freeport bullish on outlook, pushing hard to boost production
 
 
By: Liezel Hill
21st April 2011  

 

TORONTO (miningweekly.com) – Freeport-McMoRan Copper & Gold is still “aggressively” looking to increase production from its operations, to take advantage of what CEO Richard Adkerson said is a “very positive” outlook for copper.

Speaking on a conference call on Wednesday, Adkerson said the company will consider acquisition opportunities and closely monitor the activites of other industry players, but that the focus is heavily on developing its own projects.

“We are positioned so that if an attractive acquisition came to us, we are financially and technically available and prepared to take advantage of it,” he said.

“(But) we don't expect it, it's not part of our strategy, and if it did come to us it would have to be an extraordinary opportunity.”

Shares in Freeport, which is the biggest publicly traded copper miner, rose three percent on Wednesday, after the company said that first quarter sales were higher than forecast and raised its guidance for the full year. The firm also announced it would pay a supplemental dividend.

Freeport cut back sharply on production – especially at higher-cost mines in the US – when demand and prices fell in late 2008, and Adkerson was reluctant to bring production back on line last year until he was certain that demand growth was sustainable.

But the Phoenix, Arizona-based company is now pushing hard to ramp up production, and also has a long list of projects being implemented, planned or considered.

In North America, Freeport has restarted its Morenci mine and is achieving targeted throughputs. The company is looking at increasing the mining rate further and is also studying a mill expansion to increase production.

Restarts at both the Miami and Chino mines are also on schedule, Adkerson said.

In Chile, the firm started production in the first quarter from the new sulphides project at its El Abra mine, and continues to study milling capacity expansions at the operation.

Still in South America, the company will complete a feasibility study by mid-year on a large-scale concentrator expansion at the Cerro Verde mine in Peru, followed by the filing of an environmental impact assessment in the second half.

Freeport has been saying for some time that it is looking at either doubling or tripling capacity at Cerro Verde, and Adkerson indicated on Wednesday the company is now focused on  a project that would triple mill throughput to 360 000 t/d.

“This will be one of the world's largest concentrator operations at this level of expansion,” he said.

The company also continues to invest in its big Grasberg operation in Indonesia.

Overall, capital spending this year is forecast at $2,5-billion in 2011 and $2,1-billion for 2012, although the numbers may be revised upwards as the company approves new projects.

“We expect our capital spending beyond 2011 will increase above our previous guidance as we get board approval for the Cerro Verde expansion and other projects," Adkerson said.

The company has yet to approve the start-up of its Climax molybdenum project, although construction is continuing and will likely be completed in early 2012.

Freeport is one of the biggest producers of molybdenum, which is used to strengthen steel in steel pipes and drills and other extreme high- or low-temperature applications, and to prevent corrosion.

TENKE

At the Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo (DRC), Freeport is “actively” studying an expansion that would add about 150-million pounds a year of copper over the next couple of years, and engineering and exploration work aimed at further, larger expansions is also ongoing.

The company has already added mining equipment to take advantage of the fact that the mill, which was designed at 8 000 t/d, is operating well above that at close to 11 000 t/d.

“We'll have further opportunities for the available oxide ore. And we are looking at alternatives for processing the very large amounts of mixed ore and what appears to be a really large sulphide resource there, to provide us the long-term opportunities,” Adkerson said.

Earlier this week, DRC President Joseph Kabila formalised a new contract agreement for Tenke Fungurume, in which Freeport now owns 56%, partner Lundin Mining holds 24% and DRC government-owned Gecames owns the other 20%.

One of the options being considered for Tenke is the construction of a cobalt refinery, Adkerson said on Wednesday.

If it went ahead, the project could cost in the ballpark of $150-million to $200-million, he estimated.
 

Edited by: Creamer Media Reporter

Copper Prices Rise as Freeport Halts Operations at Grasberg Mine

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Copper Prices Rise as Freeport Halts Operations at Grasberg Mine

By Yi Tian and Agnieszka Troszkiewicz – Apr 19, 2011

Copper rose, halting the longest slump since June, after Freeport-McMoRan Copper & Gold Inc. said it suspended operations at a mine in Indonesia.

Subsurface activity was stopped at the Grasberg mine after an “industrial accident” killed one worker and left another missing, said Freeport, the world’s biggest publicly traded producer. U.S. builders broke ground on 549,000 homes at an annual pace in March, more than analysts forecast. Copper has gained 21 percent in the past year.

“The market is in a long-term uptrend” because global mine output is failing to keep pace with demand, said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis.

Copper futures for July delivery rose 3.1 cents, or 0.7 percent, to close at $4.2485 a pound at 1:23 p.m. on the Comex in New York.

Before today, prices fell for six sessions, dropping 6.3 percent, partly on concern that demand will slow as China, the world’s biggest consumer, tightens credit to fight inflation.

The metal gained today after a report signaled that manufacturing remains robust in China.

“Any sort of worries over what impact the Japanese earthquake might have had on activity in China have been put aside now,” said Christin Tuxen, an analyst at Danske Bank A/S in Copenhagen.

On the London Metal Exchange, copper for three-month delivery climbed $115, or 1.2 percent, to $9,340 a metric ton ($4.24 a pound.)

Lead, zinc, aluminum and tin also rose in London. Nickel fell.

To contact the reporters on this story: Yi Tian in New York at ytian8@bloomberg.net; Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Copper falls as dollar, China move dent sentiment

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Copper falls as dollar, China move dent sentiment

Mon Apr 18, 2011 11:30am GMT
 

By Rebekah Curtis

LONDON (Reuters) - Copper fell on Monday, on track for its sixth straight session of losses, after equities dropped, the dollar rose and top world metals consumer China raised banks' required reserves.

Copper for three-months delivery on the London Metal Exchange traded at $9,364.75 a tonne at 1116 GMT, from a close of $9,405 a tonne on Friday.

China raised banks' reserve requirements on Sunday for the fourth time this year, extending the fight against excessive liquidity and stubbornly high inflation there.

"Any tightening from China is bad," Danske Bank analyst Christin Tuxen said. "That's not something that base metals like very much."

So far this year Chinese demand has been soft and investors, unnerved by rising copper inventories in Asia, have worried that the tighter monetary policy could further hurt Chinese demand.

But Chinese stocks rose to a five-month high as many investors had factored in the much anticipated measure.

Some analysts said the monetary tightening also sent a positive signal as it showed the world's second-largest economy had its growth under control.

"It does seem that they're managing to pull down growth a little bit but not dramatically, which is the ideal scenario," Daniel Smith, an analyst at Standard Chartered, said of China.

The dollar strengthened against a basket of major currencies, softening metals demand from non-U.S. investors.

Also keeping sentiment in check, European equities fell as the crisis in the euro zone continued to dampen risk appetite.

COPPER STOCKS

Stocks of copper in LME warehouses last rose 1,350 tonnes to 451,775 tonnes, their highest since June 2010. The majority of these inflows went into warehouses in Asia, supporting investors' concerns that Chinese demand is lacklustre.

"People are still talking a lot about the high inventories in China for copper," Standard Chartered's Smith said.

Aluminium traded at $2,675.50 from $2,690 a tonne.

Zinc was at $2,385.75 from $2,398 a tonne. Stocks of the metal rose 50 tonnes to a seven-year high of 764,300 tonnes.

Battery material lead was at $2,628 a tonne from $2,651 a tonne, tin traded at $32,950 from $33,100 a tonne and nickel

was at $26,174 a tonne from $26,155.

Investors also looked out for euro zone consumer confidence for April, due at 1400 GMT.

 

Copper Falls for Fifth Day as Chinese Production Sets Record

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Copper Falls for Fifth Day as Chinese Production Sets Record
By Agnieszka Troszkiewicz and Yi Tian – Apr 15, 2011

Copper fell for a fifth day in New York after Chinese production of the metal climbed to a record amid concern the government will tighten credit, slowing growth and curbing commodity demand.

Refined output in China, the world’s biggest consumer, rose 24 percent from a year earlier to 470,000 metric tons in March, the statistics bureau said. That’s a monthly record, according to Minmetals Starfutures Co. The country’s economy expanded by a more-than forecast 9.7 percent in the first quarter, and inflation accelerated in March to the fastest pace since 2008, adding pressure for more monetary tightening.

“Record copper output in China” weighed on sentiment, John Meyer, an analyst at Fairfax IS in London, said today in a report. The economic data “demonstrates China’s continuing drive for growth, and that measures to slow inflation have not yet had severe impact.”

Copper futures for July delivery slid 2.25 cents, or 0.5 percent, to $4.281 a pound at 11:13 a.m. on the Comex in New York. A close at that price would leave the contract down 5.3 percent for the week.

On the London Metal Exchange, copper for three-month delivery dropped $22.50, or 0.2 percent, to $9,387.50 a ton ($4.26 a pound).

Inventories tracked by the LME increased 1.4 percent this week, the ninth gain in 10 weeks. Stockpiles are up 29 percent from the 2010 low on Dec. 10. Nissan Motor Co., Japan’s second- largest carmaker, may delay reopening an engine plant damaged by the March 11 earthquake after several aftershocks.

“The market had a substantial selloff this week” amid rising LME supplies and a slowdown in the Japanese auto industry, said Rich Ilczyszyn, a senior strategist at Lind- Waldock, a broker in Chicago. “We need a catalyst for copper to take off.”

Also in London, aluminum, lead, nickel and tin gained. Zinc was little changed.

To contact the reporters on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net Yi Tian in New York at ytian8@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Copper Falls a Fourth Day in London Trade After China Report: LME Preview

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Copper Falls a Fourth Day in London Trade After China Report: LME Preview

By Glenys Sim – Apr 14, 2011

Copper in London may drop for a fourth day, the longest period of declines since January, on concern that China may step up its credit-tightening measures to cool asset prices.

Three-month-delivery copper on the London Metal Exchange was little changed at $9,500 a metric ton at 2:31 p.m. Singapore time, after falling as much as 0.6 percent earlier. The contract dropped to $9,443 a ton yesterday, the lowest in a week. Zinc, lead and tin gained.

“Higher prices hinge on China’s demand, which is unclear at the moment,” said Yang Zhenqiang, an analyst at First Futures Co. “We do see physical buyers emerge every time there’s a decline, so that’s keeping the market supported.”

July-delivery copper on the Comex in New York gained 0.4 percent to $4.3315 a pound. The metal for June-delivery on the Shanghai Futures Exchange dropped for a third day, declining as much as 1.8 percent to 70,880 yuan ($10,848) a ton.

China is likely to raise banks’ reserve requirement ratios in the “near future,” the China Securities Journal said in a front-page commentary today. China has increased the ratio three times this year as part of efforts to curb inflation. The government is scheduled to release March inflation and first- quarter economic growth data tomorrow.

Analysts’ Forecasts

The leaders of Brazil, Russia, India, China and South Africa, meeting in China, said rising commodities prices pose a threat to global growth, according to a draft copy of the communiqué given to Bloomberg News. Copper’s 30-day historical volatility, a measure of how much the metal fluctuates, was at 26 percent today, the highest level since April 1.

Goldman Sachs Group Inc. lowered its year-end copper forecast 11 percent on concern that weak Chinese demand and the earthquake in Japan will delay an expected reduction in exchange stockpiles. Copper may reach $9,800 a ton by the end of this year, down from a previous forecast of $11,000, analysts Joshua Crumb and Allison Nathan said in an April 12 report.

“The global copper market will show a small deficit this year, even if Chinese demand does not grow at all,” Bank of America Merrill Lynch strategist Michael Widmer wrote in a report yesterday. “Reduced copper offtake from China will, however, have a knock-on impact on 2012: if the country’s demand increases by less than 2.5 percent in 2011, there is scope for an oversupplied market next year.”

Zinc in London gained 0.8 percent to $2,440 a ton, lead climbed 0.6 percent to $2,695 a ton, nickel increased 0.2 percent to $26,300 a ton and tin advanced 1.2 percent to $32,644 a ton. Aluminum was little changed at $2,664 a ton.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

 

Copper falls as Japan crisis hits sentiment

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Copper falls as Japan crisis hits sentiment

 Copper fell on Tuesday as Japan's worsening nuclear crisis and aftershocks hit market confidence and weakened prospects for economic recovery and metals demand growth in the world's third-largest economy.

Three-month copper on the London Metal Exchange fell about 1 percent and was at $9,775.75 a tonne by 0946 GMT from $9,855 at the close on Monday, extending losses from the previous session.

The economic damage from Japan's massive earthquake and tsunami last month is likely to be worse than first thought as power shortages curtail factory output and disrupt supply chains, the country's economics minister warned on Tuesday.

A second major aftershock rocked northeast Japan on Tuesday, swaying buildings in central Tokyo, shortly after the government upgraded its nuclear crisis to that on par with Chernobyl in 1986.

"The market was in a bit of a fragile mood after news of aftershocks in Japan," said Credit Agricole analyst Robin Bhar.

"You can't start reconstruction if there are ongoing aftershocks. It just feeds the uncertainty in the market," Bhar said.

Triggering some selling, long-term commodity bull Goldman Sachs on Monday advised its clients to take profits as there is a strong chance that oil and other commodity prices may reverse.

"I think (Goldman's advice) did have some impact. It may not be the major factor but it helped," said Bahr.

Soaring oil prices and inflation in emerging economies pose new risks to global recovery but are not yet strong enough to derail it, the International Monetary Fund said on Monday.

RISING ALUMINIUM COSTS

Higher inventories of copper on the London Metals Exchange also weighed on the red metal, raising concerns on spot demand from top consumer China.

Inventories have been increasing since mid-December and lately rose by 1,000 to 446,700 tonnes, the highest level since July 1, the latest data showed.

Inventories of aluminium fell 2,275 tonnes to 4,575,250 tonnes lately but still remained close to a record high 4,640,750 tonnes hit on Jan. 20 last year.

Nonetheless, soaring power costs, lucrative bank deals that keep metal away from the market and strong demand growth are likely to boost aluminium prices this year.

"Despite recent increases in aluminium prices stimulated by cost push support, we remain bullish as aluminium stays well below its 2008 premium over marginal cost levels," said Metal Bulletin Research analyst Kamil Wlazly.

"Having said that, we remain cautious about the impact of widespread inflationary pressures in emerging economies and high oil prices which could dampen global demand for industrial metals."

China is considering plans to either scrap or reduce export tax rebates on some aluminium extrusion products, the China Securities Journal reported.

This comes after China decided to halt plans to build new aluminium plants to tackle serious overcapacity in the industry.

"China is trying to keep inflation stable and keep the metal inside the country. It will definitely have some impact," Wlazly said, adding the while domestic prices are likely to stabilise or even soften, lower Chinese exports may support international prices.

Aluminium was at $2,682.87 from $2,689.

Tin was at $32,940 from a last bid at $33,290 on Monday while zinc, used in galvanising was at $2,513 from $2,545.

Lead, used in batteries, was at $2,820 from $2,855 and nickel was at $27,450 from $27,705.

 

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