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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/24/2006 : 19:11:28
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Copper slides in London as LME stockpiles jump most in 6 months
Copper dropped for a third straight session in London as stockpiles of the metal used in wires and pipes jumped the most in six months, indicating a supply squeeze may be easing.
Inventory at warehouses monitored by the London Metal Exchange gained 7,750 metric tons, or 6.9 percent, to 120,825 tons, the LME said today in a daily report. Still, stockpiles are equal to less than three days of global demand.
"The physical market is very well-supplied," said Andrew Silver, a trader at London-based Natexis Commodity Markets, one of 11 companies that trade on the LME floor.
Copper for delivery in three months on the LME dropped $95, or 1.3 percent, to $7,450 a ton as of 4:21 p.m. local time. It has declined 2.7 percent in the past three sessions. The three- month contract traded at a record $8,800 a ton May 11.
Copper for delivery in December lost 6.1 cents, or 1.8 percent, to $3.39 a pound on the Comex division of the New York Mercantile Exchange.
Most of today's increases in LME copper stockpiles were recorded in Singapore, where inventory rose by 7,025 tons. Singapore, Asia's trading hub, is the leading point of export to China, the world's largest user of copper, and southeast Asia.
Stockpiles rose even as output at producing companies fell. BHP Billiton Ltd., the world's largest mining company, said today production dropped 19 percent to 249,900 tons in the quarter ended Sept. 30 after workers at the Escondida mine in Chile stopped work for four weeks in August and September. Scheduled maintenance at Olympic Dam in Australia also cut output.
Lead, Aluminium
Maintenance work reduced BHP Billiton's zinc and lead production in Australia, the Melbourne-based company said. Lead output fell 25 percent and zinc 28 percent. BHP Billiton owns the Cannington site in Australia, the world's largest lead mine.
Lower production at Cannington sent lead to a record $1,550 a ton on Oct. 16. Prices gained $8 to $1,520 a ton today.
Aluminium declined after Norsk Hydro ASA, the world's fourth-largest producer last year, said demand will decline in 2007 as economic growth slows.
"The primary aluminium market is expected to move from a moderate deficit in 2006 to a moderate surplus in 2007," the company said in a statement accompanying its third-quarter earnings. "Key economic indicators signal lower global growth in 2007."
OAO Russian Aluminium, creating the world's largest metal producer in a merger OAO Sual Group, said yesterday prices will stay at about $2,300 to $2,600 a ton for "a number of years" as supplies remain tight.
Aluminium fell $16, or 0.6 percent, to $2,689 a ton.
Among other metals on the LME, zinc dropped $15, or 0.4 percent, to $3,905 a ton and tin lost $175, or 1.7 percent, at $10,200. Nickel declined $150, or 0.5 percent, to $32,250 a ton.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/24/2006 : 19:21:18
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BHP September quarter copper output down 19 percent
BHP Billiton has revealed the impact of a month long strike at the Escondida mine in Chile on its copper production.
The company's September quarter copper output fell 250,000 metric tons, down 19 per cent on the same period last year.
Production has also been affected by maintenance at the Olympic Dam site in South Australia and the sale of a mine in Peru.
The mining giant's first production report for its fiscal year showed silver, lead and zinc production fell on problems at Cannington in Australia
Silver production fell 35 percent to 7.349 million ounces in the three months through Sept. 30,
lead fell 25 percent to 48,977 metric tons
and zinc fell 18 percent to 24,011 metric tons.
Alumina production rose 5 percent to 1.078 million metric tons compared with the same period last year and up just one percent from the June quarter.
BHP Billiton has reported record production of aluminium and manganese. Aluminium rose one percent on year to 337,000 metric tons, in a record for continuing operations, excluding Valesul in Brazil. Nickel output rose 1%.
Iron ore production is up 5 per cent on last year, but down 4 per cent on the June quarter.
The company expects to bring its $US1 billion Spence mine in Chile online this quarter, which will add 200,000 tonnes a year to its copper production |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/24/2006 : 19:23:24
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Nickel related news
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Posco increases stainless steel prices as nickel costs surge
Posco, the world's third-largest steelmaker, will increase the price of its stainless steel products for a seventh time this year as prices of nickel, a key raw material, surged.
Posco will raise the price of its 300-series stainless steel hot-rolled coil 6 percent to 3.5 million won ($3,662) a metric ton starting Oct. 25, Ko Min Jin, a spokeswoman at the Pohang, South Korea-based company said today. The steelmaker will increase prices of 300-series stainless steel cold-rolled coil by 5.6 percent to 3.8 million won a ton, Ko said.
Nickel for delivery in three months reached $32,625 a ton on Oct. 20 on the London Metal Exchange, the highest in at least 19 years. Prices of the metal, used as alloy in stainless steel production, has more than doubled this year as inventories monitored by the London Metal Exchange plunged 86 percent.
The 300-series contains the most nickel, varying between 8 percent and 25 percent, and is used typically for food equipment, chemical equipment and architectural applications, according to the Specialty Steel Industry of North America's Web site.
Posco produces about 1.8 to 2 million tons of stainless steel a year, of which about 70 percent is the 300-series. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/25/2006 : 19:25:43
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Zinc up copper , nickel down
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Zinc Advances to Highest Ever in London on Production Shortfall
By Chanyapr0n Chanjaroen
Oct. 25 (Bloomberg) -- Zinc climbed to a record in London on speculation that demand for the metal used to galvanize steel will keep outpacing supply. Lead also rose to its highest ever.
Inventory tracked buy the London Metal Exchange dropped 1.5 percent to 115,650 metric tons, a 15-year low, the LME said in a daily report today. Production will lag behind demand by 420,000 tons this year, according to Societe Generale.
``The market continues to tighten and we don't see it easing until the middle of next year,'' Giles Lloyd, a London- based analyst at consulting company CRU said by phone.
Zinc for delivery in three months on the LME jumped $160, or 2.9 percent, to $4,060 a ton as of 5:30 p.m. London time. It earlier rose as much as $240, or 6.2 percent, to $4,140, beating the previous record set on Oct. 17 by $120.
The dark gray metal has more than doubled in the past year on soaring demand from China, the world's largest consumer. Global use will increase by 3.9 percent to 11.1 million tons this year, and by 2.6 percent to 11.4 million tons in 2007, the International Lead and Zinc Study Group said Oct. 9.
Other metals, including copper, nickel and lead, are also forecast to experience production shortfalls this year.
Michael Lewis, head of commodities research in London at Deutsche Bank AG, Germany's largest bank, said in an interview he's more bullish on lead and zinc, whose stockpiles continue to decline.
Lead was $38 higher at $1,570 a ton. Earlier it jumped to a record $1,590 on the LME, beating the previous high set Oct. 16 by $40.
Copper Drops
LME-monitored lead inventory dropped 5 percent in the past three days to 45,325 tons, the lowest since January 9. Falling production at BHP Billiton's Cannington mine in Australia, the world's largest lead mine, has cut supplies of the metal used in car batteries.
Copper dropped for a fourth straight trading session, losing $10 at $7,485 a ton. Copper for delivery in December on the Comex division of the New York Mercantile Exchange dropped $1.05, or 0.3 percent, to $3.409 a pound.
LME copper stockpiles rose to their highest in more than six weeks, showing a supply shortage may be easing. Inventory jumped 2.9 percent to 124,275 tons, the highest since Sept. 8.
``We're becoming more concerned about copper as stocks are rising, not falling,'' Robin Bhar, a London-based metals analyst at UBS Ltd., said in a daily research note. Bhar has tracked metals since 1984.
The premium between copper for immediate delivery over three-month prices narrowed to $8 yesterday, from more than $20 last week. A decline in the premium, known as a backwardation, usually indicates an easing of constraints on supply.
Nickel Slump
Nickel slumped $400 to $31,800 a ton on the LME.
Nickel inventory tracked by the LME gained for a third straight day, increasing 510 tons, or 9.7 percent, to 5,748 tons. Stockpiles have gained 12 percent this month.
Still, metal bought and due to be shipped from LME-registered warehouses accounted for more than a third of registered inventory.
The U.S. Federal Reserve will probably leave its benchmark interest rate unchanged at 5.25 percent today for a third month, according to all 106 economists surveyed by Bloomberg News. The Fed, which raised borrowing costs for two years through June, will announce its decision at about 2:15 p.m. Washington time.
An easing in borrowing costs usually spurs economic and industrial activity and boosts demand for metals.
Also on the LME, aluminum gained $66 to $2,700 a ton. Tin was unchanged at $10,200. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/25/2006 : 19:30:51
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New Caledonia nickel company smelter running out of ore
New Caledonia's SLN nickel company says after 30 days of strike action its smelter is in an extremely critical situation as ore is in short supply.
SLN, which is majority owned by Eramet of France, says that blockades of mining sites by the CSTNC union have forced the smelter to be run at minimum capacity, with the company now losing just under 1.5 million US dollars a day.
The union has been demanding the removal of Filipino workers from another nickel company, the resignation of the government and lower living costs.
SLN has now accused the union leader, Sylvain Nea, of fraud by getting illegal advances for 123 employees, but he has denied this.
Last attempts at talks between the union and the government were abandoned at the weekend when under the influence of alcohol, Mr Nea publicly insulted local and French politicians.
The ruling party has already taken legal action against Mr Nea for alleged incitement to race hatred following his verbal attacks on Filipinos.
Mr Nea is due in court next week after appealing a three-month jail sentence over his role in illegal activities related to a strike at SLN last year.
New Caledonia has about 25 percent of the world's known nickel resources.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/25/2006 : 19:36:00
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What better way to guarantee a supply of nickel for a stainless steel producer than to own nickel mines?
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Vale completes takeover of Canadian nickel miner Inco
Cia. Vale do Rio Doce completed its takeover of Inco Ltd., the world's second-largest nickel maker, putting the Brazilian company on course to become the top nickel miner by 2009.
Rio de Janeiro-based Vale, the world's largest iron-ore producer, said in an e-mail statement that 75.66 percent of Inco shares were tendered in the offer, for which Vale paid C$15 billion ($13.3 billion). Vale said it's extending the offer until midnight Nov. 3 to acquire the remaining shares. The takeover is the biggest foreign acquisition by a Brazilian company.
"In line with the objective of acquiring 100 percent of Inco's traded shares, Vale intends to take measures to acquire Inco's remaining ordinary shares in the market," the statement said.
The acquisition, part of Chief Executive Officer Roger Agnelli's plan to expand the company beyond its Brazilian borders and into markets other than iron-ore, allows Vale to add new nickel capacity in Brazil, Canada and Indonesia. Nickel is a key element for the production of stainless steel, which is used in a variety of products, from surgical instruments and cutlery to skyscrapers and airplanes. The metal has doubled in price this year and quadrupled since the 1990s.
Agnelli, 47, said acquiring Inco will allow Vale to gain supplies of nickel to deliver alongside iron ore to steelmaking customers such as ThyssenKrupp AG. Inco, which employees 10,000 people, has 19 percent of the world's nickel market. Russia's OAO Norilsk is the No. 1 producer.
Vale on Oct. 13 extended its offer for Inco to Oct. 23 to give regulators in Canada time to review the bid. The offer of C$86 ($75.57) a share for Toronto-based Inco was extended to midnight Toronto time from an earlier Oct. 16 deadline.
Toronto-based
To demonstrate to Canadian regulators that the acquisition would benefit the country, Vale pledged to base its global nickel division, called CVRD Inco, in Toronto. A Canadian chief operating officer will be appointed to head CVRD Inco, along with a senior executive team comprised largely of Canadians, Vale said in a statement on Oct. 19.
The company will have "a mandate to expand its businesses as a global leader in the nickel industry," Agnelli said in that statement.
"CVRD will transfer management responsibility for its interest in existing and future nickel projects to CVRD Inco, including its interest in the Onca Puma and Vermelho projects in Brazil," Vale said in the statement.
The miner, which employees 10,000 people, said there will be no layoffs at Canadian operating facilities for at least three years, "and in any event total employment at such facilities will not fall below 85 percent of current levels."
Vale's takeover brings an end to a nearly yearlong battle for Canada's nickel assets after 104-year-old Inco proposed to acquire Falconbridge Ltd. on Oct. 11.
Falconbridge shareholders instead accepted an all-cash bid from Anglo-Swiss miner Xstrata Plc in July, rejecting a three- way deal with Inco and Phelps Dodge Corp that would have created a $40 billion metals giant. Vale won the battle for Inco after Vancouver-based Teck Cominco Ltd. and Phelps withdrew their competing offers.
Vale's more liquid preferred shares rose 4 centavos, or 0.9 percent, to close at 44.50 reais yesterday while the benchmark Bovespa index rose 583.94, or 1.5 percent, to 39,226.76. Inco's shares closed at C$85.87 yesterday.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/25/2006 : 19:37:53
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Philippine 1H nickel output more than doubles
Philippine nickel output more than doubled in the first half as companies including the local unit of Japan's Sumitomo Metal Mining Co. rehabilitated mines and boosted output to take advantage of rising prices.
Production of export-grade nickel ore rose from 597,002 tons to 1.36 million metric tons in the January-to-June period from a year earlier, according to an e-mailed report from government's minerals economics office. Output of nickel concentrates surged from 1,692 dry tons to 6,247 tons, the four- page report said.
Hinatuan Mining Corp. and Taganito Mining Corp., both partly owned by Japan's Pacific Motors Co., accounted for 83 percent of total production of export-grade ore, while Sumitomo Mining's Coral Bay Nickel Corp. and other local companies produced the rest, the report said.
Overseas companies are rehabilitating mines in the Philippines to gain access to metals to feed growing demand, especially from China, the world's fastest growing major economy. Their drive comes as the Philippine government is attempting to attract overseas investments to spur development of its mineral reserves, which it says are worth $1 trillion.
Nickel prices have risen to their highest level since in at least 19 years this year amid soaring demand and disruptions to supply. Three-month nickel futures on the London Metal Exchange settled at $32,200 a metric ton yesterday, and have more than doubled in the past year. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/25/2006 : 20:11:45
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NICKEL – Prices are too high says nickel expert
The volatility in world nickel prices should be considered extreme but there should be no reason to lament when it returns to more normal levels, according to one of Australia’s most experienced nickel and resources commentators.
Addressing the 2006 Paydirt Australian Nickel Conference in Perth last week, Brian Hurley said no-one had been able to predict the current nickel prices of around US$35,000 a ton.
Mr. Hurley - the Chairman of Australia’s leading mining talkfest, Diggers and Dealers held in Kalgoorlie each year in August - told the conference that never in his 38 years in the sector, apart from one hiccup in the late 1960s – had there been such a tremendous year to be in nickel as 2006.
“At this time last year, the London Metal Exchange (LME) price was US$13,000 a ton and there was a definite downward trend and the price bottomed out at around US$11,500 – but has since shot up into the stratosphere,” Brian Hurley said.
“None of us would have predicted US$35,000 ton as a likely high point this year – but while nickel stocks are low as are copper and aluminum stockpiles, the current nickel price seems over the top compared to other metals.
“While I’m sure no-one is complaining, the volatility of the price seems extreme.
“The only problem is that when the LME price recedes from US$33,000/tonne to around US$20,000/tonne, which is where one expects it to be, the pundits will declare the sky has fallen in and world is about to end.”
Brian Hurley told delegates that the reality was that even at US$18,000-US$20,000/tonne that was “a damn good price” and about four times as it was in October 2001.
……………..(An expert, like any analyst talking head, says what not what is going to happen, but what he hopes is going to happen.) |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/27/2006 : 03:32:38
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More of what's going on in the world of copper and nickel.
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Zinc Rises to Record for a Second Day in London on Output Drop
By Chanyapr0n Chanjaroen
Oct. 26 (Bloomberg) -- Zinc rose to a record for a second day in London after Zinifex Ltd., the world's second-largest producer of the metal used to galvanize steel, said its production dropped and demand remains ``strong.''
Zinifex, based in Melbourne, said today that output fell 13 percent in the three months ended Sept. 30, due to maintenance shutdowns at a smelter and its Century mine. Global zinc demand was already forecast by Societe Generale to outpace production by 420,000 metric tons this year.
``Prices are being supported by continued strong global demand for zinc, particularly from China, and a well-docomeented shortage of zinc mine capacity,'' Zinifex Chief Executive Officer Greig Gailey said today in a statement.
Zinc for delivery in three months on the LME advanced $100, or 2.5 percent, to $4,140 a ton as of 12:04 p.m. local time after climbing to a record $4,145.
LME-monitored inventory that can be tapped by consumers to fill the production shortfall dropped to a 15-year low. Stockpiles declined 1.5 percent to 113,900 tons, the exchange said in a daily report today.
Global use will increase 3.9 percent to 11.1 million tons this year and 2.6 percent to 11.4 million tons in 2007, the International Lead and Zinc Study Group said on Oct. 9. China is the world's largest zinc user.
``The market remains in significant deficit and looks like staying that way for the better part of next year,'' David Thurtell, a London-based analyst at BNP Paribas, wrote in a report yesterday.
Nickel Slump
Nickel fell $600, or 1.9 percent, to $31,000 a ton, erasing an earlier gain after LME inventory jumped 19 percent to 6,834 tons, the highest since Sept. 13.
Copper gained for the first day in five, advancing $42, or 0.6 percent, to $7,502 a ton. Chile's Codelco, the world's biggest copper producer, lost a bid to gain additional time to settle a wage agreement with workers at its largest mine.
Unions representing most workers at the Chuquicamata mine yesterday rejected a proposal to begin talks ahead of schedule after the company failed to make a wage or bonus offer, said Miguel Lopez, president of the mine's third-largest union. An early settlement would remove a bullish factor for copper, said analysts including UBS AG's Robin Bhar in London.
Chuquicamata's largest unions will begin talks in mid- November to renew labor contracts that expire at the end of December, Lopez said.
U.S. Growth
Prices of metals were also supported after the central bank of the U.S., the world's second-largest consumer of copper and aluminum, said its economy is expanding and inflation is under control. The Federal Reserve kept its benchmark interest rate at 5.25 percent for a third month, and said yesterday that U.S. economic growth would continue at a ``moderate'' pace.
The LME index tracking prices of the six base metals traded on the exchange has dropped 4.9 percent since its May 11 peak on concern that interest-rate rises in the U.S. would slow down the economy and curb demand for industrial metals.
Also on the LME, aluminum gained $16 to $2,780 a ton. Tin rose $50 to $10,250 and lead lost $15 to $1,570
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Copper May Fall Next Week; Stockpile Gains Ease Supply Squeeze
By Chanyapr0n Chanjaroen
Oct. 27 (Bloomberg) -- Copper may drop next week after increases in stockpiles worldwide eased a supply squeeze.
Inventory of the metal used in wires and pipes tracked by commodity exchanges in London, New York and Shanghai jumped to 188,923 metric tons as of yesterday, the highest in seven weeks. Eight of 11 analysts, investors and traders surveyed by Bloomberg yesterday and Oct. 25 forecast copper will decline next week. Two expect a gain and one little change.
``With copper continuing to flow into the terminal markets, warehouses and domestic business, I'll go with `down,''' said Warren Gelman, president of St. Louis-based trading company Kataman Metals Inc.
Copper for delivery in three months on the London Metal Exchange rose $25, or 0.3 percent, to $7,475 a metric ton as of 7:25 a.m. local time. It has fallen 1.1 percent this week.
On the Comex division of the New York Mercantile Exchange, copper for December delivery dropped 0.1 percent to $3.398 a pound in after-hours electronic trading. Copper for delivery in December on the Shanghai Futures Exchange fell as much as 600 yuan, or 0.9 percent, to 70,170 yuan ($8,895) a ton. Chinese prices include 17 percent tax and 2 percent duty.
The extra cost of buying copper for immediate delivery on the LME relative to that for three-month delivery narrowed to $7 a ton on Oct. 26, from more $20 a ton a week ago, indicating an easing supply squeeze. In a market with adequate supplies, longer-dated contracts are usually more expensive than nearby ones to reflect the cost of storage and interest.
Supply Shortfall
Rising stockpiles probably will help copper users fill a supply shortfall forecast at 52,000 tons this year by Goldman Sachs Group Inc. Inventory has increased even as production declined at the world's two largest copper mines.
BHP Billiton, the world's largest miner, said output fell 19 percent in the quarter ended Sept. 30, from a year ago as workers at the Escondida mine in Chile went on strike for four weeks in August. Freeport-McMoRan Copper & Gold Inc. said on Oct. 17 that third-quarter output dropped 11 percent from a year earlier at its Grasberg mine in Indonesia, the world's second- largest copper mine after Escondida.
The shortage of copper may improve in the first quarter, Michael Lewis, head of commodities research in London at Deutsche Bank AG, Germany's largest bank, said by telephone. An economic slowdown in the U.S. will curb demand, he said. The U.S. is the world's second-largest copper consumer, after China.
``There's not much tightening in the copper market from now onwards,'' Lewis said.
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BHP Billiton: global growth will slow but outlook is good
27/10/2006 - The world's largest miner BHP Billiton Ltd said on Thursday that while it expects global growth to slow, its economic outlook is positive.
“While rates of growth around the world are likely to slow from the very strong levels we've seen, we view the global economic outlook as positive," chairman Don Argus told an annual general meeting in London.
"The demand outlook for commodities is encouraging.
"But the outlook is not without risk.
"Escalating geopolitical tensions, supply disruptions and high energy prices are adding increased uncertainty in markets."
Argus said that BHP Billiton expects natural and man-made events will continue to disrupt the supply side of the commodity chain, while regulatory approvals and rising capital costs are delaying project developments.
"The likely outcome of these circomestances is an extended period of high cyclical prices for the commodities that BHP Billiton produces," he said.
Argus said growth in north-east Asia will continue to be a major driver of the global economy.
"Japan's expansion is well-established and China's economic growth is expected to remain strong, even if the attempts to cool recent accelerations are successful.
Clearly, the US economy is slowing from the rapid growth experienced earlier in the year but we expect it to remain solid."
He also spoke about energy consumption in India and China, saying they are set to skyrocket, and BHP Billiton, through its uranium business is set to benefit - its Olympic Dam project is the largest known uranium resource in the world.
"If you look at the expected growth in energy consumption from 2001 to 2050, you can see that compared with the United States and the EU, the energy consumption of India and China is expected to increase dramatically," Argus said.
Argus noted that both India and China are considering nuclear power, although India has yet to satisfy the conditions of Australia's uranium export policy.
"BHP Billiton is well placed to supply the uranium they (India and China) will require to meet their energy needs."
Chief executive Chip Goodyear declined to give a prediction on future commodity prices that helped the mining giant demolish its own Australian earnings record in August, with an annual net profit topping $US10 billion ($A13.14 billion).
"We don't try to predict where commodity prices will be either tomorrow or in the next decade," Goodyear said.
"But we do believe that solid product demand and a supply side that struggles to keep up will characterise our industry in the short to medium term."
Goodyear also said the success of BHP Billiton's carbon steel materials group, which makes iron ore, coking coal and manganese, is set to continue.
"With seven carbon steel materials projects in our pipeline, volume growth will continue to be delivered in all three commodities," he said.
Source: AAP NewsWire
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Chile's copper production declines in September
Chile's copper production totaled 392,130 metric tons in September, plunging another 9.8% on the year, government statistics institute INE said Thursday.
In September of 2005, the South American country, the world's biggest copper producer, mined 434,692 tons of the red metal.
Last month's decline followed a 12.3% plunge in August on year.
Chile's September '06 copper production fell by 18,395 metric tons from 410,525 metric tons in August '06.
Through the end of September, copper production increased 0.6% on the year to 3,867,273 tons compared with 3,843,507 tons in the same period last year.
Copper production in September declined mainly due to lower output in concentrates in Chile's second region, which mines close to a quarter of world copper output.
Falling production in that same region triggered the drop in September via a three-week strike at the BHP Billiton-controlled (BHP) Escondida mine and a tunnel collapse that damaged a conveyor belt at Corporacion Nacional del Cobre de Chile's Chuquicamata mine.
Chile is the world's largest copper producer, accounting for more some 37% of world output.
Molybdenum output also continued falling with an 18.4% plunge on the year in September to 3,526 tons from 4,323 tons, said INE. In August, the metal's production dropped 10.3%.
January-September, molybdenum output fell 12.5% on the year to 29,723 tons from 33,983 tons, INE added.
Molybdenum last year became the country's second-largest export in terms of revenues.
INE's metallic mining index fell 9.4% during the month, while its non-metallic mining index rose 5.0% in September from the same month a year earlier.
The overall mining index lost 8.5% on the year.
In its April data, released in May, INE adjusted its index to 2003 as base year from the previous base year of 1990, increasing the weighting of copper and molybdenum.
INE surprised markets by releasing the data a day early. A spokesman for the agency said they were purposely released early without warning "given the importance of the data."
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Shanghai copper up; zinc, lead just under peaks
TAIPEI (Reuters) - Shanghai copper futures rose on Thursday, tracking gains in London prices despite a rise in stocks, while zinc and lead hovered close to new highs set in the previous session.
Copper on the Shanghai Futures Exchange rose, with the most active December contract closing 340 yuan higher at 70,900 yuan. Spot prices in Shanghai ranged between 70,820 and 71,100 yuan per tonne, up 110 yuan from Wednesday.
"Turnover has certainly picked up a little bit today compared with the last few sessions, and after recent dips on copper, maybe these levels are seen as a buying opportunity," said a Shanghai-based trader.
"As for zinc, tin and lead, there's still room for moves higher on the stocks situation."
London Metal Exchange copper for delivery in three months was trading at $7,540 a tonne by 0716 GMT, up from $7,455 at the London close.
Sentiment was buoyed after 6,000 workers at the Norte division of state-run Codelco, the largest division of the world's largest copper company, rejected early negotiation of a new three-year contract.
To avoid a strike, the two sides must reach an agreement before the existing contract runs out on December 31, and regular negotiations are set to begin on November 17, when the four unions involved in negotiations must formally present their contract demands to the company.
But rising inventories of copper were seen capping any rise, analysts said.
The arrival of material in St Louis on Wednesday marked the first time this warehouse has held metal since 2003, providing physical evidence of a slowdown in demand from the housing sector in the United States, said Peter Richardson, chief metals economist at Deutsche Bank.
ZINC, LEAD NEAR PEAKS
Three-month zinc rose to $4,120 per tonne, from $4,040 at the close on Wednesday, when it touched a record $4,140 -- representing a 6.2 percent jump since Tuesday's close of $3,900.
Buoying sentiment were comments by world number two zinc producer Zinifex Ltd. on Thursday which projected high prices, despite churning out more of the metal in its first quarter, in the face of a growing world supply shortfall.
"Tight supply and continuing strong demand suggest a very positive outlook for zinc prices for the rest of the financial year," Zinifex Chief Executive Greig Gailey said in a statement.
Zinc inventories in LME warehouses are at their lowest levels in more than a decade, at 115,650 tonnes as of Wednesday, against average daily world consumption of around 29,000 tonnes.
But lead output nearly halved to 28,233 tonnes due to a previously advised one-in-20 year shutdown at its Port Pirie blast furnace in Australia, although most of the losses would be recovered over the rest of the year, Zinifex said.
Lead was also holding at $1,575 per tonne, just off a new contract high of $1,590 hit on Wednesday.
Traders said the decision by the Federal Open Market Committee to maintain interest rates at 5.25 percent had been priced in, although concerns remained about weaker U.S. growth after the central bank was less harsh on a warning about inflation than some had expected
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Peru's July copper, silver, iron output rises; gold and tin fall
Peru's copper output rose 6.0% on year in July to 87,494 mt, the Energy and Mines Ministry said Wednesday. Among largest miners, Southern Peru Copper's output climbed 41.5%, Antamina's rose 20%, Phelps Dodge-owned Cerro Verde's production rose 2.7% and Xstrata Tintaya's output climbed 14.8%.
Copper output in the January-July period rose 5.8% to 596,994 mt, the ministry said. July gold output fell 2% compared with a year earlier to 16,809 kg or 540,424 oz. Among major producers, Minera Yanacocha, owned by Denver-based Newmont Mining Corp., boosted output by 2% while Minera Barrick Misquichilca's output dipped 10%. In the January-July period, Peru's gold output rose 14.4% to 122,476 kg or 3.9 million oz.
Zinc production fell 2.7% in July compared with a year earlier to 101,306 mt. Among major producers, Volcan's production fell 49.8%; Antamina's output dropped 34.7% and Milpo's production tumbled 40.5%. In the first seven months of the year, zinc production fell 6.6% to 671,396 mt.
Lead output in July declined 1.6% compared with a year earlier to 26,016 mt. Atacocha's output fell 47.9% while Milpo's dropped 16.6%. In the January-July period, overall lead output decreased 2.5% to 175,099 mt.
July's silver production rose 14.7% to 296,019 kg or 9.5 million oz. Buenanvetura boosted is output of the metal 10.8%. In the first seven months of the year, overall silver production rose 7.7% to 1.96 million kg or 62.9 million oz.
Tin production fell 4.9% in July compared with a year earlier to 3,416 mt. In the January-July period, tin production fell 3.8% to 23,480 mt. Minsur is the country's only tin producer.
Iron output rose 13.2% in July compared with a year earlier to 419,818 mt. In the first seven months of the year, output of the metal rose 10% compared with 2005 to 2.88 million mt. Chinese-owned Shougang is the country's only producer. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/27/2006 : 19:25:11
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Nickel news
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Jubilee sees nickel market remaining tight, prices strong
Nickel producer Jubilee Mines NL expects nickel prices to be strong in the years ahead and has ruled out growth through the acquisitions.
Chairman Kerry Harmanis told the company's annual general meeting in Perth today tight supply and insatiable demand from China and India would continue to support a strong nickel price.
"Personally, I am a strong believer in the China story, with India and other economies to follow such that, despite volatility, we will see tightness in the nickel market for some years to come, with resultant strong nickel prices," he said.
"This can only assist us as we go forward."
Mr Harmanis also ruled out travelling the acquisition path to build the company, preferring the organic growth option.
"Not only would it be dilutive to our shareholders but it would cost about $A3 per pound to buy another company compared to the 15 cent discovery cost we have now," Mr Harmanis said.
Jubilee is producing about 9,000 tonnes of nickel annually from its flagship Cosmos operation in Western Australia and has set itself a production target of 20,000 tonnes per annum by 2009.
Mr Harmanis was quick to point out the surge in the Jubilee price since the end of the 2005/06 financial year, from $8 to more than $12.
This was "a 62.5 per cent increase on the back of all time record nickel prices based upon tight supply and record demand", Harmanis noted.
Shares in Jubilee hit a twelve month high of $12.98 on Monday and closed 20 cents higher at $12.60 today.
However, Citigroup analysts noted the share price rise but downgraded their recommendation for the nickel miner.
"A share price rise of over 40 per cent in the past three months has eroded total returns and caused a downgrade from 'Buy' to 'Hold' with a revised target price of $12.39," Citigroup said in note to clients.
"We express some concern over the declining mine reserves at Cosmos that are likely to be exhausted within 12 months so that unforseen delays in the development schedule of the decline to access the Tapinos and Prospero deposits could present potential downside risk.
"However, on the positive side, continued low production costs, strong forecast earnings, and healthy cash reserves should enable the company to maintain its generous dividend payments."
Jubilee had amassed $205.7 million in bank and receivables by the end of September.
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Base metals close higher in London
Copper prices at the London Metals Exchange continued its recent range-bound trading pressured by rising stocks and weak U.S. growth data Friday, while smaller volume markets such as lead and zinc touched new highs driven by technical buying.
It was a steady end of the week performance for some of the metals, while the smaller metals put in a strong performance, said UBS analyst Robin Bhar in London. Zinc and lead hit new highs while nickel and copper were pressured by rising stocks, Bhar added.
LME three-month zinc touched a new all-time high of $4,185 per metric ton on the back of technical buying, before retreating to $4,165/ton, up $65 on the Thursday PM kerb. LME lead hit a new high of $1,630/ton earlier in the session but gave back gains to $1,600/ton, up $41 on the Thursday PM kerb.
This week the market has seen a continuation in the pull-up of aluminium, zinc and lead, primarily driven by investment interest and justified by some fundamentals, said Mo Ahmadzadeh of Mitsui Bussan in New York. Premiums in lead in Europe are strong and prompted short-covering, Ahmadzadeh added.
Meanwhile, LME copper was last quoted at $7,480/ton but down from its high of $7,550/ton. Copper prices have traded in a range between $7,000 and $8,200/ton for the past couple of months. LME data showed an increase in copper stocks by 25 tons to 126,750 tons Friday while LME nickel data showed stocks increasing by 306 tons to 7,140 tons.
Moreover, weaker than expected US third quarter gross domestic product data added pressure to LME copper prices as market participants eyed the slowing US economy with concern, an LME broker said earlier.
U.S. third-quarter gross domestic product increased at a seasonally adjusted 1.6% annual rate, the U.S. Commerce Department said Friday, but economists had expected a growth rate of 2.2%.
Meanwhile, LME aluminium pushed to a five-month high of $2,830/ton earlier in the session on speculative and technical buying driven by China's decision to increase export taxes on base metals, including aluminium. Aluminium traded to $2,809.50/ton, up $43 on the Thursday PM kerb.
China increased its export taxes on aluminium to 15% from 5% and reduced import taxes on alumina. China also imposed export duties of 15% for copper and nickel among other commodities in a bid to curb growth in energy-intensive industries.
Bhar said that early next week, the market may be focused on squaring month-end positions.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Thursday PM kerb
Copper 7469.00-7470.00 Up 29.00
Lead 1599.00-1600.00 Up 41.00
Zinc 4165.00-4168.00 Up 65.00
Aluminium 2808.00-2809.00 Up 43.00
Nickel 30950.00-31000.00 Up 600.00
Tin 10350.00-10400.00 Up 200.00
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/27/2006 : 20:42:28
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Copper stocks rising, but medium term picture still positive
LONDON (Mineweb.com) --LME copper stocks have been rising over the past week, which will undoubtedly take some of the pressure off prices and these may well decline next week as a result after a steady run over the past week. Indeed copper has stayed around the $3.50 a pound level for the past four months with a few surges and drops above and below this level. At the time of writing the metal price was around the $3.43 mark.
While stocks have been rising since the middle of the month,
this position does not seem likely to be maintained long term.
One of the most consistently accurate of copper forecasters, Peter Hollands of Bloomsbury Mineral Economics, noted at a recent Mining Journal 20:20 event that this year’s deficit in supply to demand is likely to be some 330,000 tonnes of copper concentrates, 270,000 tonnes of refined metal and some 250,000 tonnes in copper futures.
He went on to say that only a substantial release from China’s strategic stockpile had helped keep the copper price in check from an even greater price surge.
Hollands considers that copper supply will actually remain in deficit through 2007 and may only move into surplus in 2008 – and then the surplus is only likely to be small.
The current position is confirmed by low smelting and refining charges and high prices for the metal which is typically representative of poor mine production, big shortfalls in refined metal supply – with the whole picture exacerbated with a major increase in investment demand through commodity funds.
Although Hollands’ views contradict those of some other analysts, it is perhaps worth remembering that Chip Goodyear, CEO of the world’s largest producer, BHP Billiton, recently pointed to difficulties in increasing production because of labour and equipment availability constraints – and there is also the tendency to mine lower ore grades when prices are good, which also reduces metals output. As will have been noted, many major mining companies have been reporting production shortfalls recently, but mitigated by the high prices which mean that profits have been rising despite the production shortfalls.
If one looks to the copper refiners for the last word on this subject – if they felt that copper was likely to go into surplus in the short to medium term, they would hardly have caved in over the reductions negotiated in charges to the extent they did!
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Zinc hits record peak drags others higher
LONDON (Reuters) - Dwindling stocks pushed zinc to fresh highs on the London Metal Exchange (LME) on Friday, but copper sentiment was dampened by concerns of rising inventory levels in China.
"Apart from zinc and aluminium, these markets have been trading sideways throughout the week," an LME trader said.
He said that the supply side remained tight for most metals and a price move could only be triggered by demand.
"Any falls would have to come from the demand side, likewise, if we have a good U.S. figure out today then these prices could well move higher," the trader said.
The market saw little activity in early trade, ahead of the U.S. third quarter GDP figure due out by 1230 GMT.
Copper for delivery in three months <MCU3 was at $7,505/7,525 by 1007 GMT, up from $7,450 at the London close.
London prices have been weighed down recently by large increases in stocks, up by 13 percent over the past week with more to be expected.
Copper inventories climbed 25 tonnes to 126,750 on Friday.
In Shanghai, around 20,000 tonnes of copper arrived this week, of which more than 1,000 tonnes had been sold.
Dealers said in terms of the physical market, sentiment was neutral to slightly bearish in the short term.
Zinc touched a new record high of $4,170 in early trade and was indicated at $4,145/4,155 versus $4,100.
The price of zinc has more than doubled since the start of 2006, while stocks have fallen by over 80 percent since their peak in mid-2005.
Zinc inventories in LME warehouses were at their lowest in more than a decade at 110,800 tonnes, down by 3,100, against average daily world consumption of around 29,000 tonnes.
"The other metals look strong and could move higher... but copper is a bit of a dragging anchor at the moment," analyst William Adams at BaseMetals.com said.
China will raise the export tax on copper, nickel, aluminium and other metal products to 15 percent, the Ministry of Finance said on Friday.
"Higher export taxes should reduce the incentive to import raw materials and only to process them into semi-finished commodities for export," analyst John Kemp of Sempra Metals said in a research note.
"That should in turn curb China's voracious appetite for items such as iron ore, copper concentrates, etc, and help drive down international prices for them."
EYES ON U.S. GDP DATA
Aluminium was indicated at $2,808/2,813, up 1.8 percent versus Thursday's close of $2,757.
Physical demand in Europe supported aluminium, even if U.S. demand was sluggish, a Triland report said.
Traders would watch U.S. growth data for the third quarter due at 1230 GMT to glean a better view of how the economy is holding up and the extent of inflation risk.
Also, the final Michigan consumer sentiment reading for October is due at 1400 GMT.
Nickel was indicated at $30,850/31,050, rebounding from the previous session's lower close at $30,350.
On Thursday, the metal fell by 4 percent after a jump in stocks of 1,086 tonnes to 6,834. Stocks rose to 7,140 on Friday.
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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 10/28/2006 : 17:36:55
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Jubilee says nickel prices to stay high
October 27, 2006 01:36pm
Article from: AAPFont size: + -
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MINING and minerals explorer Jubilee Mines NL expects prices for nickel to be strong in the years ahead, on the back of demand from China.
Chairman Kerry Harmanis said a tight market would support the price of the metal.
"Personally, I am a strong believer in the China story, with India and other economies to follow such that, despite volatility, we will see tightness in the nickel market for some years to come, with resultant strong nickel prices," he said.
"This can only assist us as we go forward."
Mr Harmanis also noted that since the end of the financial year, Jubilee's share price has moved from $8 to more than $12.
This was "a 62.5 per cent increase on the back of all time record nickel prices based upon tight supply and record demand".
Mr Harmanis also said Jubilee had been lucky because it had been able to maintain low staff turnover rates despite a skills shortage in the mining industry.
At 13.06pm AEST, Jubilee shares were up 16 cents or 1.3 per cent to $12.56.
________________________
If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 10/30/2006 : 17:03:14
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Copper may decline next week; supply squeeze eases
Source: Bloomberg
Copper may drop next week after increases in stockpiles worldwide eased a supply squeeze.
Inventory of the metal used in wires and pipes tracked by commodity exchanges in London, New York and Shanghai jumped to 187,079 metric tons, the highest in four weeks. Eight of 11 analysts, investors and traders surveyed by Bloomberg yesterday and Oct. 25 forecast copper will decline next week. Two expect a gain and one little change.
"With copper continuing to flow into the terminal markets, warehouses and domestic business, I'll go with 'down,"' said Warren Gelman, president of St. Louis-based trading company Kataman Metals Inc.
Copper for delivery in three months on the London Metal Exchange rose $70, or 0.9 percent, to $7,520 a metric ton as of 11:47 a.m. local time. It has fallen 0.3 percent this week.
On the Comex division of the New York Mercantile Exchange, copper for December delivery gained 0.2 percent to $3.405 a pound in after-hours electronic trading. Copper for delivery in December on the Shanghai Futures Exchange fell 0.7 percent to close at 70,310 yuan ($8,912) a ton. Chinese prices include 17 percent tax and 2 percent duty.
The extra cost of buying copper for immediate delivery on the LME relative to that for three-month delivery narrowed to $7 a ton on Oct. 26, from more $20 a ton a week ago, indicating an easing supply squeeze. In a market with adequate supplies, longer-dated contracts are usually more expensive than nearby ones to reflect the cost of storage and interest.
Supply Shortfall
Rising stockpiles probably will help copper users fill a supply shortfall forecast at 52,000 tons this year by Goldman Sachs Group Inc. Inventory has increased even as production declined at the world's two largest copper mines.
BHP Billiton, the world's largest miner, said output fell 19 percent in the quarter ended Sept. 30, from a year ago as workers at the Escondida mine in Chile went on strike for four weeks in August. Freeport-McMoRan Copper & Gold Inc. said on Oct. 17 that third-quarter output dropped 11 percent from a year earlier at its Grasberg mine in Indonesia, the world's second- largest copper mine after Escondida.
The shortage of copper may improve in the first quarter, Michael Lewis, head of commodities research in London at Deutsche Bank AG, Germany's largest bank, said by telephone. An economic slowdown in the U.S. will curb demand, he said. The U.S. is the world's second-largest copper consumer, after China.
"There's not much tightening in the copper market from now onwards," Lewis said.
#9668;
________________________
If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/30/2006 : 19:57:07
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I hope no one minds if I post a few news items at a time, I just would like to save forum members some time in looking for this information on your own.
Copper supply for the future, will take a few years before the mine is up and running
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African Copper finds high grade copper, silver at Thakadu project in Botswana
African Copper PLC said initial drilling results at Thakadu project near its Dukwe project returned high grade copper-silver intersections and added that a pre-feasibility study is underway.
The drill results showed 4.18 pct copper and 45 grammes a tonne of silver over 25.85 metres and 2.10 pct copper and 11 grammes a tonne of silver over 24.91 metres. Drilling is on-going.
'The deposits at the Thakadu Project show striking similarities to the sedimentary hosted copper deposits of Zambia and the Democratic Republic of the Congo,' said chief operating officer Joe Hamilton. 'The structural setting, age of mineralization and associated rock types and mineralogy are almost identical to those found in some of the larger copper deposits,' he added.
The deposits are close to road, rail, power and water.
Metallurgical tests from previous operators showed a copper recovery of 90 to 96 pct can be achieved, it said.
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Copper Erases Earlier Gains, Leading Metal Losses; Zinc Drops
By Chanyapr0n Chanjaroen
Oct. 30 (Bloomberg) -- Copper erased earlier gains, leading declines of metals in London. Aluminum and zinc also dropped.
Copper for delivery in three months on the LME lost $70, or 0.9 percent, to $7,380 a metric ton as of 12:02 p.m. It earlier rose as much as 0.5 percent to $7,510 a ton.
Zinc dropped $15, or 0.4 percent, to $4,150 a ton. It earlier traded at $4,202 a ton, the highest ever. Aluminum slid $13, or 0.5 percent, to $2,795 a ton.
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Korean consortium to develop Madagascan nickel mine
A Korean consortium led by the state-run Korea Resources Corp. said Monday (Oct. 30) it will take part in the development of a large-scale nickel mine in Madagascar.
The consortium has acquired a 27.5 percent stake in the Ambatovy mine project that is estimated to yield 125 million tons of nickel, the resource corporation said. Once the nickel mine, ore preparation plant and refinery are completed in 2010, Ambatovy is expected to produce 60,000 tons of nickel annually.
The amount would be the third-largest production output in the world. The mine located east of Antananarivo, Madagascar's capital, is expected to be in operation for 27 years.
Besides the state-run company, Daewoo International Corp., STX Corp, and Keangnam Enterprises Ltd, are Korean companies in the consortium. Other stake holders are Sumitomo Corp. with a 27.5 percent stake and Dynatec International Ltd, which controls the project with a 40 percent share in the mine.
Full production of the mine is expected to alleviate nickel supply shortage concerns. Korea is the fourth largest importer of nickel in the world, after China, Japan and the United States. It consumes 9 percent of the world's total output.
The price of nickel has risen threefold in the last 3 years, with the material being used to make stainless steel products, special composite metal and batteries.
Demand for the material is expected to rise 5.4 percent annually in the coming year, making it imperative for the country to secure a steady supply.
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Japan's copper cathode inventories rise 5% in September
Japan's inventories of copper cathode totaled 44,363 metric tons in September, up 5.1% on month, according to preliminary data released by the Ministry of Economy, Trade and Industry Friday.
On year, copper stocks were up 14.2%.
According to the data, Japanese smelters produced 122,101 tons of copper cathode in September, down 5.3% from August, but up 5.1% from a year ago.
Monday, the 3-month copper contract on the London Mercantile Exchange was trading $30 lower during London's morning at $7,470.
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J.P. Morgan upgrades resources sector to overweight, cites China growth
MELBOURNE (MarketWatch) -- Sustained growth in China and a sluggish supply response will continue to drive the resources boom, Wall Street investment bank JP Morgan said Monday, moving to overweight from underweight in the sector.
The broker cited compelling stock valuations, tight markets, Chinese growth and an expected increase in iron ore prices.
"We moved to underweight the resources sector back in February and suffered some pain as commodity prices, and the resource majors, continued their rise," JP Morgan analysts said in a client note.
JP Morgan said its decision was partly vindicated by the pullback in commodity prices and resource stocks that followed, but it is now time to move back to overweight.
The analysts said initial indications are that contract iron ore price will rise again in the current round of negotiations.
"If the opening ambit claim by the Chinese is for a reduction of only 5%, coupled with recent production reports from BHP (BHP) and Rio (RTP) where iron ore production performance was less than exemplary, then the eventual price settlement could end up higher than the current consensus view of a 5-10% rise," the note said.
JP Morgan expects Chinese growth of 10.6% in 2006
and 9.5% in 2007
and said it is possible the economy will overshoot market expectations.
It also has a more positive view of the United States than consensus and believes the housing downturn will not drag down the whole economy.
JP Morgan said miners claim the supply side response to surging demand for commodities is proceeding slowly, a view backed up by recent BHP and Rio Tinto production reports.
The analysts said BHP and Rio have underperformed the recent resurgence in base metals prices and their valuations are looking much more attractive in terms of price to net present valuations.
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Now is a good time to buy copper
Seasonality Copper has a period of seasonal strength from the end of October to the end of March. A study by seasonalcharts.com that examined trends of copper futures prices during the past 36 years confirms that copper has a long history of seasonal strength during this period.
The trade has been profitable in seven of the past 10 periods. The average return per period was 14.4%. Copper's winter strength is related to strong seasonal industrial demand for the metal. The chart shows seasonal entry and exit points for copper during the past five years.
Technicals Technicals currently are neutral. After a strong momentum spurt last spring, copper has developed a triangular pattern.
Support exists at US$2.9145 per pound and resistance exists at US$3.9490 per pound. A break above US$3.60 per pound will complete the triangular pattern and set the stage for the annual seasonal trade.
Canadian base-metal stocks such as Aur Resources Inc. (AUR/TSX), Inmet Mining Corp. (IMN/TSX), Hudbay Minerals Inc. (HBM/TSX) and Teck Cominco Ltd. (TCKb/TSX) already have started to climb.
Traders are guessing that at least some of the funds from the recent takeover of Inco will flow back to other base-metal stocks.
The sector also is the subject of takeover rumours. Teck Cominco and Phelps Dodge were unsuccessful with their attempts to acquire Inco. They may be interested in acquiring other available base-metal mining companies and properties.
Fundamentals Demand for copper continues to rise faster than supply. Demand is particularly strong from countries with exceptional economic growth such as China and India. Slightly offsetting this is a slowdown in demand by the U.S. housing industry.
Copper supply frequently is disrupted by labour and production work stoppages as well as strains on limited refining capacity. Copper inventories are near a record low.
A minor disruption in the supply of refined product during the current period of strong seasonal demand could have a significant impact on the price of copper.
THE BOTTOM LINE
Chances are high that copper and base-metal stocks will enter a period of seasonal strength before the end of 2006.
- Don Vialoux, chartered market technician, is the author of a free daily report on equity markets, sectors, commodities and exchange-traded funds. Reports are available at You must be logged in to see this link. . Mr. Vialoux does not own copper futures or equities related to copper. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/30/2006 : 20:12:40
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remember the difference between an analysts charts
And a sea captain’s charts.
An analysts charts tells us what should lie ahead,
A sea captain’s charts tells us what DOES lie ahead.
Don’t bother timing the market,
Learn to time the crowd.
In spite of the argument Efficient Market Theory
It is the human buyers and sellers that determine the price.
A crazy whim, a gut feeling, a broker’s bit of advice, fear, greed or tea leave readings are usually the real reason things get bought or sold, not efficiency.
If charting worked perfectly, then stock and commodity brokers wouldn’t need clients, they could make all the money themselves by reading the charts and buying what looked best on the chart. |
Edited by - pencilvanian on 10/30/2006 20:17:56 |
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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 10/31/2006 : 08:31:34
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quote:
Originally posted by pencilvanian
remember the difference between an analysts charts
And a sea captain’s charts.
An analysts charts tells us what should lie ahead,
A sea captain’s charts tells us what DOES lie ahead.
Don’t bother timing the market,
Learn to time the crowd.
In spite of the argument Efficient Market Theory
It is the human buyers and sellers that determine the price.
A crazy whim, a gut feeling, a broker’s bit of advice, fear, greed or tea leave readings are usually the real reason things get bought or sold, not efficiency.
If charting worked perfectly, then stock and commodity brokers wouldn’t need clients, they could make all the money themselves by reading the charts and buying what looked best on the chart.
Pure wisdom there.
________________________
If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/31/2006 : 19:22:41
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Thank you, Ardent Listener, on occasion my brain seems to work and I come up with a half decent idea.
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Grupo Mexico unit sees copper price strong on China
MEXICO CITY, Oct 31 (Reuters) - Southern Copper Corp., one of the world's top producers of the red metal, sees copper prices holding strong because of hefty demand from China, the company's chief financial officer said on Tuesday.
Eduardo Gonzalez said demand from China was expected to remain strong over the long term even though its monthly imports are volatile.
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Margins to recede on copper trading
The Shanghai Futures Exchange, the only Chinese bourse trading copper and aluminum, said it was reducing the margin for copper to 6 percent of a contract's value from 9 percent, effective from today.
The reduction, announced in a statement from the exchange Monday, more than reverses a margin increase for copper contracts to 9 percent from 7 percent that was imposed in May. Margin is the amount required by an exchange to cover any liability resulting from positions held by investors.
"The market is cooling, so a higher margin is no longer needed," Wu Bowen, a trader at Shanghai Jinpeng Futures, said.
Shanghai copper prices have dropped by 20 percent since they touched a record 85,550 yuan (HK$84,446.40) a tonne on May 15.
Margins are often raised at times of high price volatility, and reduced when prices stabilize.
The exchange decision could attract more cash to the Shanghai copper market, Wu said. Copper for delivery in January fell as much as 700 yuan, or 1 percent, to 68,550 yuan Tuesday.
The contract traded at 68,880 yuan, down 370 yuan, or 0.5 percent, at the market's midday break.
Benchmark London Metal Exchange copper prices fell from a record high of US$8,800 (HK$68,640) in May and were at US$7,415 a ton early afternoon Shanghai time amid growing investor concern that economic growth is slowing in China and the United States.
China's economic expansion slowed for the first time in a year to 10.4 percent in the third quarter from 11.3 percent in the second quarter.
US economic growth slowed to 1.6 percent in the third quarter, the slowest pace in more than three years.
Margins for aluminum contracts on the Shanghai exchange will remain unchanged at 7 percent. Margins for the metal were raised from 5 percent in May along with copper.
"Aluminum prices are still undergoing volatility, as funds recently stepped up taking positions," said Wu. Aluminum for delivery in January fell as much as 770 yuan, or 3.8 percent, to 19,580 yuan a ton Tuesday, and traded at 19,600 yuan at the market's midday break. The contract peaked at 24,330 yuan on May 12.
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Swedish mining company Boliden AB to invest SEK5.2bn in expanding production at copper mine in Sweden
Swedish mining and smelting group Boliden AB announced on Tuesday (31 October) that it has decided to invest SEK5.2bn in expanding production at its Aitik copper mine outside Gallivare in northern Sweden.
The investment, to take place between 2007 and 2011, includes the building of a new concentrator, which will increase the ore production capacity from the current 18m tonnes to 36m tonnes. The new concentrator is scheduled to begin production in 2010 with an initial capacity of 33m tonnes, to be increased to 36m tonnes by 2014.
In addition to increasing capacity the investment will expand the Aitik copper mine's lifespan, improve competitiveness and environmental performance.
"This is one of our biggest investments to date," commented Jan Johansson, President and CEO of Boliden.
"The investment will make Aitik one of the most efficient mines in the world, and will substantially improve its competitiveness. This will, in turn, generate the preconditions for healthy profits and cash flows in the future," Johansson said.
Boliden on Tuesday also published its interim report for the third quarter, posting an operating profit of SEK2,095m, as compared to SEK686m in the third quarter of 2005.
Revenues improved to SEK9,299m, up by SEK4,375m from SEK4,924m in the third quarter last year.
Earnings per share amounted to SEK5.32, up from SEK1.50.
Revenues and earnings were positively affected by improved metal prices and improved production.
Boliden, headquartered in Stockholm, Sweden, has operations in Sweden, Finland, Norway and Ireland. The company has 4,500 employees and an annual turnover of SEK30bn. Boliden is listed on the Nordic Exchange in Stockholm and on the Toronto Stock Exchange.
One British pound (GBP) is worth approximately 13.70 Swedish kronor (SEK). |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/03/2006 : 22:40:17
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Copper closes higher in London
Short covering ahead of the weekend lifted London Metal Exchange copper into positive territory Friday after stopping short of breaking important nearby support this week, traders said.
Following a string of sizable LME stock additions and negative U.S. economic data, copper broke support at $7,200 a metric ton Wednesday to fall to a four-week low of $7,090/ton, still within its broad range but close to major support at $7,000/ton.
"There was no follow through after the selloff, and the downside was averted again, leaving me quite bullish for copper," a trader said.
Many analysts tipped copper to succomeb to this level soon given improving metal availability, weakness in the U.S. housing sector and slowing demand from China.
September customs data from China revealed a drop in imports, which many market participants said is the result of reduced demand due to the government's attempts to cool the country's economy.
Europe's largest copper producer, Norddeutsche Affiniere AG, said declining Chinese copper imports are much more likely the result of the use of national stockpiles and market participants there waiting for favorable prices before buying.
Upcoming contract negotiations at the world's largest copper producer Codelco in Chile were also moving into view to bolster price outlook.
Spot gold's resilience to a sharp rise in the dollar following U.S. non-farm payroll data also helped LME metals, the trader said. After briefly dipping, spot gold rose to a fresh one-month high of $629.45 a troy ounce.
Fundamentals for LME lead, zinc and nickel remain very bullish, traders said, with zinc poised to continue its "spectacular" performance in the short-term, Societe Generale analyst Stephen Briggs said.
LME zinc rose to $4,300/ton, close to its previous record high of $4,320/tons as LME stock withdrawals continue apace. Stocks were down another 1,600 tons Friday.
Next week was likely to see some large funds roll positions forward with some technical tightness dissipating but funds would "remain active with new money coming in," a trader said.
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Credit Suisse sees copper gain
Copper may "spike" to a record $12,000 a metric ton next year, said Credit Suisse Group, which correctly forecast in 2005 that prices would rise to $8,000.
Labor disputes and other disruptions at mines may curb supply next year, said Credit Suisse analysts led by Jeremy Gray in London. Strikes, a rockfall and lower-than-expected mine recoveries have lost 476,000 tons of production so far in 2006, Gray said in an e-mailed report today.
"One of the themes that has dogged the industry for four years is supply disruptions," Gray said. "Going into 2007, we believe there is another 642,000 tons at risk."
Lost output and rising demand has increased the price of copper fourfold since 2002. As a result mining companies such as BHP Billiton Ltd., the world's largest, have posted record profits while consumers have had to pay more for items such as plumbing and power cables.
Copper for delivery in three months on the London Metal Exchange rose $115, or 1.6 percent, to $7,265 a ton as of 3:06 p.m. in London. Gray forecast copper may rise to $8,000 in a Nov. 21, 2005, report. That day, copper closed at $4,215.
Credit Suisse joined Barclays Capital in predicting copper may surpass the record $8,800 set May 11. Barclays analysts led by Kevin Norrish in London said Oct. 30 that copper for immediate delivery will peak in the second quarter next year, averaging $8,300 a ton. That's the highest of 10 quarterly analyst forecasts tracked by Bloomberg.
Not So Bullish
Other analysts aren't so bullish. HSBC Holdings Plc's Paul McTaggart in London said Oct. 6 that production may exceed consumption by 133,000 tons in 2007, anticipating a global economic slowdown that will curb demand.
Calyon, the investment-banking unit of Credit Agricole SA, France's second-largest bank, said last month prices will average $6,100 next year, from $6,675 a ton estimated for 2006.
Production has been curbed this year by unforeseen events including a strike at BHP Billiton's Escondida, the world's largest copper mine, in Chile. New Orleans-based Freeport- McMoRan Copper & Gold Inc. produced less at Indonesia's Grasberg copper mine, the world's second biggest, because of falling metal recoveries. The same problem cost output at other mines in Chile and Zambia.
'Swing Factor'
China, the world's largest copper consumer, remains "the key swing factor" in the market, Gray said. The country released up to 200,000 tons of "strategic" stockpiles this year and another 200,000 tons of scrap, the report said. If China replenishes inventory, its demand growth may double to a rate of 8 percent next year, representing 150,000 tons of the metal, Credit Suisse said.
Growth in China probably will create a supply shortfall of 252,000 tons next year, Credit Suisse said. Assuming a U.S. housing slowdown wipes out 200,000 tons of potential copper demand, the deficit would be 52,000 tons, the bank added.
India, whose population of 1 billion is close to that of China, may add to demand growth as it increases spending on infrastructure and construction, Credit Suisse said. Currently the South Asian nation consumes 3 percent of global copper.
"India could represent up to 8 percent of global demand within five years as its $350 billion infrastructure program gathers pace," the analysts said.
Gray, a graduate from Melbourne University, has tracked metals since 1994 when he first joined Credit Suisse in Australia. He moved to Morgan Stanley in London in 1996 and later became a founding partner of Sthenos Capital Ltd.'s European Opportunity fund. The analyst returned to Credit Suisse in August 2005 to cover the industry.
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US copper scrap spreads tighten slightly on overseas buying
Spreads for US copper scrap narrowed slightly this week on more reported buying from overseas customers. But trade sources grew more pessimistic about the state of domestic mills, which have cut back their buying amid softer orders and sufficient inventories.
The Platts spread for No. 2 Birch/Cliff, normally the most sensitive to overseas market activity, narrowed to December COMEX minus 45 cents/lb from December COMEX minus 50 cents/lb last week, though most trade sources continued to put the spread at December COMEX minus 45-50 cents.
Reports continued to vary on the extent of Chinese buying, with a few dealers saying the Chinese have fully returned to the market, while most said Chinese consumers are buying at lower prices and smaller volumes. "They're nibbling, but they're nibbling at much wider spreads than before," one dealer said. "They're not going in there and paying big prices, probably because there's not a domestic market. But nibbling is different than coming in full blast," he added, saying he heard of No. 2 business at December COMEX minus 50 cents for export delivery.
The trader added that domestic mills don't need additional spot material because their orders have sagged. "The mills just don't want to buy. And now you're getting into winter when things quiet down after Thanksgiving," he said. "I don't see them coming into the market and buying especially now with the market dropping. They're in no hurry."
Another dealer said he had started to get more inquiries from Chinese buyers, both from regular customers and new customers. "They're starting to beat the bushes a little bit, but they're not overpaying," he added, putting the spread at December COMEX minus 45 cents.
Another dealer agreed, saying "It looks like export [business] is kind of starting to come back into the market now. I know they had the issue with the ports" involving duties and a crackdown on smuggling. "But now it looks like it's slowly starting to pick back up again," he said, putting the export spread at December COMEX minus 40-45 cents. Some overseas deals were even heard in the high 30s, he added.
The Platts spread for No. 1 burnt wire narrowed to December COMEX minus 25 cents from December COMEX minus 30 cents the previous week, though most trade sources continued to put the spread at December COMEX minus 25-30 cents.
A dealer who said he had done business in the high 20s said business was also heard at December COMEX minus 33 cents. The spread for No. 1 was probably December COMEX minus 27-35 cents, he said. Other dealers said they had heard business at December COMEX minus 25-30 cents.
The Platts spread for bare bright scrap narrowed to December COMEX minus 12 cents from December COMEX minus 15 cents. As in previous weeks, spreads for bare bright, which is largely a domestic market, varied widely depending on terms and location.
One dealer said he had been able to sell domestically at December COMEX minus 5-10 cents, but added that he had not heard export spreads recently. Most trade source said they had not heard of much domestic or export business for bare bright recently. But one dealer said domestic spreads were probably in the range of December COMEX minus 12-15 cents.
Dealers this week were universally pessimistic about the prospects for domestic consumption. "I think it's even more difficult to get sales off, at least domestic sales," one dealer said. "It is just slim pickings, and at this point, it seems it will be that way from now til the end of the year. There is just no indication that anyone is going to be coming online." Another agreed, saying, "There's not much moving in copper scrap at all."
One opinion on nickel
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Eramet 3Q sales rise 17% on nickel, manganese prices
Eramet SA, operator of the world's largest ferronickel plant, said third-quarter sales gained 17 percent on higher prices for the steelmaking raw material and for nickel.
Revenue at the Paris-based company climbed to 723 million euros ($923 million) from 618 million euros a year earlier, according to a statement published in Les Echos newspaper today. Eramet's manganese unit's sales rose 23 percent to 289 million euros. Nickel sales gained 15 percent to 235 million euros.
The company said in the statement that second-half pretax operating profit may exceed that of the first half. The forecast assumes that a strike in New Caledonia is rapidly resolved and that nickel prices remain at their current level, it said.
The price of nickel, used to make stainless steel, has more than doubled since the beginning of the year amid surging production of stainless steel. Manganese prices averaged 613 euros a metric ton in the quarter, 20 percent higher than a year earlier, according to data from industry publishing company Metal Bulletin Plc.
Shares of Eramet closed at 124.70 euros in Paris yesterday. They have risen 54 percent this year, valuing the company at 3.2 billion euros.
Another opinion on nickel
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2 November 2006
Nickel may moderate soon
The nickel market has been tight in the second half of 2006 because of vigorous stainless steel capacity additions in China and significant nickel production losses, according to analyst Jon Bergtheil at the J.P. Morgan Securities offices in London. Inventories have dropped from 35,742 metric tons in January to 6,834 metric tons in late October. So, the average annual price of $10.20/lb through last week compares with a previous six-year price average (2000-2005) of $4.59/lb.
Bergtheil suggests that "investors have a passion for the metal at the moment," which has kept prices high. However, like almost everybody else, he sees seasonal slippage ahead. That's why he projects a full-year world price average of $9.52/lb for 2006.
And, looking at 2007, Bergtheil sees the average annual price dropping to $6.80. Nickel production growth is expected to increase 5.9% in 2007 versus demand growth of 5%, creating a small price-depressing surplus. Also, sustained high prices for nickel through 2007 will exert downward pressure on the direct demand for the metal in 2008 and beyond, he says, with use of nickel per metric ton of stainless steel anticipated to decline. At that time, he also says "actual stainless steel demand will face consumer resistance in favor of alternative metals."
Still, not everyone agrees with lower prices ahead. Kerry Harmanis, chairman of Jubilee Mines, expects prices for nickel to be strong in the years ahead, on the back of demand from China and India that will keep supply tight. "Personally, I am a strong believer in the China story, with India and other economies to follow, such that, despite volatility, we will see tightness in the nickel market for some years to come, with resultant strong nickel prices," he tells The Age Australian newspaper. |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 11/06/2006 : 19:35:52
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By Clare Black
LONDON, Nov 6 (Reuters) - Low stocks and healthy demand pushed zinc prices to fresh all-time highs on the London Metal Exchange on Monday, taking their gain for the year to a whopping 130 percent.
With fund interest also high in the metal used mainly to coat steel to prevent it from rusting, analysts could not rule out further gains, with most touting $5,000-a-tonne as an achievable target before the year-end.
By 0943 GMT, zinc futures <MZN3> were quoted at $4,370 a tonne, up sharply from Friday's close of $4,292 and not far from a new record peak of $4,400.
Some traders attributed the new high to automatic buy orders from a fund trading programme at the start of the day in Europe, noting that volumes were otherwise very thin.
Stephen Briggs, metals economist at Societe Generale, said he could not rule out prices rising towards $5,000/T in coming weeks, but he expected them to ease significantly next year as fresh supply starts to flow in.
"We still believe zinc mine production could surge by 20 percent between 2006 and 2008," he said in a research note.
Zinc stocks held in LME warehouses fell 1,625 tonnes to 101,350 -- their lowest in over a decade and a far cry from the swollen levels of April 2002 at over 970,000 tonnes.
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If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 11/09/2006 : 11:04:06
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Nickel Drops to One-Month Low in London After Stockpiles Gain
By Chanyapr0n Chanjaroen
Nov. 9 (Bloomberg) -- Nickel fell to the lowest in a month after stockpiles gained on the London Metal Exchange, increasing supplies of the metal used as an alloy in stainless-steel making.
Inventory tracked by the LME climbed 114 metric tons, or 1.5 percent, to 7,614 tons, the exchange said today in a daily report. That's the highest level since July 13.
Nickel for delivery in three months fell $400, or 1.3 percent, to $29,650 a metric ton as of 11:17 a.m. London time and traded as low as $29,100 a ton. A close at the level would be the lowest since Oct. 5.
Nickel inventory jumped 14 percent since Nov. 3. It's still equal to less than three days of global consumption. Briggs forecasts a supply global shortfall of 40,000 tons this year.
Eramet SA, operator of the world's largest ferronickel plant, restored full access to its nickel mine in New Caledonia today, spokesman Philippe Joly said from Paris. Two of the company's four mines on the Pacific island have been blocked by striking miners since September, disrupting the supply to the Doniambo plant. Some miners remain on strike, Joly said.
The outlook for a swift end to the stoppage and a resumption of production ``remains uncertain,'' Stephen Briggs, a London-based analyst at Societe Generale, said by phone.
Among other metals traded on the LME, copper gained $50, or 0.7 percent, to $7,170 a ton. Aluminum climbed $11 to $2,728 a ton and tin advanced $100, or 1 percent, to $9,900 a ton. Lead dropped $25 to $1,692 and zinc lost $45 to $4,375 a ton.
To contact the reporter on this story: Chanyapr0n Chanjaroen in London at cchanjaroen@bloomberg.net .
Last Updated: November 9, 2006 06:24 EST
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If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 11/09/2006 : 18:01:22
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DJ Comex Copper Review: Higher After End-Of-Day Boost
NEW YORK (Dow Jones)--Comex copper futures settled higher Thursday at the New
York Mercantile Exchange as they gained late-day momentum from a weak dollar
and fund buying, traders said.
At settlement, most-active December copper is up 6.45 cents at $3.3090 per
pound. During the session the contract traded mostly inside Wednesday's range
but broke out on the upside to trade to a session high of $3.3170.
During the session, traders said they were awaiting news about Chinese demand
and the outcome of the labor issues at Chilean copper producer Codelco.
"It's a wait and see market," said a New York-based trader.
But a late day move by bargain-hunter buyers in the precious metals complex
and London Metal Exchange base metals mixed with a weak dollar helped copper
prices rise.
At 1:41 p.m. EST, the Nybot U.S. dollar index is down at 85.12 from a
previous close of 85.48. The greenback dipped to a session low of 85.06.
The sharp drop in the dollar was prompted by a Reuters report citing Governor
Zhou Xiaochuan as saying that China has a plan to diversify its foreign
exchange reserves and is considering various ways of doing so, prompting the
dollar to extend losses against the euro and also start to lose ground against
the yen.
Meanwhile, two unions at Codelco's Norte division said Wednesday they ruled
out pushing forward contract talks, a union leader told Dow Jones Newswires in
Santiago.
Norte unions No. 2 and No. 3 will follow the legally-mandated schedule for
contract talks and hand in their list of demands on Nov. 17, said union No. 3
president Hernan Guerrero.
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If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 11/09/2006 : 19:07:27
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High nickel price to continue, says insiders
Shanghai. November 9. INTERFAX-CHINA - The high price of nickel will continue for at least a couple of years due to a supply shortage and could move up as high as $40,000 a ton in February because of a likely strike, industry insiders said Wednesday.
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If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/09/2006 : 21:57:07
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One opinion to consider, emphasis on the word opinion. The author has no more idea as to what prices will do than you or I, though we should consider every angle, pro or con.
Base Metals: Silver's Albatross?
By Tom Szabo
07 Nov 2006 at 12:06 PM EST
SAN JOSE (ResourceInvestor.com) -- Base metals are of peculiar interest to silver investors because the majority of silver production is a by-product or co-product of base metal mining. More base metal mining means more silver production and vice versa. In addition, the shares of companies involved in base metal/silver operations are obviously influenced by both silver and base metal prices as well as future expectations about those prices.
Silver is also found along with gold at many mining districts, especially in Mexico and South America, but the more important relationship between gold and silver is their unique status as the dual monetary metals. And although I believe silver will eventually see its salvation in tandem with gold as real money makes its way back into the global economy, there may be a near-term risk to silver due to its sometimes fortunate, sometimes unfortunate relationship with base metals.
On April 20, 2006, near the cycle peak to date for silver and gold, I provided some commentary to Resource Investor to the effect that hedge funds were marching the current bull market in natural resources to an early death because of excessive, manipulative speculation. At the time, I didn't offer any sort of explanation for this provocative thesis and unfortunately I have been unable to find time to do so since then. Luckily, Frank Veneroso has recently put into words and charts most of the discombobulated snippets of thought concerning this topic that have been circling in my head these many months.
I urge every single metal investor to read Mr. Veneroso's highly controversial and contrarian (to metal bulls) analysis which was originally delivered to the Geneva Conference on Base Metals Investing on October 3, 2006 and published on November 6, 2006. This could turn out to be the seminal analysis for the next phase of this commodities bull cycle. On the other hand, it could turn out to be a footnote in what might be a record breaking future for hard assets.
Mr. Veneroso provides his own way out should the latter occur; his own data goes back to the beginning of the Industrial Revolution, which generally refers to the period in Western history roughly bound by 1750 and 1850. The key here may be the word "Western", since the rest of the world did not participate to any significant extent. In fact, China and India, home to almost half of the world's population, might truly be in the middle of what historians will call the Second Industrial Revolution.
If so, Mr. Veneroso's position, that base metal prices are unsustainable in part because they have never experienced such an increase above the marginal cost of production since the beginning of the Industrial Revolution, may turn out to be yet another victim to an unfolding commodities supercycle.
The tug of war between the optimists, who believe China and India will dominate the demand side of the equation with insatiable appetites as far as the eye can see, and the pessimists, who see a global slowdown around the corner which will decimate the commodities sector, is nothing new. In fact, this diametric opposition has formed the very backbone of the bull market in metals for the last year or two. Waves of fear, uncertainty and doubt followed by bouts of greed-laced panic have characterized the volatile trading in metals.
Yet the prognostications have been rather lopsided in favor of a continuation, if not intensification, of the upward momentum in metals and other commodities.
Most of these arguments, however, have been rather dogmatic in their logic. Take, for example, the almost ubiquitous truism that the commodities bull market will not reach bubble status until the general public is actively participating. Comparisons are made to the dotcom mania where housewives were exchanging stock tips about the next hot Internet IPO. When the topic of conversation at roostertail parties is ore grades and drill results, so the argument goes, the smart money will know to leave the table because the end is near. I myself have been guilty of indulging this fantasy, such as when I asked: Is the Spotlight Shining On Silver, Gold and Commodities Yet?
I tend to believe that the quality of analysis within the metal bull community has suffered greatly because most of the dissent, with notable exceptions like Paul van Eeden, has come from "official" sources at the brokerage houses, investment banks and the like generally bundled together as "manipulators" by the true gold and silver bug.
A recent example from the supposed "manipulators" is the piece Global Disconnects by Stephen Roach of Morgan Stanley. Although this type of work is featured on several sites including You must be logged in to see this link. it is usually dismissed with little apparent effort by the metal gurus, as it is in the recent piece, Base Metals - A Good Alternative? Unfortunately, the constant feeding of one's belief system with platitudes is a surefire path to a very dangerous situation: groupthink.
That someone like Frank Veneroso would come along and provide a detailed, well-reasoned and objective analysis of base metals, the stellar performers to date of this commodity bull market, should be noteworthy. That he would slam the natural resource community consensus in such a forceful manner should be worrisome. But what should really be troubling, and this is something I predict will happen, is that he is likely to be ignored by those who have the most at stake.
In fact, he has been ignored for more than a year as he has painstakingly docomeented the discrepancy between base metal supply, demand and prices, all the while pointing to manipulation by hedge funds on the long side as the likely culprit. The short shrift has occurred despite Mr. Veneroso not being a stranger to "gold-bug friendly" manipulation theories, having been one of the most respected gold experts relied on by GATA for information about covert central bank activity in the gold market back in the days before conspiracies about gold were fashionable.
Now some of you may point out that Mr. Veneroso has been predicting a crash in base metal prices ever since copper was trading at $1.50/lb. on its way to $4.00/lb. So why should he be right this time? Well, being wrong in the short term does not automatically make one wrong in the long term. The potential value of Mr. Veneroso's work probably isn't in providing insight into what base metals will do next week, next month or even next year, but rather in generalizing about what direction they are likely headed in the next few years. His analysis may not be very important to speculators on any given day but it might make all the difference to long-term "buy and hold investors" in base metal (and silver) mining stocks.
So, which will it be? "This time it's different" because China and India are industrializing or "history is repeating" because the laws of economics still function? Regardless of which way base metals are headed and whether or not their precious cousins are dragged along for the ride, I personally believe that it would be unwise to marginalize Mr. Veneroso's work. At the least, he points out some fundamental risks that have been important historically and could become even more important in the future, thanks in part to the evolution of hedge fund speculation. With hedge funds in the picture, "this time it's different" may just turn out to be true, but not necessarily in the bulls' favor.
I'd like to conclude by pointing out my running soliloquy at silveraxis.com, which has included numerous cautionary notes in the past few months regarding base metals. I too have been talking about a possible economic slowdown amid what I view as a speculative orgy in commodities, although with far less eloquence and persuasiveness than Mr. Veneroso.
But my point hasn't been that silver, which is similar to base metals in that most of its demand is industrial, could join base metals in a downward spiral. Sure, that is a very real risk and the basis for my current careful posture in the silver market. At the same time, it should be noted that the risk to silver is mitigated somewhat by the fact that declining base metal production would eventually also curtail silver production. In any case, I don't see the downside in the price of silver being anything other than a buying opportunity because I believe physical silver should be constantly accomeulated in moderate doses over a very long holding horizon spanning generations.
Rather, what has me cautious and vigilant is the simple fact that most of the large, attention-grabbing silver projects out there are really silver-rich base metal projects which would be negatively impacted by falling base metal prices even if silver prices were not dragged significantly down.
In short, I believe natural resource companies with a large amount of base metal exposure are less than ideal candidates at the present time for those seeking investment opportunities in silver. One possible solution, according to this line of logic, might be to focus on silver projects which are gold-rich, since gold is more likely to weather the coming economic uncertainty than base metals.
Here is another viewpoint.
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The Silver Intersection
Excerpt
DETAIL 1: "nobody invested in production capacity for 20 years."
Putting aside monetary concerns for the moment, the bullish case for commodities in general and mineral resources in particular rests on the combination of diminished capacity confronted by increased global demand. Following World War II, increasing capacity fostered a general trend toward lower commodity prices. The roughly 20-year boom in the financial markets culminating with the Technology Bubble coincided with the final slump in the commodity markets, which manifested itself primarily in a lack of capital expenditure as companies focused on survival rather than expansion. At the same time, emerging nations home to better than one-third of the global population began experiencing robust growth, which has started placing a strain on the world's resources.
The mining industry to a large extent survived the bear market by becoming more efficient and by consolidating. Mergers and acquisitions resulted in many sectors seeing the number of operating companies nearly halved. Although consolidating to survive was a reasonable response to difficult times, mining companies to this day tend to acquire existing reserves rather than to develop new ones. Although the regulatory environment explains this to some extent, if the past is any guide, the increased acquisition activity will translate into reduced exploration and development spending going forward, which does nothing to secure long term supply and will have lasting repercussions for commodity prices, especially if global demand does not slacken.
Arguments that mineral prices are cyclical do not fully appreciate the damage done by the prolonged period of under-investment, the extent of the systematic neglect the industry has suffered, or the major hurdles it now faces. The mechanism to ramp up mineral production is simply not in place today; further, in the near to intermediate term the ETR is not aware of any projects underway that are of sufficient magnitude to both compensate for the rate at which mines worldwide are being depleted and to develop the surplus necessary to rebalance the supply-demand equation. And with a pronounced shortage of engineers of all stripes, a sparsely populated academic pipeline, a general dearth of mine personnel as well as heavy equipment, it is hardly surprising mining costs have soared 35% (see chart below). Further, with mining costs increasing relative to the prices obtained, a decline in earnings may be in the offing, but thinking those cost increases are not headed consumers' way is naïve.
At the same time mining capacity has been constrained, global demand has been exploding. Asian economies as a whole are growing at a rate roughly three times that of the US. One important aspect of this growth is that the highways, seaports, power stations and waterworks projects underway are the very kinds of infrastructure development that pave the way for sustained economic growth. The parallel between the US consuming more than half of the world's commodities in the 1950's and China doing something similar today suggests that the demand being generated now may be far more sustainable than those predicting a post-Olympics bust imagine.
Against this promising backdrop for commodity prices in general, silver assumes a rather unusual position and appears set to continue to outperform in the years ahead. Silver is arguably the most versatile of metals, as is witnessed by more patents being filed for new uses of silver each year than for all other metals combined: it has the highest electrical and thermal conductivity of any metal, the highest optical reflectivity, and the lowest contact resistance. Silver is classified as a precious metal, but it is the only one with the chemical reactivity to act as a catalyst in several critical applications; ironically, despite the 'precious' classification, the vast majority of the metal's uses today are industrial in nature.
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Edited by - pencilvanian on 11/09/2006 22:00:45 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/10/2006 : 22:01:14
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Copper Futures Plunge to 4 1/2 Month Low
NEW YORK — Copper futures quickly plunged to a 4 1/2 month low Friday, after increases in London and Shanghai exchange copper stocks led to a technical breakdown for the metal.
At settlement, the benchmark December copper contract was down 22.05 cents at $3.0885 per pound on the New York Mercantile Exchange.
Just ahead of the close, the contract plunged to a low of $3.08 a pound _ its weakest level since June 28.
The Shanghai Futures Exchange reported that copper inventories rose 15 percent in the week ending Thursday, to 35,123 metric tons. Inventories of copper in London Metal Exchange warehouses rose 1,625 metric tons to 148,200, the exchange reported early Friday.
Edward Meir, analyst at Man Financial, said the sharp sell-off in metals overall was sparked by copper and the Shanghai data.
"The main culprit in the copper sell-off, it seems, is the reported rise in Chinese stocks this week, once again raising the question of just how strong Chinese demand really is," said Meir.
Dan Vaught, a futures analyst at AG Edwards, said a steady accomeulation of exchange copper stocks played a large role in copper's demise as it implies that a surplus may be building in the marketplace.
"It's not unusual to see copper supplies increase on a seasonal basis, but the steady nature of the increases of 2,000 to 3,000 tons over the last few weeks has eroded support in the market," said Vaught.
That news led to a technical break in support for the December contract at $3.20 a pound, said Larry Young, a senior trader at Infinity Brokerage.
"Now the charts have turned slightly negative," said Young, who added that a break of the psychologically important level of $3 a pound should bring in further selling.
In precious metals trading on the Nymex, profit-taking left December gold $6.………
………(The decline in copper is to be expected, since nothing goes up forever.
The fundamentals are still in place:
Worldwide demand, supply barely keeping up with demand
Prices go up, sideways then down, up sideways, down,
Those of us who hoarded copper cents and nickel/cupronickel five cent coins, are guaranteed at least the face value of our coins, we can never lose our principal.
Inflation is not going away any time soon, things keep going up and up and up.
Unless there is a world wide depression, metals will continue to increase, or at least hold their value.)
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Nickel & copper news. (ongoing)
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