Mid-tier copper producer Inmet Mining Corp. is dismissing speculation that it's the target of a potential takeover by a private-equity fund, just days after reporting a three-fold increase in third-quarter profit.
Chairman and chief executive Richard Ross told shareholders Monday that such a deal would not be in their best interests — at least not right now.
“On that score, I can tell you that we have not had any serious discussions with any private-equity fund,” Ross told a conference call with analysts.
“In light of our growing production base and further growth potential, we do not believe it would be in the best interests of our shareholders to consider a transaction involving a private-equity fund at this time.”
Some analysts, however, have suggested that Inmet and rival Canadian copper producer Aur Resources Inc. are attractive targets amid the current takeover frenzy in the global metals industry.
“We believe there continues to be a compelling opportunity for private-equity investors to enter the base metals market,” Orest Wowkodaw of Canaccord Adams said in a recent note to clients.
“For illustration purposes only, we estimate that the cash required to launch a hostile bid for Inmet Mining, for example, even at a relatively rich 50 per cent premium to the current share price would be completely repaid by around the end of 2011, or in roughly five years, assuming all production is hedged at the current forward curve. The opportunity would be similar in the case of Aur Resources.”
Both companies are enticing because each has existing production and significant net cash growth, Mr. Wowkodaw added in an interview.
He estimates the companies will grow their net cash per share balance to about 60 per cent of their current share prices by the end of 2008. For its part, Inmet's cash balance totalled about $550-million at the end of September.
“We believe that the market continues to mis-price the anticipated net cash build of these three companies,” he said. “If this mis-pricing continues, we wonder how long it will take before we see a private-equity player capitalize on this opportunity.”
Inmet shares gained 2.1 per cent Monday, closing up $1.12 at $54.72 on the TSX. The stock has a 52-week high and low of $56.65 and $19.75.
Last Friday, Inmet reported that robust metal prices helped more than triple its third-quarter profit to $111.6-million or $2.31 share from a year-earlier $35.9-million or 80 cents per share.
“Copper and zinc prices continued to fluctuate around their record highs,” the company said.
“The average London Metal Exchange cash price this quarter was $3.48 (U.S.) per pound for copper, up significantly from $1.70 in 2005, and $1.52 per pound for zinc, compared with 59 cents per pound in 2005.”
Inmet's gross sales increased 69 per cent to $301.1-million. Copper production increased seven per cent to 20,700 tonnes, but zinc production fell 34 per cent to 16,500 tonnes.
“We are on target to achieve our 2006 objective of 80,000 tonnes of copper,” the miner said. “We have lowered our original 2006 objective for zinc to 74,000 tonnes because mining of some zinc rich zones at Pyhasalmi (in Finland) and Cayeli (in Turkey) has been pushed out to 2007.”
Inmet is a Toronto-based global mining company that produces copper, zinc and gold with mines in Canada, Turkey, Finland and Papua New Guinea.
Tuesday, October 31, 2006
Monday, October 30, 2006
Kazakh copper miner Kazakhmys PLC reported higher production in the third quarter, reflecting higher copper grades and improved extraction from its East Region mines.
Copper in concentrates output in the quarter to September rose to 111,400 tonnes from 96,100 tonnes previously, while copper cathodes production grew to 107,300 tonnes from 94,400 tonnes.
Ore extraction rose to 10,128 tonnes from 9,731 tonnes, while average copper grade improved to 1.16 pct from 1.04 pct.
Copper in concentrates output in the quarter to September rose to 111,400 tonnes from 96,100 tonnes previously, while copper cathodes production grew to 107,300 tonnes from 94,400 tonnes.
Ore extraction rose to 10,128 tonnes from 9,731 tonnes, while average copper grade improved to 1.16 pct from 1.04 pct.
Sunday, October 29, 2006
As a lockout of union employees nears its ninth month, AK Steel executives insist that they are not shopping the Ohio company even though some analysts think it is being eyed for a possible takeover.
"We are all about improving our competitiveness," Chief Executive James Wainscott told investors last week. "If in the process of doing that it makes us more attractive, so be it; but we are not actively marketing AK Steel."
Some analysts believe that potential suitors are just waiting for AK to resolve its labor problems. The company has been operating its largest mill, the Middletown Works, about 30 miles north of Cincinnati, with replacement workers since a lockout began March 1.
"There have been lots of takeover rumors," said analyst Charles Bradford, of Bradford Research/Soleil Securities in New York. "The industry is consolidating, and they (AK Steel) are subject to takeover because they are relatively small and flexible. If they solve their (labor) problems, they become more attractive."
Industry analyst Michael Locker, who has been a consultant to the union that represents the locked-out workers, said he believes AK has had a lot of lookers, but no takers.
"Obviously, small and medium-sized mills are facing consolidation," Locker said. "What I hear is that nearly every international producer that is interested in buying into the U.S. market has looked at AK."
But nobody wants to take on AK's current legacy costs for pensions and health care, he said.
"Until that is resolved in a favorable way that both parties can live with, I don't think you're going to attract much of an interest among buyers," Locker said.
Union workers voted down a contract proposal in September and a similar one in October that would have had everybody back to work in 90 days. After that, the company put a significantly worse offer on the table.
AK has said the Middletown Works operates at a $40-a-ton cost disadvantage and the company must have a contract that eliminates work force guarantees, allows greater flexibility in scheduling, passes on some health care insurance costs and converts a defined benefits pension to a contributory plan.
Since Wainscott's team took over management of AK Steel three years ago, the total work force has been cut from around 9,000 to about 6,600 and productivity has increased 36 percent, Wainscott said.
The Middletown Works had about 2,700 hourly production and maintenance workers in January. When it became evident that some kind of job action was eminent, a wave of resignations began as workers who had 30 years seniority took advantage of their eligibility to retire with full benefits.
The work force had dropped to about 2,500 when union workers were locked out on Feb. 28, when their contract expired. More retirements and resignations have reduced union membership to just over 1,800 -- about the same number of replacement workers who were hired to keep the mill going.
"The bottom line is we are prepared to operate in this fashion indefinitely if we need to do so," Wainscott said. "Having said that, just as we have for the past 11 months, we will continue to bargain in good faith to reach a labor agreement that allows us to compete at Middletown Works."
Wainscott has gone out of his way to tell investors that AK is happy with its niche market status and wants to stay independent.
"We're not for sale," he also told analysts in July. "This is a company that is standing alone, and we hope to do so more profitably."
He repeated that assessment when AK announced its profitable third-quarter results last week.
"AK Steel is back in the game," Wainscott said. "Now it's time for us to take it to the next level, and that's exactly what we intend to do. We can now focus on sustaining and growing our profitability."
Locker chalked that up to a certain amount of posturing.
"Every management says that," Locker said. "I think he's trying to maintain the morale and focus of his work force and management. But I think he's quite aware that companies of their size are takeover targets."
AK, with revenue of about $6 billion a year, was ranked 46th in size last year by the International Iron and Steel Institute with production of about 5.5 million metric tons of steel -- less than 10 percent of industry giant Mittal.
But that does not mean that AK could not survive as an independent.
"Their position is to be as niche-oriented as possible, and there's some sense to that," Locker said. "There's a viable possibility of doing that. The trend globally is for the acquisition of these type of assets, but that doesn't mean some medium and smaller producers can't survive."
Locker noted that AK is unique in its ability to produce different kinds of steel.
"It has an attractive market position," Locker said. "It produces a lot of value-added products. It's got good supply agreements. It has stainless and carbon (steel) positions and electrical, which is very profitable."
Shares of AK closed at $15.07 on Friday. It's traded between $6.76 and $15.95 in the past 52 weeks.
"We are all about improving our competitiveness," Chief Executive James Wainscott told investors last week. "If in the process of doing that it makes us more attractive, so be it; but we are not actively marketing AK Steel."
Some analysts believe that potential suitors are just waiting for AK to resolve its labor problems. The company has been operating its largest mill, the Middletown Works, about 30 miles north of Cincinnati, with replacement workers since a lockout began March 1.
"There have been lots of takeover rumors," said analyst Charles Bradford, of Bradford Research/Soleil Securities in New York. "The industry is consolidating, and they (AK Steel) are subject to takeover because they are relatively small and flexible. If they solve their (labor) problems, they become more attractive."
Industry analyst Michael Locker, who has been a consultant to the union that represents the locked-out workers, said he believes AK has had a lot of lookers, but no takers.
"Obviously, small and medium-sized mills are facing consolidation," Locker said. "What I hear is that nearly every international producer that is interested in buying into the U.S. market has looked at AK."
But nobody wants to take on AK's current legacy costs for pensions and health care, he said.
"Until that is resolved in a favorable way that both parties can live with, I don't think you're going to attract much of an interest among buyers," Locker said.
Union workers voted down a contract proposal in September and a similar one in October that would have had everybody back to work in 90 days. After that, the company put a significantly worse offer on the table.
AK has said the Middletown Works operates at a $40-a-ton cost disadvantage and the company must have a contract that eliminates work force guarantees, allows greater flexibility in scheduling, passes on some health care insurance costs and converts a defined benefits pension to a contributory plan.
Since Wainscott's team took over management of AK Steel three years ago, the total work force has been cut from around 9,000 to about 6,600 and productivity has increased 36 percent, Wainscott said.
The Middletown Works had about 2,700 hourly production and maintenance workers in January. When it became evident that some kind of job action was eminent, a wave of resignations began as workers who had 30 years seniority took advantage of their eligibility to retire with full benefits.
The work force had dropped to about 2,500 when union workers were locked out on Feb. 28, when their contract expired. More retirements and resignations have reduced union membership to just over 1,800 -- about the same number of replacement workers who were hired to keep the mill going.
"The bottom line is we are prepared to operate in this fashion indefinitely if we need to do so," Wainscott said. "Having said that, just as we have for the past 11 months, we will continue to bargain in good faith to reach a labor agreement that allows us to compete at Middletown Works."
Wainscott has gone out of his way to tell investors that AK is happy with its niche market status and wants to stay independent.
"We're not for sale," he also told analysts in July. "This is a company that is standing alone, and we hope to do so more profitably."
He repeated that assessment when AK announced its profitable third-quarter results last week.
"AK Steel is back in the game," Wainscott said. "Now it's time for us to take it to the next level, and that's exactly what we intend to do. We can now focus on sustaining and growing our profitability."
Locker chalked that up to a certain amount of posturing.
"Every management says that," Locker said. "I think he's trying to maintain the morale and focus of his work force and management. But I think he's quite aware that companies of their size are takeover targets."
AK, with revenue of about $6 billion a year, was ranked 46th in size last year by the International Iron and Steel Institute with production of about 5.5 million metric tons of steel -- less than 10 percent of industry giant Mittal.
But that does not mean that AK could not survive as an independent.
"Their position is to be as niche-oriented as possible, and there's some sense to that," Locker said. "There's a viable possibility of doing that. The trend globally is for the acquisition of these type of assets, but that doesn't mean some medium and smaller producers can't survive."
Locker noted that AK is unique in its ability to produce different kinds of steel.
"It has an attractive market position," Locker said. "It produces a lot of value-added products. It's got good supply agreements. It has stainless and carbon (steel) positions and electrical, which is very profitable."
Shares of AK closed at $15.07 on Friday. It's traded between $6.76 and $15.95 in the past 52 weeks.
Saturday, October 28, 2006
Southern Copper Corp., one of the world's top producers of the red metal, on Friday reported a 41 percent rise in third-quarter net income to $521.6 million, driven by high metals prices.
The results, which were dampened by lower mine production, were below forecasts by two Peruvian banks and one U.S. investment bank polled by Reuters, which predicted profits of between $535 million and $752 million.
The company's profits for the first nine months of 2006 rose to $1.4 billion, or earnings per share of $4.69, compared with $979.7 million, or $3.33 per share, in the same period of 2005.
Southern Copper is majority owned by Mexico City-based Grupo Mexico and owns the Toquepala and Cuajone pits in Peru and the Cananea and La Caridad mines in Mexico.
The company said third-quarter earnings per share rose to $1.77, compared to $1.25 per share for the same period a year 2005, despite lower metals output.
"This increase was due principally to higher copper, silver and zinc prices," Southern Copper said in a statement.
London Metal Exchange (LME) and New York Commodity Exchange (COMEX) copper prices averaged $3.48 and $3.54 a pound respectively in the third quarter, compared with an average of $1.70 a pound in the third quarter of 2005, the company said.
That price increase made up for a fall in SCC's copper and zinc output in the quarter.
Copper output fell 21 percent to 311.5 million pounds in the third quarter, mainly due to a decrease in production in Mexico, where a labor dispute caused the temporary closure of the La Caridad pit.
La Caridad will be back at full production in the fourth quarter, SCC said.
Zinc production fell 0.5 percent to 81.1 million pounds in the third quarter due to lower ore grades, SCC said.
"We will restore 100 percent of the zinc production at the San Luis Potosi zinc refinery by the end of October," the company added.
Net sales in the third quarter rose 37 percent to $1.4 billion compared with the same period a year ago. Net sales in the first nine months rose 30 percent to $3.8 billion compared to the year-earlier period.
Shares of Southern Copper rose 0.32 percent to $52.66 in New York in morning trade. Shares in Lima were unchanged at $52.40 a share.
The results, which were dampened by lower mine production, were below forecasts by two Peruvian banks and one U.S. investment bank polled by Reuters, which predicted profits of between $535 million and $752 million.
The company's profits for the first nine months of 2006 rose to $1.4 billion, or earnings per share of $4.69, compared with $979.7 million, or $3.33 per share, in the same period of 2005.
Southern Copper
The company said third-quarter earnings per share rose to $1.77, compared to $1.25 per share for the same period a year 2005, despite lower metals output.
"This increase was due principally to higher copper, silver and zinc prices," Southern Copper said in a statement.
London Metal Exchange (LME) and New York Commodity Exchange (COMEX) copper prices averaged $3.48 and $3.54 a pound respectively in the third quarter, compared with an average of $1.70 a pound in the third quarter of 2005, the company said.
That price increase made up for a fall in SCC's copper and zinc output in the quarter.
Copper output fell 21 percent to 311.5 million pounds in the third quarter, mainly due to a decrease in production in Mexico, where a labor dispute caused the temporary closure of the La Caridad pit.
La Caridad will be back at full production in the fourth quarter, SCC said.
Zinc production fell 0.5 percent to 81.1 million pounds in the third quarter due to lower ore grades, SCC said.
"We will restore 100 percent of the zinc production at the San Luis Potosi zinc refinery by the end of October," the company added.
Net sales in the third quarter rose 37 percent to $1.4 billion compared with the same period a year ago. Net sales in the first nine months rose 30 percent to $3.8 billion compared to the year-earlier period.
Shares of Southern Copper rose 0.32 percent to $52.66 in New York in morning trade. Shares in Lima were unchanged at $52.40 a share.
Friday, October 27, 2006
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.
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.
Thursday, October 26, 2006
Copper futures in New York firmed at the open on Thursday, but continued to tread in well-trodden ranges as news of a rejection of early contract talks at Chile's Codelco gave the market a modest bounce, sources said.
"We're seeing some support from the Codelco news this morning, but the market is not having a great response to it. There is nothing really behind it to push us out of this morning's range ... we have been stuck in this 50-point range for the past hour," said one COMEX floor dealer.
By 10:40 a.m. EDT (1440 GMT), copper for December delivery was up 2.05 cents at $3.4250 a lb on the New York Mercantile Exchange's COMEX division, near the upper end of its early $3.39-$3.4330 trading band.
Spot October was untraded at $3.3880.
COMEX copper volume at 10:00 a.m. was estimated at a mere 3,000 lots.
Sentiment was lifted after some 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.
Chile, the world's biggest copper miner, produced 392,130 tonnes of the red metal in September, down 9.8 percent from the same month last year, the government said on Thursday.
Traders noted that price action in the benchmark December copper contract for the week has been relatively calm, with little involvement from the funds, who for the most part, have taken to the sidelines during this week's barrage of U.S. economic data.
After the copper close on Wednesday, the U.S. Federal Reserve held its benchmark interest rate steady at 5.25 percent for a third straight meeting, citing economic cooling while warning that it was closely monitoring price pressures.
Thursday's data showed new orders of U.S.-made durable good surge to a much greater-than-expected 7.8 percent in September, while new U.S. single-family home sales increased 5.3 percent in September to an annualized rate of 1.075 million.
"I think the more important number will be the U.S. GDP number out tomorrow," said Edward Meir, metals analyst with Man Financial.
"If we get another surprise on the upside, that could kind of kick-start things," Meir added.
However, another huge influx of material into London Metal Exchange warehouses continued to worry the bulls, holding copper back from joining rallies this week in most of the other base metals, analysts said.
"Given the stock rises of late this is not so surprising, especially with the metal tending to build up in the US and also with withdrawals diminishing," said William Adams, metals analyst with BaseMetals.com.
LME copper warehouse inventories climbed 2,450 tonnes to 126,725 tonnes on Thursday, while COMEX stocks rose 174 short tons to 23,104 tons on Wednesday.
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.
LME three-months copper last traded up $70 at $7,525 a tonne from Wednesday's kerb close.
"We're seeing some support from the Codelco news this morning, but the market is not having a great response to it. There is nothing really behind it to push us out of this morning's range ... we have been stuck in this 50-point range for the past hour," said one COMEX floor dealer.
By 10:40 a.m. EDT (1440 GMT), copper for December delivery
Spot October
COMEX copper volume at 10:00 a.m. was estimated at a mere 3,000 lots.
Sentiment was lifted after some 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.
Chile, the world's biggest copper miner, produced 392,130 tonnes of the red metal in September, down 9.8 percent from the same month last year, the government said on Thursday.
Traders noted that price action in the benchmark December copper contract for the week has been relatively calm, with little involvement from the funds, who for the most part, have taken to the sidelines during this week's barrage of U.S. economic data.
After the copper close on Wednesday, the U.S. Federal Reserve held its benchmark interest rate steady at 5.25 percent for a third straight meeting, citing economic cooling while warning that it was closely monitoring price pressures.
Thursday's data showed new orders of U.S.-made durable good surge to a much greater-than-expected 7.8 percent in September, while new U.S. single-family home sales increased 5.3 percent in September to an annualized rate of 1.075 million.
"I think the more important number will be the U.S. GDP number out tomorrow," said Edward Meir, metals analyst with Man Financial.
"If we get another surprise on the upside, that could kind of kick-start things," Meir added.
However, another huge influx of material into London Metal Exchange warehouses continued to worry the bulls, holding copper back from joining rallies this week in most of the other base metals, analysts said.
"Given the stock rises of late this is not so surprising, especially with the metal tending to build up in the US and also with withdrawals diminishing," said William Adams, metals analyst with BaseMetals.com.
LME copper warehouse inventories climbed 2,450 tonnes to 126,725 tonnes on Thursday, while COMEX stocks rose 174 short tons to 23,104 tons on Wednesday.
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.
LME three-months copper
Wednesday, October 25, 2006
Allegheny Technologies Inc. _ a maker of steel and titanium products for the aerospace, defense and chemicals industries _ on Wednesday said third-quarter profit surged 83 percent on sharply higher sales.
Net income increased to $161.9 million, or $1.58 per share, from $88.3 million, or 87 cents per share, in the year-ago quarter.
Sales grew to $1.29 billion from $861.7 million _ a 50 percent jump year over year. By segment, sales jumped 40 percent in high performance metals, 66 percent in the flat-rolled products business and 7 percent in engineered products.
Analysts surveyed by Thomson Financial forecast earnings of $1.36 per share and sales of $1.19 billion.
"Most of our major markets remained strong and total operating margins continued to expand," said Patrick Hassey, chairman, president and chief executive.
Allegheny said its key growth markets included aerospace and defense, the chemical process industry, oil and gas, electrical energy and medical.
Net income increased to $161.9 million, or $1.58 per share, from $88.3 million, or 87 cents per share, in the year-ago quarter.
Sales grew to $1.29 billion from $861.7 million _ a 50 percent jump year over year. By segment, sales jumped 40 percent in high performance metals, 66 percent in the flat-rolled products business and 7 percent in engineered products.
Analysts surveyed by Thomson Financial forecast earnings of $1.36 per share and sales of $1.19 billion.
"Most of our major markets remained strong and total operating margins continued to expand," said Patrick Hassey, chairman, president and chief executive.
Allegheny said its key growth markets included aerospace and defense, the chemical process industry, oil and gas, electrical energy and medical.
Peru's output of copper rose in July, while zinc and gold production fell, the Energy and Mines Ministry said Wednesday.
Mineral production has become a motor of the Andean nation's economic growth, with a number of new mines opening in recent years.
The government said that copper production rose 6.0% to 87,494 metric tons in July compared with the same month a year earlier.
Copper output rose 20% at Compania Minera Antamina SA, the government said.
The government said that gold output totaled 16,809 kilograms in July, down 2.0% compared with July 2005.
The ministry pointed to lower production at several mines, including Barrick Gold Corp.'s (ABX) Minera Barrick Misquichilca.
It said, however, that output rose 2.46% at Minera Yanacocha SRL, which runs one of the world's largest gold mines.
Zinc production was 101,306 tons in July, down 2.7% from a year earlier.
Output fell at Compania Minera Antamina and at Compania Minera Volcan SAA (VOLCABC1.VL), the ministry said.
Silver production in July was 296,019 kilograms, an increase of 14.7% from the same period a year before.
Among some of the other minerals, the government said that molybdenum output fell 19.8% to 1,339 tons in July.
Lead production was 26,016 tons in July, a slide of 1.6% from the same month in the previous year.
Tin output was 3,416 tons in July, down 4.9% on year.
Iron output totaled 419,818 tons in July, a 13.2% increase, the government said.
Newmont Mining Corp. (NEM) has a 51.35% stake in Minera Yanacocha, while Peru's Compania de Minas Buenaventura SAA (BVN) holds a 43.65% share.
The owners of Antamina are: BHP Billiton (BHP), with a 33.75% stake; Falconbridge Ltd (FAL.T) with 33.75%; Teck Cominco Corp.(TEK.B.T) with 22.5% and Mitsubishi Corp. (8058.TO) with 10%.
Mineral production has become a motor of the Andean nation's economic growth, with a number of new mines opening in recent years.
The government said that copper production rose 6.0% to 87,494 metric tons in July compared with the same month a year earlier.
Copper output rose 20% at Compania Minera Antamina SA, the government said.
The government said that gold output totaled 16,809 kilograms in July, down 2.0% compared with July 2005.
The ministry pointed to lower production at several mines, including Barrick Gold Corp.'s (ABX) Minera Barrick Misquichilca.
It said, however, that output rose 2.46% at Minera Yanacocha SRL, which runs one of the world's largest gold mines.
Zinc production was 101,306 tons in July, down 2.7% from a year earlier.
Output fell at Compania Minera Antamina and at Compania Minera Volcan SAA (VOLCABC1.VL), the ministry said.
Silver production in July was 296,019 kilograms, an increase of 14.7% from the same period a year before.
Among some of the other minerals, the government said that molybdenum output fell 19.8% to 1,339 tons in July.
Lead production was 26,016 tons in July, a slide of 1.6% from the same month in the previous year.
Tin output was 3,416 tons in July, down 4.9% on year.
Iron output totaled 419,818 tons in July, a 13.2% increase, the government said.
Newmont Mining Corp. (NEM) has a 51.35% stake in Minera Yanacocha, while Peru's Compania de Minas Buenaventura SAA (BVN) holds a 43.65% share.
The owners of Antamina are: BHP Billiton (BHP), with a 33.75% stake; Falconbridge Ltd (FAL.T) with 33.75%; Teck Cominco Corp.(TEK.B.T) with 22.5% and Mitsubishi Corp. (8058.TO) with 10%.
Copper dropped for a fourth straight trading session in London after stockpiles rose to their highest in more than six weeks, showing a supply shortage may be easing.
Stockpiles of the metal monitored by the London Metal Exchange jumped 2.9 percent, to 124,275 tons, the exchange said today in a daily report. That's the highest since Sept. 8. The gain will curb pressure on supplies of the metal used in wires, Michael Lewis, head of commodities research in London at Deutsche Bank AG, Germany's largest bank, said in an interview.
``There's not much tightening in the copper market from now onwards,'' said Lewis, who has tracked commodities since 2003.
Copper for delivery in three months on the LME fell $20, or 0.3 percent, to $7,475 a ton as of 10:23 a.m. London time. The contract earlier rose as much as $25.50 to $7,520.50 a ton.
The shortage of copper may ease in the first quarter of next year, Lewis said, as an economic slowdown in the U.S. will curb demand. The U.S. is the world's second-largest copper consumer after China.
Production may exceed demand by 50,000 tons in 2007, from a deficit this year of 150,000 tons, according to Societe Generale. Users have turned to stocks to fill the production shortfall this year. Prices rose 89 percent in the past 12 months, and copper traded on May 11 at a record $8,800 a ton.
The premium between copper for immediate delivery over three-month prices narrowed to $8 yesterday, from more than $20 last week. An easing of the premium, known as a backwardation, usually indicates an easing of constraints on supply.
Nickel, used in stainless steel production, lost $600, or 1.9 percent, to $31,600 a ton on the LME. The metal has more than doubled in the past year. It traded at $32,625 on Oct. 20, the highest since at least 1987.
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.
Metal bought and due to be shipped out from LME-registered warehouses accounted for more than a third of inventory.
Zinc rose $30 to $3,930 a ton and tin fell $50 to $10,150. Lead gained $3 to $1,535lme.
Stockpiles of the metal monitored by the London Metal Exchange jumped 2.9 percent, to 124,275 tons, the exchange said today in a daily report. That's the highest since Sept. 8. The gain will curb pressure on supplies of the metal used in wires, Michael Lewis, head of commodities research in London at Deutsche Bank AG, Germany's largest bank, said in an interview.
``There's not much tightening in the copper market from now onwards,'' said Lewis, who has tracked commodities since 2003.
Copper for delivery in three months on the LME fell $20, or 0.3 percent, to $7,475 a ton as of 10:23 a.m. London time. The contract earlier rose as much as $25.50 to $7,520.50 a ton.
The shortage of copper may ease in the first quarter of next year, Lewis said, as an economic slowdown in the U.S. will curb demand. The U.S. is the world's second-largest copper consumer after China.
Production may exceed demand by 50,000 tons in 2007, from a deficit this year of 150,000 tons, according to Societe Generale. Users have turned to stocks to fill the production shortfall this year. Prices rose 89 percent in the past 12 months, and copper traded on May 11 at a record $8,800 a ton.
The premium between copper for immediate delivery over three-month prices narrowed to $8 yesterday, from more than $20 last week. An easing of the premium, known as a backwardation, usually indicates an easing of constraints on supply.
Nickel, used in stainless steel production, lost $600, or 1.9 percent, to $31,600 a ton on the LME. The metal has more than doubled in the past year. It traded at $32,625 on Oct. 20, the highest since at least 1987.
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.
Metal bought and due to be shipped out from LME-registered warehouses accounted for more than a third of inventory.
Zinc rose $30 to $3,930 a ton and tin fell $50 to $10,150. Lead gained $3 to $1,535lme.
Tuesday, October 24, 2006
Oxiana Ltd., the fastest growing of Australia's 10 largest mining companies, said third-quarter copper production was 20,073 metric tons and zinc output was 21,482 tons.
Total output of gold was 58,829 ounces in the three months ended Sept. 30 from its Sepon mine in Laos and Golden Grove mine in Australia, Melbourne based Oxiana said today in a statement to the Australian Stock Exchange.
Oxiana spent $271 million expanding and buying copper and zinc mines in Laos and Western Australia last year, which helped drive a 14-fold increase in first-half profit. About 48 percent of its full-year earnings are forecast to come from copper and 45 percent from zinc, Merrill Lynch & Co. said Aug. 24.
``Production was focused on copper,'' at Golden Grove during the quarter, with ``strong development performance,'' Oxiana said in the statement.
Silver production was 580,925 ounces in the quarter, the company said.
Total output of gold was 58,829 ounces in the three months ended Sept. 30 from its Sepon mine in Laos and Golden Grove mine in Australia, Melbourne based Oxiana said today in a statement to the Australian Stock Exchange.
Oxiana spent $271 million expanding and buying copper and zinc mines in Laos and Western Australia last year, which helped drive a 14-fold increase in first-half profit. About 48 percent of its full-year earnings are forecast to come from copper and 45 percent from zinc, Merrill Lynch & Co. said Aug. 24.
``Production was focused on copper,'' at Golden Grove during the quarter, with ``strong development performance,'' Oxiana said in the statement.
Silver production was 580,925 ounces in the quarter, the company said.
Monday, October 23, 2006
BHP Billiton Ltd./Plc., the world's biggest miner, said on Tuesday its copper production in the three months ended September fell 19 percent from a year ago, in large part due to a month-long strike at its Escondida mine in Chile.
Copper is a key component underpinning forecasts for a sharp rise in the Sydney and London-listed company's fiscal 2007 profit.
The company also said it continues to face shortages of equipment and workers, in common with other miners as they increase production to meet strong global demand.
"While the majority of BHP Billiton's projects remain broadly on schedule and budget, tight labour markets and shortages of equipment and supplies continue across the industry," the company said.
"These issues are particularly acute in Western Australia and the Gulf of Mexico and continue to impact costs and schedules."
BHP Billiton, which sees strong demand for metals for the remainder of the year, is forecast to post a full-year net profit exceeding last year's $10.45 billion.
BHP said copper output fell to 249,900 tonnes in the three months to Sept. 30 from 308,900 tonnes a year ago, impacted largely by the strike at Escondida, in which BHP has a 57.5 percent stake.
The strike over wages, which ran for most of August, also played a role in a decline in copper production at BHP's close rival and 30 percent Escondida stakeholder, Rio Tinto Ltd./Plc. .
London Metal Exchange copper sold for between $7,150 and $8,100 a tonne during the company's last quarter. In May it fetched as much as $8,800 a tonne, double its January price.
BHP also reported output of 44,500 tonnes of nickel, up 1 percent on the same period last year.
The increase comes amid record high nickel prices above $32,000 a tonne due to little or no surplus supplies of the metal, which is needed to give stainless steel its shine.
Aluminium production was up 1 percent to 337,000 tonnes, a record high, while output of alumina, which is needed to make aluminium, rose 5 percent to 1.078 million tonnes.
Iron ore production, where BHP Billiton holds the No.3 position behind Brazil's CVRD and Rio Tinto, was 5 percent higher at 25 million tonnes.
Iron ore has emerged as a key component of BHP Billiton's asset mix, given strong demand across Asia and China's emergence as a top global steelmaker.
Oil and condensate production in the quarter fell 2 percent to 15.216 million barrels.
BHP Billiton stock, which fell 11 percent in the last quarter, closed at A$27.8 on Monday.
Copper is a key component underpinning forecasts for a sharp rise in the Sydney and London-listed company's fiscal 2007 profit.
The company also said it continues to face shortages of equipment and workers, in common with other miners as they increase production to meet strong global demand.
"While the majority of BHP Billiton's projects remain broadly on schedule and budget, tight labour markets and shortages of equipment and supplies continue across the industry," the company said.
"These issues are particularly acute in Western Australia and the Gulf of Mexico and continue to impact costs and schedules."
BHP Billiton, which sees strong demand for metals for the remainder of the year, is forecast to post a full-year net profit exceeding last year's $10.45 billion.
BHP said copper output fell to 249,900 tonnes in the three months to Sept. 30 from 308,900 tonnes a year ago, impacted largely by the strike at Escondida, in which BHP has a 57.5 percent stake.
The strike over wages, which ran for most of August, also played a role in a decline in copper production at BHP's close rival and 30 percent Escondida stakeholder, Rio Tinto Ltd./Plc.
London Metal Exchange copper
BHP also reported output of 44,500 tonnes of nickel
The increase comes amid record high nickel prices above $32,000 a tonne due to little or no surplus supplies of the metal, which is needed to give stainless steel its shine.
Aluminium
Iron ore production, where BHP Billiton holds the No.3 position behind Brazil's CVRD
Iron ore has emerged as a key component of BHP Billiton's asset mix, given strong demand across Asia and China's emergence as a top global steelmaker.
Oil and condensate production in the quarter fell 2 percent to 15.216 million barrels.
BHP Billiton stock, which fell 11 percent in the last quarter, closed at A$27.8 on Monday.
Copper prices rose by about one percent in London on Monday, while nickel was looking to return to record highs on threats to mine supply and critically low world stocks, dealers said.
‘The market is bubbling away, but things are generally light. We are still digesting last week’s moves but I think metals probably want to try and forge a path higher,’ a London dealer said.
‘Aluminium, nickel and zinc certainly all look frothy, but copper is holding shy of the big number at $8,000, There is some forward selling that is keeping a lid on things.’
At 1000 GMT three month London Metal Exchange (LME) copper futures MCU3 were quoted at $7,590/7,605 a tonne, versus $7,530 at Friday’s close.
Nickel MNI3 was at $32,300/32,500, up $250 from Friday, when the metal hit a new high of $32,625 on threats to supply in New Caledonia and tight stocks.
‘Nickel is a dangerous market. The metal is pretty scarce and dips will be bought until we see a significant rise in stocks,’ a second trader said.
Stocks of the metal in LME warehouses were 5,148 tonnes, up 318 over the weekend, but 1,866 tonnes are earmarked for delivery, leaving just 3,282 left to support the 1.4 million tonne per year market.
France’s Eramet ERMT.PA said on Friday a general strike on the Pacific island of New Caledonia was costing it around $1 million a day and had left its Doniambo nickel smelter with some 10 days of feedstock.
Eramet is 60 percent owner of Societe Le Nickel (SLN), which produces around 70,000 tonnes of nickel concentrate a year, some 5 percent of world production. [ID:nL20660136]
Leading indicator
Last week, nickel, tin, lead and zinc all hit contract highs, despite downbeat economic data from the United States and China that have taken the gloss off metals since they peaked in May.
‘The scenario we are looking at is a rotation away from domestic construction and auto manufacturing into commercial construction and infrastructure,’ Sean Corrigan, chief investment strategist, Diapason Commodities Management, said.
He pointed to booming construction sectors in Germany and Japan. ‘The renaissance of construction in Japan and Germany seems to be picking up after the lost decade of the Japanese slump and the post re-unification hangover in Germany,’ he said.
‘Either we will wake up to the fact that the economic slowdown is worse than we thought and the market is in for a torrid time, or metals are telling us that our theory was right and we should look at base metals as a leading indicator and the economy is picking up again.’
In other metals, aluminium MAL3 was steady at $2,726/2,729 from $2,718 at Friday’s close, while tin MSN3 was flat at $10,150/10,200.
Tin gained as much as 12 percent last week, hitting a contract high of $11,000 after the closure of more than 20 small smelters in Indonesia.
The Indonesian government wants to regulate tin mining in Bangka Belitung Province after a demonstration by hundreds of miners against the closure of three smelters turned violent in early October.
Zinc MZN3 was at $3,975/3,990, up $5, after touching $4,005 on light fund buying, just $15 short of last week’s record $4,020.
Gold XAU was softer, tracking oil CLc1, which fell over one percent despite confirmation leading exporter Saudi Arabia was curbing November supplies after an OPEC agreement to cut output.
‘The market is bubbling away, but things are generally light. We are still digesting last week’s moves but I think metals probably want to try and forge a path higher,’ a London dealer said.
‘Aluminium, nickel and zinc certainly all look frothy, but copper is holding shy of the big number at $8,000, There is some forward selling that is keeping a lid on things.’
At 1000 GMT three month London Metal Exchange (LME) copper futures MCU3 were quoted at $7,590/7,605 a tonne, versus $7,530 at Friday’s close.
Nickel MNI3 was at $32,300/32,500, up $250 from Friday, when the metal hit a new high of $32,625 on threats to supply in New Caledonia and tight stocks.
‘Nickel is a dangerous market. The metal is pretty scarce and dips will be bought until we see a significant rise in stocks,’ a second trader said.
Stocks of the metal in LME warehouses were 5,148 tonnes, up 318 over the weekend, but 1,866 tonnes are earmarked for delivery, leaving just 3,282 left to support the 1.4 million tonne per year market.
France’s Eramet ERMT.PA said on Friday a general strike on the Pacific island of New Caledonia was costing it around $1 million a day and had left its Doniambo nickel smelter with some 10 days of feedstock.
Eramet is 60 percent owner of Societe Le Nickel (SLN), which produces around 70,000 tonnes of nickel concentrate a year, some 5 percent of world production. [ID:nL20660136]
Leading indicator
Last week, nickel, tin, lead and zinc all hit contract highs, despite downbeat economic data from the United States and China that have taken the gloss off metals since they peaked in May.
‘The scenario we are looking at is a rotation away from domestic construction and auto manufacturing into commercial construction and infrastructure,’ Sean Corrigan, chief investment strategist, Diapason Commodities Management, said.
He pointed to booming construction sectors in Germany and Japan. ‘The renaissance of construction in Japan and Germany seems to be picking up after the lost decade of the Japanese slump and the post re-unification hangover in Germany,’ he said.
‘Either we will wake up to the fact that the economic slowdown is worse than we thought and the market is in for a torrid time, or metals are telling us that our theory was right and we should look at base metals as a leading indicator and the economy is picking up again.’
In other metals, aluminium MAL3 was steady at $2,726/2,729 from $2,718 at Friday’s close, while tin MSN3 was flat at $10,150/10,200.
Tin gained as much as 12 percent last week, hitting a contract high of $11,000 after the closure of more than 20 small smelters in Indonesia.
The Indonesian government wants to regulate tin mining in Bangka Belitung Province after a demonstration by hundreds of miners against the closure of three smelters turned violent in early October.
Zinc MZN3 was at $3,975/3,990, up $5, after touching $4,005 on light fund buying, just $15 short of last week’s record $4,020.
Gold XAU was softer, tracking oil CLc1, which fell over one percent despite confirmation leading exporter Saudi Arabia was curbing November supplies after an OPEC agreement to cut output.
Toronto's FRONTERA COPPER CORP. has completed its first sale of LME Grade A copper cathode from its Piedras Verdes project in the Sonora state. The customer, GERALD METALS of Stamford, Connecticut, has agreed to purchase all of Frontera's copper production through 2010.
At current copper prices Frontera expects to generate strong positive cash flows during the fourth quarter of 2006 and to record approximately $30 million of revenue in the current year's financial statements.
Piedras Verdes is a run-of-mine heap leach, SX/EW copper project. Annual production is estimated to be 70 million lb of copper cathode. A total of 942 million lb of copper is projected to be produced during the 18-year life of the mine.
At current copper prices Frontera expects to generate strong positive cash flows during the fourth quarter of 2006 and to record approximately $30 million of revenue in the current year's financial statements.
Piedras Verdes is a run-of-mine heap leach, SX/EW copper project. Annual production is estimated to be 70 million lb of copper cathode. A total of 942 million lb of copper is projected to be produced during the 18-year life of the mine.
Sunday, October 22, 2006
Base metal prices notched up another record week on plunging stocks and keen demand, while crude oil prices headed lower as traders tracked OPEC output news and US energy reserves.
On Friday, the Commodities Research Bureau’s index of 17 commodities firmed to 306.11 points, from 303.64 points the previous week.
GOLD: Gold rebounded above $600 for the first time since October 2. “Prices strengthened with gold retesting the 600-dollar mark on strong investor interest prompted by the positive sentiment in the oil market and the sharp decline in the dollar,” said Barclays Capital analyst Sudakshina Unnikrishnan.
A weaker dollar makes commodities priced in the US unit on world markets more attractive to buyers using other currencies. Investors also seek refuge in gold because it is seen as a safe store of value in times of higher inflation.
SILVER: Silver prices climbed in line with other precious metals, breaching $12 per ounce.
PALLADIUM AND PLATINUM: Platinum and palladium prices rose. Deutsche Bank analysts said that palladium gains would be limited owing to plentiful stockpiles. “We remain concerned about the sizeable quantities of above ground stocks in both Zurich and Russia that could be liquidated and sold into the market if required,” they said. On the London Platinum and Palladium Market, platinum rose to $1,080 per ounce at the late fixing Friday, from $1,073 the previous week.
Palladium gained to $326 per ounce on Friday from $314 the previous week.
BASE METALS: The base metal complex enjoyed another historic week. On the London Metal Exchange, three-month zinc prices reached an all-time pinnacle of $4,020 per tonne — the highest level since the metal was first listed in 1915. Zinc is used to galvanize iron and steel.
Nickel had touched an all-time peak of $32,250 per tonne, while lead hit a record high $1,550 per tonne. Tin prices meanwhile had struck $11,000 per tonne — the best level since 1989 when the metal was re-introduced on the London market. Base metals are currently enjoying a record-breaking run thanks largely to weak stocks, ongoing production problems and soaring demand from China, whose economic growth has continued at a blistering pace.
On Friday, the Commodities Research Bureau’s index of 17 commodities firmed to 306.11 points, from 303.64 points the previous week.
GOLD: Gold rebounded above $600 for the first time since October 2. “Prices strengthened with gold retesting the 600-dollar mark on strong investor interest prompted by the positive sentiment in the oil market and the sharp decline in the dollar,” said Barclays Capital analyst Sudakshina Unnikrishnan.
A weaker dollar makes commodities priced in the US unit on world markets more attractive to buyers using other currencies. Investors also seek refuge in gold because it is seen as a safe store of value in times of higher inflation.
SILVER: Silver prices climbed in line with other precious metals, breaching $12 per ounce.
PALLADIUM AND PLATINUM: Platinum and palladium prices rose. Deutsche Bank analysts said that palladium gains would be limited owing to plentiful stockpiles. “We remain concerned about the sizeable quantities of above ground stocks in both Zurich and Russia that could be liquidated and sold into the market if required,” they said. On the London Platinum and Palladium Market, platinum rose to $1,080 per ounce at the late fixing Friday, from $1,073 the previous week.
Palladium gained to $326 per ounce on Friday from $314 the previous week.
BASE METALS: The base metal complex enjoyed another historic week. On the London Metal Exchange, three-month zinc prices reached an all-time pinnacle of $4,020 per tonne — the highest level since the metal was first listed in 1915. Zinc is used to galvanize iron and steel.
Nickel had touched an all-time peak of $32,250 per tonne, while lead hit a record high $1,550 per tonne. Tin prices meanwhile had struck $11,000 per tonne — the best level since 1989 when the metal was re-introduced on the London market. Base metals are currently enjoying a record-breaking run thanks largely to weak stocks, ongoing production problems and soaring demand from China, whose economic growth has continued at a blistering pace.
Friday, October 20, 2006
Copper edged up as gains in other metals, specifically nickel, supported the metal and helped offset concerns over the economic slowdown in the US following weak data yesterday.
Nickel rose to a new record peak today above 32,000 usd a tonne. The metal 'remains plagued by an acute stock shortage,' The LME reported another decline in nickel stocks today, saying they fell 96 tonnes to 4,836 tonnes.
Nickel stocks are equivalent to less than one day of global consumption. Further, the metal was plagued earlier this month by a strike at Inco's Goro nickel project in New Caledonia.
The strike has since been resolved but Adams said 'even if production recovers in New Caledonia, the market will still remain tight ... which means all eyes will no doubt remain on LME stocks'.
Turning to copper, which has become the laggard of the base metals complex recently, Adams said in spite of its modest gain at present, he believes the metal is holding back the complex.
The LME said today copper stocks in its warehouses jumped by 2,550 tonnes to 112,275 tonnes, but analysts noted stocks remain extremely tight overall. They are equivalent to less than three days of global consumption.
Copper's problem, they said, is more that it has fallen behind the other metals in the complex recently in part because it is the most sensitive to the economic statistics coming out of the US.
Yesterday, US data showed a shock fall to -0.7 in the Philly Fed business activity index for October, which measures manufacturing activity in the Philadelphia region. Analysts had expected a rise to +7.8.
Man Financial analyst Ed Meir despite tight fundamentals, funds are 'be holding back from piling back into copper' as they prefer to keep a 'wary eye on the largely neutral to negative economic stats coming out of the US'.
At 2.05 pm, LME copper for 3-month delivery
climbed to 7,685.00usd a tonne against 7,660.00 usd at the close yesterday, while nickel surged to 32,250.00 against 31,700.00 usd.
Zinc climbed to 3,980.00 usd against 3,945.00 usd, aluminium was flat at 2,741.50 usd, tin edged down to 9,925.00 usd against 9,950.00 usd, while lead was up at 1,507.50 usd usd against 1,500.00 usd.
Nickel rose to a new record peak today above 32,000 usd a tonne. The metal 'remains plagued by an acute stock shortage,' The LME reported another decline in nickel stocks today, saying they fell 96 tonnes to 4,836 tonnes.
Nickel stocks are equivalent to less than one day of global consumption. Further, the metal was plagued earlier this month by a strike at Inco's Goro nickel project in New Caledonia.
The strike has since been resolved but Adams said 'even if production recovers in New Caledonia, the market will still remain tight ... which means all eyes will no doubt remain on LME stocks'.
Turning to copper, which has become the laggard of the base metals complex recently, Adams said in spite of its modest gain at present, he believes the metal is holding back the complex.
The LME said today copper stocks in its warehouses jumped by 2,550 tonnes to 112,275 tonnes, but analysts noted stocks remain extremely tight overall. They are equivalent to less than three days of global consumption.
Copper's problem, they said, is more that it has fallen behind the other metals in the complex recently in part because it is the most sensitive to the economic statistics coming out of the US.
Yesterday, US data showed a shock fall to -0.7 in the Philly Fed business activity index for October, which measures manufacturing activity in the Philadelphia region. Analysts had expected a rise to +7.8.
Man Financial analyst Ed Meir despite tight fundamentals, funds are 'be holding back from piling back into copper' as they prefer to keep a 'wary eye on the largely neutral to negative economic stats coming out of the US'.
At 2.05 pm, LME copper for 3-month delivery
climbed to 7,685.00usd a tonne against 7,660.00 usd at the close yesterday, while nickel surged to 32,250.00 against 31,700.00 usd.
Zinc climbed to 3,980.00 usd against 3,945.00 usd, aluminium was flat at 2,741.50 usd, tin edged down to 9,925.00 usd against 9,950.00 usd, while lead was up at 1,507.50 usd usd against 1,500.00 usd.
Thursday, October 19, 2006
Another strong quarterly earnings report by steelmaker and scrap metal recycler Nucor Corp. sent the company's share price higher Thursday and spurred analyst optimism even in the face of worries about softer fourth-quarter demand.
On a conference call with investors, CEO Daniel R. DiMicco noted that the company has now met or exceeded earnings guidance for 13 straight quarters and credited the company's product mix _ which includes steel sheets, bars, beams, plates and value-added steel products like building systems _ with helping Nucor avoid short-term downturns.
"Because of our product line diversity, Nucor's short term performance is not tied to any one market," DiMicco said.
For the quarter ending Sept. 30, Nucor reported net earnings of $517.6 million, or $1.68 per share. That was up 77 percent over the $291.9 million, or 93 cents per share, earned in the third quarter of 2005.
For the first nine months of 2006, earnings totaled $1.35 billion, or $4.33 per share, an increase of 39 percent over the first nine months of 2005 _ and a sum greater than the company's earnings for all of 2005, Nucor said.
Consolidated net sales totaled $3.93 billion for the quarter, up from $3.03 billion in the third quarter of 2005.
The results beat Wall Street expectations for profit of $1.56 per share on sales of $3.88 billion, according to a poll by Thomson Financial. Nucor shares rose 40 cents to close at $54.70 on the New York Stock Exchange.
While DiMicco expects a some reduction in fourth-quarter shipments due to lower seasonal demand and customers reducing inventory overstocks due to a flood of imports, he predicted margins will remain strong.
"Most importantly, underlying demand trends are very positive heading into 2007," he said. "Our confidence has never been greater that Nucor's best years are ahead of it."
Timna Tanners, an analyst with UBS Investment Research in New York, held Nucor at a "neutral 2" rating and in a note to investors wrote, "While (Nucor's) diversification and variable cost structure should keep it relatively resilient, we see earnings stagnating on tougher market conditions, and expect investors to stay wary amid market softness."
Michelle Applebaum, an independent Chicago-based analyst, said she was raising her projection of Nucor's fourth-quarter earnings to $1.48 per share, above the consensus of $1.34 and a dime above Tanners' $1.38 estimate. Though the sheet steel business, which makes up about 40 percent of Nucor's sales, may be soft in the fourth quarter due to the inventory issues, Applebaum expects demand and margins for long steel products to remain strong.
"After a $1.68 (third quarter), even with the little bit of weakness we're seeing for sheet, I think consensus has to jump," Applebaum said in an e-mail.
For the third quarter, Nucor's average sales price per ton was up 23 percent over the third quarter of 2005 and up 7 percent over the second quarter of this year. The company said demand remained strong, as it shipped 5.6 million tons of steel to outside customers in the third quarter. That was an increase of 6 percent over the third quarter of last year, but a drop of 4 percent over the second quarter of this year.
Energy and scrap costs _ both key indicators for Nucor, which makes steel from recycled metal at its "minimill" operations across the country _ were up slightly over the second quarter. Scrap costs per ton rose 4 percent, to $257 in the third quarter, while total energy costs increased about $3 per ton from the second to third quarters.
Earlier this month, Nucor announced plans to expand operations in Memphis, Tenn., by adding a $230 million, 850,000-ton annual capacity mill there that will employ more than 200 people. Nucor, the nation's largest recycler, has operations in 17 states and has also announced this year a new $27 million Utah facility and an expansion of operations in Decatur, Ala.
On a conference call with investors, CEO Daniel R. DiMicco noted that the company has now met or exceeded earnings guidance for 13 straight quarters and credited the company's product mix _ which includes steel sheets, bars, beams, plates and value-added steel products like building systems _ with helping Nucor avoid short-term downturns.
"Because of our product line diversity, Nucor's short term performance is not tied to any one market," DiMicco said.
For the quarter ending Sept. 30, Nucor reported net earnings of $517.6 million, or $1.68 per share. That was up 77 percent over the $291.9 million, or 93 cents per share, earned in the third quarter of 2005.
For the first nine months of 2006, earnings totaled $1.35 billion, or $4.33 per share, an increase of 39 percent over the first nine months of 2005 _ and a sum greater than the company's earnings for all of 2005, Nucor said.
Consolidated net sales totaled $3.93 billion for the quarter, up from $3.03 billion in the third quarter of 2005.
The results beat Wall Street expectations for profit of $1.56 per share on sales of $3.88 billion, according to a poll by Thomson Financial. Nucor shares rose 40 cents to close at $54.70 on the New York Stock Exchange.
While DiMicco expects a some reduction in fourth-quarter shipments due to lower seasonal demand and customers reducing inventory overstocks due to a flood of imports, he predicted margins will remain strong.
"Most importantly, underlying demand trends are very positive heading into 2007," he said. "Our confidence has never been greater that Nucor's best years are ahead of it."
Timna Tanners, an analyst with UBS Investment Research in New York, held Nucor at a "neutral 2" rating and in a note to investors wrote, "While (Nucor's) diversification and variable cost structure should keep it relatively resilient, we see earnings stagnating on tougher market conditions, and expect investors to stay wary amid market softness."
Michelle Applebaum, an independent Chicago-based analyst, said she was raising her projection of Nucor's fourth-quarter earnings to $1.48 per share, above the consensus of $1.34 and a dime above Tanners' $1.38 estimate. Though the sheet steel business, which makes up about 40 percent of Nucor's sales, may be soft in the fourth quarter due to the inventory issues, Applebaum expects demand and margins for long steel products to remain strong.
"After a $1.68 (third quarter), even with the little bit of weakness we're seeing for sheet, I think consensus has to jump," Applebaum said in an e-mail.
For the third quarter, Nucor's average sales price per ton was up 23 percent over the third quarter of 2005 and up 7 percent over the second quarter of this year. The company said demand remained strong, as it shipped 5.6 million tons of steel to outside customers in the third quarter. That was an increase of 6 percent over the third quarter of last year, but a drop of 4 percent over the second quarter of this year.
Energy and scrap costs _ both key indicators for Nucor, which makes steel from recycled metal at its "minimill" operations across the country _ were up slightly over the second quarter. Scrap costs per ton rose 4 percent, to $257 in the third quarter, while total energy costs increased about $3 per ton from the second to third quarters.
Earlier this month, Nucor announced plans to expand operations in Memphis, Tenn., by adding a $230 million, 850,000-ton annual capacity mill there that will employ more than 200 people. Nucor, the nation's largest recycler, has operations in 17 states and has also announced this year a new $27 million Utah facility and an expansion of operations in Decatur, Ala.
Copper rose for a second day in London on expectations that China's economic growth is fast enough to spur demand for the metal used in power plants, cars and homes.
China's industrial production rose 16.1 percent in September from a year earlier, the National Bureau of Statistics said today in Beijing. The gain in August was 15.7 percent. Gross domestic product in the third quarter rose 10.4 percent from a year earlier, the bureau also said. Second-quarter expansion was 11.3 percent. China is the biggest copper user.
``You can't lose sight of the fact growth is still running 10 percent plus,'' said Alex Heath, head of base metals at RBC Capital Markets in London, in a phone interview. ``That, in the world of metals, points to copper and that means they'll continue to be a buyer.''
Copper for delivery in three months rose $20, or 0.3 percent, to $7,670 a metric ton at 11:38 a.m. on the London Metal Exchange. Prices rose 0.1 percent yesterday. The metal soared 96 percent in the past year and traded at a record $8,800 a ton on May 11.
Usage in China fell 7.8 percent in the seven months through July, the International Copper Study Group said this week. Consumers may have used inventory in the period, Heath said.
``China has been destocking for so long they need to come to the market and buy,'' he said.
Contract Negotiations
Still, price gains may be limited as buyers in Europe hold off purchases during contract negotiations with suppliers, said Michael Widmer, an analyst in London at Calyon, one of 11 companies that trade on the LME floor. Consumers are trying to agree on so-called premiums, the surcharge paid on top on the LME benchmark price to take delivery of the metal.
``We've seen premiums in Europe easing over the past two months from $100 a ton to $90, and the last one I heard was $60 to $80 a ton,'' Widmer said.
Chinese Premier Web Jiabao is trying to slow economic growth to avoid overheating. The central bank has raised interest rates twice. Retail sales in September rose 13.9 percent from a year earlier, the most since January, today's report said.
``The barrage of data today shows the economy continues to slow from the first half, and it suggests interest rate hikes had some effect,'' Heath said.
China's industrial production growth compares with the 15.8 percent median forecast of 24 economists surveyed by Bloomberg. The nation is also the largest consumer of steel and other metals including aluminum and zinc.
Nickel for delivery in three months on the LME rose $300, or 1 percent, to $31,200 a ton. Inventory in warehouses approved by the LME fell 378 tons to 4,932 tons.
Nickel Mine Strike
Prices of the metal used to make stainless steel fell 1.6 percent yesterday on signs of a possible end to a four-week strike at New Caledonia, Heath said.
Eramet SA, the biggest producer of nickel in New Caledonia, said today workers returned to work at its largest nickel mine on the island north of New Zealand after police cleared strikers.
Three of the company's four mines in the French-controlled territory are now operating and Eramet is ``hopeful'' of resuming normal shipments to customers next week, said Pierre Alla, chief executive officer of Eramet's Le Nickel-SLN unit.
Other metals on the LME rose. Aluminum gained $17, or 0.6 percent, to $2,732 a ton. Earlier it traded at $2,739, the highest since May 30. Zinc rose $67 to $3,948, lead increased $15 to $1,510 and tin was up $200 at $9,900.
China's industrial production rose 16.1 percent in September from a year earlier, the National Bureau of Statistics said today in Beijing. The gain in August was 15.7 percent. Gross domestic product in the third quarter rose 10.4 percent from a year earlier, the bureau also said. Second-quarter expansion was 11.3 percent. China is the biggest copper user.
``You can't lose sight of the fact growth is still running 10 percent plus,'' said Alex Heath, head of base metals at RBC Capital Markets in London, in a phone interview. ``That, in the world of metals, points to copper and that means they'll continue to be a buyer.''
Copper for delivery in three months rose $20, or 0.3 percent, to $7,670 a metric ton at 11:38 a.m. on the London Metal Exchange. Prices rose 0.1 percent yesterday. The metal soared 96 percent in the past year and traded at a record $8,800 a ton on May 11.
Usage in China fell 7.8 percent in the seven months through July, the International Copper Study Group said this week. Consumers may have used inventory in the period, Heath said.
``China has been destocking for so long they need to come to the market and buy,'' he said.
Contract Negotiations
Still, price gains may be limited as buyers in Europe hold off purchases during contract negotiations with suppliers, said Michael Widmer, an analyst in London at Calyon, one of 11 companies that trade on the LME floor. Consumers are trying to agree on so-called premiums, the surcharge paid on top on the LME benchmark price to take delivery of the metal.
``We've seen premiums in Europe easing over the past two months from $100 a ton to $90, and the last one I heard was $60 to $80 a ton,'' Widmer said.
Chinese Premier Web Jiabao is trying to slow economic growth to avoid overheating. The central bank has raised interest rates twice. Retail sales in September rose 13.9 percent from a year earlier, the most since January, today's report said.
``The barrage of data today shows the economy continues to slow from the first half, and it suggests interest rate hikes had some effect,'' Heath said.
China's industrial production growth compares with the 15.8 percent median forecast of 24 economists surveyed by Bloomberg. The nation is also the largest consumer of steel and other metals including aluminum and zinc.
Nickel for delivery in three months on the LME rose $300, or 1 percent, to $31,200 a ton. Inventory in warehouses approved by the LME fell 378 tons to 4,932 tons.
Nickel Mine Strike
Prices of the metal used to make stainless steel fell 1.6 percent yesterday on signs of a possible end to a four-week strike at New Caledonia, Heath said.
Eramet SA, the biggest producer of nickel in New Caledonia, said today workers returned to work at its largest nickel mine on the island north of New Zealand after police cleared strikers.
Three of the company's four mines in the French-controlled territory are now operating and Eramet is ``hopeful'' of resuming normal shipments to customers next week, said Pierre Alla, chief executive officer of Eramet's Le Nickel-SLN unit.
Other metals on the LME rose. Aluminum gained $17, or 0.6 percent, to $2,732 a ton. Earlier it traded at $2,739, the highest since May 30. Zinc rose $67 to $3,948, lead increased $15 to $1,510 and tin was up $200 at $9,900.
Wednesday, October 18, 2006
Copper and zinc prices rose, reversing yesterday's losses, on falling inventories and continued supply worries, but tin and nickel edged lower, extending their fall off all time highs touched Monday.
The LME said copper inventories in its warehouses fell by 50 tonnes to 109,550 tonnes - the lowest stockpile level since August 10. Yesterday, the exchange reported a 5,000 decline in copper stocks.
Meanwhile, Rio Tinto, the world's second largest miner, said refined copper production fell by 15 pct in the third quarter due to a major smelter shutdown in early September.
It also reported a 6 pct drop in mined copper output, due in part to a drop in production following a strike in August at the company's 30 pct owned Escondida mine in Chile.
Zinc, which touched an all time high of 4,020 usd a tonne yesterday before close lower, was also finding support from declining inventories. The LME reported a 1,725 tonne decline in zinc inventories today.
'With fundamentals remaining tight dip buying ... continues to be seen and further attempts to break above resistance should be seen,' said UBS Investment Bank analyst Robin Bhar.
In the immediate term, however, some analysts sounded a note of caution.
Man Financial analyst Ed Meir said yesterday's weaker-than-expected US September industrial production data could weigh on the market, especially the copper market.
'The indicator is one of the more highly correlated readings to metal prices (for copper in particular). We believe the impact of poor industrial production may not have been fully discounted,' he said.
Tin and nickel prices, which on Monday hit their highest levels in 19 and 17 years, respectively, receded further today and analysts warned about volatility in these metals.
BaseMetals.com analyst William Adams said he would be more wary of nickel and tin 'because
they have already advanced rapidly' while copper and zinc have lagged behind and have more upside potential.
At 4.25 pm, LME copper for 3-month delivery edged up to 7655.00 usd a tonne against 7,639.00 usd at the close yesterday, zinc climbed to 3,900.00 usd against 3,865.00 usd while aluminium rose to 2707.50 usd against 2,674.00 usd.
Tin fell to 9,650.00 usd against 10,000.00 usd, nickel dropped to 31,000.00 usd against 31,400.00 while lead was flat at 1,495.00 usd.
The LME said copper inventories in its warehouses fell by 50 tonnes to 109,550 tonnes - the lowest stockpile level since August 10. Yesterday, the exchange reported a 5,000 decline in copper stocks.
Meanwhile, Rio Tinto, the world's second largest miner, said refined copper production fell by 15 pct in the third quarter due to a major smelter shutdown in early September.
It also reported a 6 pct drop in mined copper output, due in part to a drop in production following a strike in August at the company's 30 pct owned Escondida mine in Chile.
Zinc, which touched an all time high of 4,020 usd a tonne yesterday before close lower, was also finding support from declining inventories. The LME reported a 1,725 tonne decline in zinc inventories today.
'With fundamentals remaining tight dip buying ... continues to be seen and further attempts to break above resistance should be seen,' said UBS Investment Bank analyst Robin Bhar.
In the immediate term, however, some analysts sounded a note of caution.
Man Financial analyst Ed Meir said yesterday's weaker-than-expected US September industrial production data could weigh on the market, especially the copper market.
'The indicator is one of the more highly correlated readings to metal prices (for copper in particular). We believe the impact of poor industrial production may not have been fully discounted,' he said.
Tin and nickel prices, which on Monday hit their highest levels in 19 and 17 years, respectively, receded further today and analysts warned about volatility in these metals.
BaseMetals.com analyst William Adams said he would be more wary of nickel and tin 'because
they have already advanced rapidly' while copper and zinc have lagged behind and have more upside potential.
At 4.25 pm, LME copper for 3-month delivery edged up to 7655.00 usd a tonne against 7,639.00 usd at the close yesterday, zinc climbed to 3,900.00 usd against 3,865.00 usd while aluminium rose to 2707.50 usd against 2,674.00 usd.
Tin fell to 9,650.00 usd against 10,000.00 usd, nickel dropped to 31,000.00 usd against 31,400.00 while lead was flat at 1,495.00 usd.
Shanghai copper futures fell on Wednesday after a broad base-metals sell-off in London, but losses were curbed as investors worried about selling too strongly following sharp gains earlier in the week.
Shanghai's most active December copper contract ended the morning session down 820 yuan, or 1.1 percent, at 71,580 yuan a tonne, from Tuesday's close of 72,400 yuan.
Investors rushed to cash in profits as London Metal Exchange copper dropped along with zinc and tin the previous day, but Shanghai copper was supported as it approached the seven-day moving average (MA) of 70,387 yuan and the 14-day MA of 70,237.
A slight recovery in LME copper also induced short-covering.
At 0350 GMT, the key three-month LME copper futures contract was up $55, or 0.7 percent, at $7,660 per tonne, from Tuesday's London kerb close of $7,605.
"Chinese copper prices fell in line with falls in LME yesterday, but I think they are generally supported," said a Shanghai-based trader.
"Fundamentally, nickel, zinc and tin are clearly bullish because of supply worries and they are supporting copper and aluminium," he said.
Spot Shanghai copper prices hovered between 71,570 and 71,900 yuan, down 430 yuan from Tuesday.
Shanghai aluminium futures inched down, but were off their lows on short-covering in line with the overall bullish market outlook.
"I believe aluminium futures in Shanghai will be in an upward trend for at least the next three months, as domestic consumption becomes stronger partly because of large exports," said Li Rong, an analyst at Great Wall Futures in Shanghai.
Most active December aluminium futures on the Shanghai Futures Exchange closed the morning session at 20,770 yuan a tonne, down 1 percent from Tuesday's close of 20,990.
Both LME copper and aluminium prices were higher in light trading following falls the previous day.
Traders said the three-month LME copper contract stayed range-bound after falling from a high of $7,890 on electronic trading platform Select on Tuesday.
"We've confirmed that topside will be limited above $7,800 after failing to sustain the level, but the market will find a solid floor," said a trader at a Japanese trading house.
He said there is strong technical support for three-month LME copper at the 100-day MA of around $7,505.
Three-month LME zinc hit an all-time high of $4,020 per tonne on Tuesday, but then fell back with tin as investors took profits.
Zinc was expected to be supported by tight stocks. The latest LME data showed on Tuesday that zinc inventories fell by 1,325 tonnes to 127,400, their lowest level since 1991.
LME zinc was little changed at $3,860/3,880 on Wednesday from the London kerb close of $3,865.
Three-month LME tin futures fell to $9,900 a tonne on Wednesday, from the kerb close of $10,000.
Tin reached a record high of $11,000 on Monday, supported by concerns that a clampdown on smelters operating without proper permits in Indonesia would cut supplies.
Shanghai's most active December copper contract ended the morning session down 820 yuan, or 1.1 percent, at 71,580 yuan a tonne, from Tuesday's close of 72,400 yuan.
Investors rushed to cash in profits as London Metal Exchange copper dropped along with zinc and tin the previous day, but Shanghai copper was supported as it approached the seven-day moving average (MA) of 70,387 yuan and the 14-day MA of 70,237.
A slight recovery in LME copper also induced short-covering.
At 0350 GMT, the key three-month LME copper futures contract was up $55, or 0.7 percent, at $7,660 per tonne, from Tuesday's London kerb close of $7,605.
"Chinese copper prices fell in line with falls in LME yesterday, but I think they are generally supported," said a Shanghai-based trader.
"Fundamentally, nickel, zinc and tin are clearly bullish because of supply worries and they are supporting copper and aluminium," he said.
Spot Shanghai copper prices hovered between 71,570 and 71,900 yuan, down 430 yuan from Tuesday.
Shanghai aluminium futures inched down, but were off their lows on short-covering in line with the overall bullish market outlook.
"I believe aluminium futures in Shanghai will be in an upward trend for at least the next three months, as domestic consumption becomes stronger partly because of large exports," said Li Rong, an analyst at Great Wall Futures in Shanghai.
Most active December aluminium futures on the Shanghai Futures Exchange closed the morning session at 20,770 yuan a tonne, down 1 percent from Tuesday's close of 20,990.
Both LME copper and aluminium prices were higher in light trading following falls the previous day.
Traders said the three-month LME copper contract stayed range-bound after falling from a high of $7,890 on electronic trading platform Select on Tuesday.
"We've confirmed that topside will be limited above $7,800 after failing to sustain the level, but the market will find a solid floor," said a trader at a Japanese trading house.
He said there is strong technical support for three-month LME copper at the 100-day MA of around $7,505.
Three-month LME zinc hit an all-time high of $4,020 per tonne on Tuesday, but then fell back with tin as investors took profits.
Zinc was expected to be supported by tight stocks. The latest LME data showed on Tuesday that zinc inventories fell by 1,325 tonnes to 127,400, their lowest level since 1991.
LME zinc was little changed at $3,860/3,880 on Wednesday from the London kerb close of $3,865.
Three-month LME tin futures fell to $9,900 a tonne on Wednesday, from the kerb close of $10,000.
Tin reached a record high of $11,000 on Monday, supported by concerns that a clampdown on smelters operating without proper permits in Indonesia would cut supplies.
Tuesday, October 17, 2006
Mining company Freeport-McMoRan Copper & Gold Inc. said Tuesday that third-quarter earnings more than doubled on sharply higher copper and gold prices.
Net income rose to $350.7 million, $1.67 per share, from $165.8 million, or 86 cents per share, a year ago. Excluding charges and gains on debt reduction, preferred share redemption and land sales, the company earned $1.73 per share in the latest period.
Revenue grew to $1.64 billion from $983.3 million last year.
Analysts surveyed by Thomson Financial were looking for profit of $1.59 per share on sales of $1.31 billion.
The company said average realized prices per pound of copper rose to $3.43 from $1.73 last year, and to $3.38 from $1.67 for gold.
Third-quarter sales for PT Freeport Indonesia, the company's Indonesian mining unit, totaled 323.6 million pounds of copper and 478.0 thousand ounces of gold, down from last year's sales, but above revised estimates the company supplied in July of 280.0 million pounds of copper and 320.0 thousand ounces of gold. The higher-than-expected sales reflect the mining of a high-grade section of the Grasberg pit previously scheduled to be mined in future periods.
The company forecasts annual sales for 2006 of about 1.2 billion pounds of copper and 1.7 million ounces of gold, including 415 million pounds of copper and 470 thousand ounces of gold estimated for the fourth quarter.
Net income rose to $350.7 million, $1.67 per share, from $165.8 million, or 86 cents per share, a year ago. Excluding charges and gains on debt reduction, preferred share redemption and land sales, the company earned $1.73 per share in the latest period.
Revenue grew to $1.64 billion from $983.3 million last year.
Analysts surveyed by Thomson Financial were looking for profit of $1.59 per share on sales of $1.31 billion.
The company said average realized prices per pound of copper rose to $3.43 from $1.73 last year, and to $3.38 from $1.67 for gold.
Third-quarter sales for PT Freeport Indonesia, the company's Indonesian mining unit, totaled 323.6 million pounds of copper and 478.0 thousand ounces of gold, down from last year's sales, but above revised estimates the company supplied in July of 280.0 million pounds of copper and 320.0 thousand ounces of gold. The higher-than-expected sales reflect the mining of a high-grade section of the Grasberg pit previously scheduled to be mined in future periods.
The company forecasts annual sales for 2006 of about 1.2 billion pounds of copper and 1.7 million ounces of gold, including 415 million pounds of copper and 470 thousand ounces of gold estimated for the fourth quarter.
Copper futures in Shanghai rose as hedge and investment funds increased buying base metals amid concern supply for copper may not meet demand. Aluminum surged.
Codelco, the world's largest copper producer, said Oct. 11 demand for the metal used in wires and pipes is strong and inventories are low. The metal jumped 5.1 percent in London yesterday, nickel rose to the highest in at least 19 years and tin rose to the most in at least 17 years.
``Copper is surging on both the supply and the funds perspective,'' Li Xun, a trader at Shanghai Continent Futures Co, said today. ``Funds are returning to base metals, pushing up other metals, notably tin and nickel.''
Copper for December delivery surged 2,420 yuan, or 3.5 percent, to settle at 72,270 yuan ($9,139) a metric ton on the Shanghai Futures Exchange. The contract rose by as much as 3.9 percent, hitting the price movement limit of 4 percent.
Copper for immediate delivery in Changjiang, Shanghai's biggest spot copper market, advanced as much as 1,650 yuan, or 2.3 percent, to 72,500 yuan a ton.
Output of copper from mines has lagged behind growth in demand, bolstering prices that climbed to a record this year, Jose Pablo Arellano, executive president of Codelco, the world's largest copper producer, said last week.
Codelco, owned by Chile's government, may produce less than its June forecast for 1.7 million metric tons after a rockslide in July at its largest mine, Arellano said. The company last year produced 11 percent of the copper from mines worldwide.
In addition, the company will start contract talks next month with workers at Codelco Norte, the company's largest division, chairwoman of Codelco Poniachik said last week.
``Supply of copper remains vulnerable to Codelco's coming contract talks, which we are closely following,'' said Li.
Metal for three-month delivery on the London Metal Exchange rose $17, or 0.2 percent, to trade at $7,785 at 3:28 p.m. Shanghai time.
Codelco, the world's largest copper producer, said Oct. 11 demand for the metal used in wires and pipes is strong and inventories are low. The metal jumped 5.1 percent in London yesterday, nickel rose to the highest in at least 19 years and tin rose to the most in at least 17 years.
``Copper is surging on both the supply and the funds perspective,'' Li Xun, a trader at Shanghai Continent Futures Co, said today. ``Funds are returning to base metals, pushing up other metals, notably tin and nickel.''
Copper for December delivery surged 2,420 yuan, or 3.5 percent, to settle at 72,270 yuan ($9,139) a metric ton on the Shanghai Futures Exchange. The contract rose by as much as 3.9 percent, hitting the price movement limit of 4 percent.
Copper for immediate delivery in Changjiang, Shanghai's biggest spot copper market, advanced as much as 1,650 yuan, or 2.3 percent, to 72,500 yuan a ton.
Output of copper from mines has lagged behind growth in demand, bolstering prices that climbed to a record this year, Jose Pablo Arellano, executive president of Codelco, the world's largest copper producer, said last week.
Codelco, owned by Chile's government, may produce less than its June forecast for 1.7 million metric tons after a rockslide in July at its largest mine, Arellano said. The company last year produced 11 percent of the copper from mines worldwide.
In addition, the company will start contract talks next month with workers at Codelco Norte, the company's largest division, chairwoman of Codelco Poniachik said last week.
``Supply of copper remains vulnerable to Codelco's coming contract talks, which we are closely following,'' said Li.
Metal for three-month delivery on the London Metal Exchange rose $17, or 0.2 percent, to trade at $7,785 at 3:28 p.m. Shanghai time.
Monday, October 16, 2006
Copper futures in New York charged to a 2-1/2-week high early Monday, fueled by chart-based buying after prices penetrated key technical points, sources said.
"The buying that has come in this morning has not been that sizable ... there just wasn't anything standing in its way on the way up. Some (buy) stops were set off above $3.50, which took us up to the highs, but that is about it," said one floor dealer.
By 10:34 a.m. EDT (1434 GMT), copper for December delivery rallied 10.50 cents, or 3 percent, at $3.5185 a lb. on the New York Mercantile Exchange's COMEX division, moving between $3.3960 and $3.5250, its loftiest level since Sept. 27.
Floor dealers noted the Sept. 27 peak at $3.54 would be the next short-term target for the market to hurdle before making a run at $3.60.
Spot October climbed 9.15 cents to its morning peak at $3.49.
Volume at 10 a.m. was estimated at 5,000 lots.
The ongoing strength in the rest of the base metals complex was seen offering support to the copper market as the overall tightness in the group bolstered the bullish sentiment.
Three-months tin, three-months nickel and lead futures all rallied to a new contract highs on the London Metal Exchange on Monday. [nL16619962]
"Indeed, with equities also putting in solid gains, and with oil and gold pointing higher again, it looks as though there is a broad-based sense of optimism running through the markets," said William Adams, metals analyst with BaseMetals.com
However, slack demand from China, the world's largest consumer of the red metal, continued to plague upside momentum.
China imported 39.6 percent less refined copper and alloy in the first nine months than in the year-ago period, official Customs figures showed on Monday. Exports jumped 232.4 percent over the same period. [nPEK329314]
Inventory data showed London Metal Exchange-monitored warehouse stocks rose 475 tonnes to 114,600 tonnes on Monday, while COMEX stocks rose 1,008 short tons to 23,210 tons on Friday.
The latest weekly Commitments of Traders data issued by the Commodity Futures Trading Commission showed the speculative short position in the market grew 8 percent in the week ended Oct. 10.
Noncommercial players in copper -- mostly speculators -- held a net short position of 13,287 contracts as of Tuesday, up from 12,293 contracts a week earlier.
Robin Bhar, metals analyst at investment bank UBS, noted this was the largest net short position in COMEX copper futures since October 2002, and suggested that concerns over a global economic slowdown were likely influencing the bearish short position.
LME three-months copper surged $255 to $7,715 a tonne by the midday point, compared with a Friday settlement at $7,460 a tonne.
"The buying that has come in this morning has not been that sizable ... there just wasn't anything standing in its way on the way up. Some (buy) stops were set off above $3.50, which took us up to the highs, but that is about it," said one floor dealer.
By 10:34 a.m. EDT (1434 GMT), copper for December delivery
Floor dealers noted the Sept. 27 peak at $3.54 would be the next short-term target for the market to hurdle before making a run at $3.60.
Spot October
Volume at 10 a.m. was estimated at 5,000 lots.
The ongoing strength in the rest of the base metals complex was seen offering support to the copper market as the overall tightness in the group bolstered the bullish sentiment.
Three-months tin
"Indeed, with equities also putting in solid gains, and with oil and gold pointing higher again, it looks as though there is a broad-based sense of optimism running through the markets," said William Adams, metals analyst with BaseMetals.com
However, slack demand from China, the world's largest consumer of the red metal, continued to plague upside momentum.
China imported 39.6 percent less refined copper and alloy in the first nine months than in the year-ago period, official Customs figures showed on Monday. Exports jumped 232.4 percent over the same period. [nPEK329314]
Inventory data showed London Metal Exchange-monitored warehouse stocks rose 475 tonnes to 114,600 tonnes on Monday, while COMEX stocks rose 1,008 short tons to 23,210 tons on Friday.
The latest weekly Commitments of Traders data issued by the Commodity Futures Trading Commission showed the speculative short position in the market grew 8 percent in the week ended Oct. 10.
Noncommercial players in copper -- mostly speculators -- held a net short position of 13,287 contracts as of Tuesday, up from 12,293 contracts a week earlier.
Robin Bhar, metals analyst at investment bank UBS, noted this was the largest net short position in COMEX copper futures since October 2002, and suggested that concerns over a global economic slowdown were likely influencing the bearish short position.
LME three-months copper
Friday, October 13, 2006
Higher-than-normal copper prices characterized the third quarter and are expected to boost copper miner earnings when producers report quarterly results over the next two weeks or so, analysts say.
Copper miners have been blessed with a run-up in copper prices unseen since the contract started trading on the New York Mercantile Exchange in 1988. The metal settled at an all-time high of $4.0755 a pound on May 23, as demand from fast-growing economies such as India and China helped keep supply tight. Although copper prices retreated somewhat in the third quarter, copper prices still averaged about $3.50, according to an estimate by Morgan Stanley analyst Mark Liinamaa.
The analyst resumed coverage of Phelps Dodge Corp. earlier this month, saying he remains "firmly in the bullish camp for copper's long-term fundamentals" and forecasting strong earnings and cash flow over the next two to four years. Liinamaa offered a similar outlook for Freeport McMoran Copper and Gold Inc. when he raised his third-quarter profit estimates earlier this month, largely based on an increased copper price forecast.
In a recent report, Friedman Billings Ramsey analyst Amir Arif said he expects "copper names will beat current expectations" in the third quarter.
Phoenix-based Phelps Dodge is scheduled to report third-quarter earnings on Tuesday, Oct. 24. Freeport McMoran, headquartered in New Orleans, is expected to report quarterly results on Tuesday, Oct. 17.
Copper prices during the quarter were also supported in part by work stoppages, as several companies faced prolonged strikes by miners.
Workers at Chile's Escondida mine _ which generates about 8 percent of the world's copper output _ ended a 25-day strike on Aug. 31 after securing a 5 percent wage raise and bonuses totaling about $16,600 for each worker. The mine is majority-owned by Australia's BHP Billiton Ltd., which earned $10.45 billion for the year through June, an Australian corporate profit record. The company reports financial results only at the mid-year and year-end periods.
Grupo Mexico SA subsidiary Southern Copper Corp. endured a more than monthlong strike at Mexico's largest copper mine, Cananea, and a roughly three-month strike at another copper mine, La Caridad. Both ended in late July. Citigroup analyst Rafael Pablo Urquia has said he expects the effects of the stoppages to show up in Southern Copper's third-quarter report.
Southern Copper, with headquarters in Peru and a U.S. base in Phoenix, is slated to report third-quarter results at the end of the month.
Stock prices for major copper producers retreated sharply early in the quarter following May's peak copper prices. Phelps Dodge shares recovered and rose 3 percent over the third quarter. Freeport McMoran shares ended the quarter down 4 percent over the three-month period. Southern Copper shares advanced 4 percent at the same time.
Copper miners have been blessed with a run-up in copper prices unseen since the contract started trading on the New York Mercantile Exchange in 1988. The metal settled at an all-time high of $4.0755 a pound on May 23, as demand from fast-growing economies such as India and China helped keep supply tight. Although copper prices retreated somewhat in the third quarter, copper prices still averaged about $3.50, according to an estimate by Morgan Stanley analyst Mark Liinamaa.
The analyst resumed coverage of Phelps Dodge Corp. earlier this month, saying he remains "firmly in the bullish camp for copper's long-term fundamentals" and forecasting strong earnings and cash flow over the next two to four years. Liinamaa offered a similar outlook for Freeport McMoran Copper and Gold Inc. when he raised his third-quarter profit estimates earlier this month, largely based on an increased copper price forecast.
In a recent report, Friedman Billings Ramsey analyst Amir Arif said he expects "copper names will beat current expectations" in the third quarter.
Phoenix-based Phelps Dodge is scheduled to report third-quarter earnings on Tuesday, Oct. 24. Freeport McMoran, headquartered in New Orleans, is expected to report quarterly results on Tuesday, Oct. 17.
Copper prices during the quarter were also supported in part by work stoppages, as several companies faced prolonged strikes by miners.
Workers at Chile's Escondida mine _ which generates about 8 percent of the world's copper output _ ended a 25-day strike on Aug. 31 after securing a 5 percent wage raise and bonuses totaling about $16,600 for each worker. The mine is majority-owned by Australia's BHP Billiton Ltd., which earned $10.45 billion for the year through June, an Australian corporate profit record. The company reports financial results only at the mid-year and year-end periods.
Grupo Mexico SA subsidiary Southern Copper Corp. endured a more than monthlong strike at Mexico's largest copper mine, Cananea, and a roughly three-month strike at another copper mine, La Caridad. Both ended in late July. Citigroup analyst Rafael Pablo Urquia has said he expects the effects of the stoppages to show up in Southern Copper's third-quarter report.
Southern Copper, with headquarters in Peru and a U.S. base in Phoenix, is slated to report third-quarter results at the end of the month.
Stock prices for major copper producers retreated sharply early in the quarter following May's peak copper prices. Phelps Dodge shares recovered and rose 3 percent over the third quarter. Freeport McMoran shares ended the quarter down 4 percent over the three-month period. Southern Copper shares advanced 4 percent at the same time.
Copper futures in New York settled down but off their session lows on Thursday, garnering support from a softer dollar and a slight rebound in the energy markets, sources said.
"It seemed to me the copper market probably rallied in concert with the early session gains in the energy complex after the Department of Energy report was released," said Dan Vaught, futures analyst with A.G. Edwards.
Copper for December delivery ended down 2.35 cents at $3.3865 a lb on the New York Mercantile Exchange's COMEX division, after dealing from an early low of $3.3350 to a session peak at $3.4290.
Since plummeting below $3.00 in mid-June, the benchmark December copper contract has been stuck in a wide trading band roughly between $3.20 and $3.70, with concerns of a deteriorating macroeconomic picture limiting the upside.
"If we start spending some more time below $3.40, that's pretty much right around the 100-day moving average, technically speaking, and that could spell the end of what has been a bull market and trade back down to lower lows," said one market technician.
Spot October lost 2.60 cents to finish the day at $3.3740, while the rest of the board closed with losses ranging from 2.35 to 3.40.
COMEX final copper volume was estimated at 10,000 lots, almost double that of Wednesday's 5,822 lots.
"A lot of the speculative interest has left this market, especially after the failure to get back above $3.50, but every time we dip back down near the $3.30 level, the buyers come back in," said one COMEX floor dealer.
Overseas selling weighed on the COMEX open, as Chinese import data continued to show limited demand from the world's largest copper consumer.
Official preliminary data for September showed imports of copper, including semi-finished products, fell 23.6 percent to 1.52 million tonnes in the first nine months.
In September, imports of copper, including semi-finished products, stood at 174,931 tonnes. The figure was 5.2 percent less than one month earlier.
"China's copper imports have been much weaker this year a trend we attribute to destocking by consumers and sales by the SRB (State Reserves Bureau), with smelters keen to boost scrap and concentrate imports in order to boost domestic refined production," said Robin Bhar, metals analyst with investment bank UBS.
In currencies, the dollar fell slightly against the euro on Thursday after a report unexpectedly showed a record U.S. trade deficit in August.
The U.S. trade deficit widened to $69.86 billion in August from a revised $68 billion in July, surpassing expectations of a narrowing to $66.7 billion.
In afternoon trade, the euro was firmer at around $1.2545, but still had the scope to retest the 2-1/2 month lows at around $1.2500 hit on Wednesday.
Meanwhile, London Metal Exchange-monitored warehouse stocks rose 100 tonnes to 114,000 tonnes on Thursday, while COMEX stocks rose 786 short tons to 22,354 tons on Wednesday.
LME three-months copper eased $25 at the close to $7,490 a tonne, against a Wednesday settlement of $7,515.
"It seemed to me the copper market probably rallied in concert with the early session gains in the energy complex after the Department of Energy report was released," said Dan Vaught, futures analyst with A.G. Edwards.
Copper for December delivery
Since plummeting below $3.00 in mid-June, the benchmark December copper contract has been stuck in a wide trading band roughly between $3.20 and $3.70, with concerns of a deteriorating macroeconomic picture limiting the upside.
"If we start spending some more time below $3.40, that's pretty much right around the 100-day moving average, technically speaking, and that could spell the end of what has been a bull market and trade back down to lower lows," said one market technician.
Spot October
COMEX final copper volume was estimated at 10,000 lots, almost double that of Wednesday's 5,822 lots.
"A lot of the speculative interest has left this market, especially after the failure to get back above $3.50, but every time we dip back down near the $3.30 level, the buyers come back in," said one COMEX floor dealer.
Overseas selling weighed on the COMEX open, as Chinese import data continued to show limited demand from the world's largest copper consumer.
Official preliminary data for September showed imports of copper, including semi-finished products, fell 23.6 percent to 1.52 million tonnes in the first nine months.
In September, imports of copper, including semi-finished products, stood at 174,931 tonnes. The figure was 5.2 percent less than one month earlier.
"China's copper imports have been much weaker this year a trend we attribute to destocking by consumers and sales by the SRB (State Reserves Bureau), with smelters keen to boost scrap and concentrate imports in order to boost domestic refined production," said Robin Bhar, metals analyst with investment bank UBS.
In currencies, the dollar fell slightly against the euro on Thursday after a report unexpectedly showed a record U.S. trade deficit in August.
The U.S. trade deficit widened to $69.86 billion in August from a revised $68 billion in July, surpassing expectations of a narrowing to $66.7 billion.
In afternoon trade, the euro
Meanwhile, London Metal Exchange-monitored warehouse stocks rose 100 tonnes to 114,000 tonnes on Thursday, while COMEX stocks rose 786 short tons to 22,354 tons on Wednesday.
LME three-months copper
Thursday, October 12, 2006
Shanghai copper futures recovered slightly in light trading on Thursday, after low stocks helped support the rise in base metal prices in London on Wednesday.
Traders' focus shifted to low copper stocks in London and Shanghai warehouses, helping to support copper despite bearish expectations for Chinese refined copper demand growth this year.
Higher prices for nickel and lead also lent support to copper.
Shanghai's most active copper contract, December, ended up 0.7 percent at 69,820 yuan a tonne, boosted by slight gains in London on Wednesday.
Spot copper prices in eastern China traded between 70,950 and 71,270 yuan, up 135 yuan from Wednesday.
Copper for delivery in three months on the London Metal Exchange retreated 0.5 percent to $7,475 a tonne, after rising on Wednesday to close at $7,515 a tonne.
Customs data showed that China's purchases of the metal have receded in the first three quarters. Chinese imports of copper, including semi-finished products, fell 23.6 percent from a year earlier to 1.5 million tonnes in the first nine months of this year, data showed on Thursday
But China imported 528,953 tonnes of scrap copper in September, 30 percent higher than in August.
"Mounting international copper prices have encouraged Chinese fabricators to import more scrap copper for production," said an official at Jiangxi Copper, China's largest producer.
Part of the reason for the lower refined copper imports is that Chinese smelters, including Jiangxi, are expanding.
"We forecast that China's demand, especially for copper concentrate, will stay strong, as domestic smelters are expanding smelting capacity," the official said.
LME three-month aluminium was unchanged on Thursday at $2,600 a tonne.
Shanghai aluminium futures rose slightly, with the most active contract, December, ending up 1.1 percent at 20,150 yuan a tonne.
"Aluminium warehouses in Shanghai fell in recent months as traders continued to export the metal due to higher overseas prices. The low stocks may cause a price hike," said Cai Luoyi, an analyst at China International Futures Corp. in Shanghai.
Nickel was quoted at $30,115 after closing at $30,100 on Wednesday. Earlier this week, it hit a record high of $30,250.
Lead was quoted at $1,443 on Thursday, compared with $1,455 at the previous day's close. Traders said fresh fund buying had been triggered after news that China was aiming to limit production of lead to 4 million tonnes by 2010.
China will also move to limit refined zinc production at 5 million tonnes by 2010. Zinc added $15 to $3,800 a tonne on Thursday.
Traders' focus shifted to low copper stocks in London and Shanghai warehouses, helping to support copper despite bearish expectations for Chinese refined copper demand growth this year.
Higher prices for nickel and lead also lent support to copper.
Shanghai's most active copper contract, December, ended up 0.7 percent at 69,820 yuan a tonne, boosted by slight gains in London on Wednesday.
Spot copper prices in eastern China traded between 70,950 and 71,270 yuan, up 135 yuan from Wednesday.
Copper for delivery in three months on the London Metal Exchange retreated 0.5 percent to $7,475 a tonne, after rising on Wednesday to close at $7,515 a tonne.
Customs data showed that China's purchases of the metal have receded in the first three quarters. Chinese imports of copper, including semi-finished products, fell 23.6 percent from a year earlier to 1.5 million tonnes in the first nine months of this year, data showed on Thursday
But China imported 528,953 tonnes of scrap copper in September, 30 percent higher than in August.
"Mounting international copper prices have encouraged Chinese fabricators to import more scrap copper for production," said an official at Jiangxi Copper, China's largest producer.
Part of the reason for the lower refined copper imports is that Chinese smelters, including Jiangxi, are expanding.
"We forecast that China's demand, especially for copper concentrate, will stay strong, as domestic smelters are expanding smelting capacity," the official said.
LME three-month aluminium was unchanged on Thursday at $2,600 a tonne.
Shanghai aluminium futures rose slightly, with the most active contract, December, ending up 1.1 percent at 20,150 yuan a tonne.
"Aluminium warehouses in Shanghai fell in recent months as traders continued to export the metal due to higher overseas prices. The low stocks may cause a price hike," said Cai Luoyi, an analyst at China International Futures Corp. in Shanghai.
Nickel was quoted at $30,115 after closing at $30,100 on Wednesday. Earlier this week, it hit a record high of $30,250.
Lead was quoted at $1,443 on Thursday, compared with $1,455 at the previous day's close. Traders said fresh fund buying had been triggered after news that China was aiming to limit production of lead to 4 million tonnes by 2010.
China will also move to limit refined zinc production at 5 million tonnes by 2010. Zinc added $15 to $3,800 a tonne on Thursday.
Wednesday, October 11, 2006
Alcoa Inc., the world's biggest aluminum maker, said rising prices boosted third-quarter profit by 86 percent. Earnings were lower than analysts estimated as unplanned shutdowns hurt output, sending the shares plunging.
Net income rose to $537 million, or 61 cents a share, from $289 million, or 33 cents, a year earlier, New York-based Alcoa said today in an e-mailed statement. The average estimate of 16 analysts surveyed by Thomson Financial was 77 cents. Sales rose 19 percent to $7.63 billion.
The shares fell $1.69, or 6 percent, $26.60 at 7:24 p.m. in New York after Alcoa said aluminum production fell to 895,000 tons in the quarter from 904,000 tons a year earlier. Lower output eroded the benefit of a 33 percent rally in the price of metal from Alcoa's smelters. Chief Financial Officer Joseph C. Muscari said defective equipment was been repaired.
``The earnings were a disappointment,'' said Charles Bradford, an analyst at Soleil Securities in New York. ``The plant outages were significant and there was a whole series of little things impacting the result. They came in strong in the second quarter and maybe that set us up for being too optimistic.''
Operating profit from raw aluminum sales doubled to $346 million from $168 million, as Alcoa sold metal on average at $2,620 a metric ton, up from $1,963 a year earlier. Prices were less than the average of $2,530 on the London Metal Exchange. The profit for alumina, a white powder that's used to make aluminum, rose 74 percent to $271 million.
Flat-Rolled Products
The flat-rolled products unit reported a 41 percent drop in operating profit to $48 million because of seasonal shutdowns and mill outages. Alcoa also said it made a ``discretionary'' $200 million pension payment.
Alcoa is the first company in the Dow Jones Industrial Average to report third-quarter profit.
Maintenance at the company's Kitts Green facility, which supplies aerospace components that carry high profit margins, took about 10 days longer than expected and reduced income from continuing operations by $11 million, with other shutdowns cost the company another $13 million, Alcoa said.
Improved Outlook
``We are positive about underlying demand for the fourth quarter, with the exception of the automotive and housing markets,'' Muscari said on a conference call with analysts and investors.
Aluminum prices surged to the highest in at least 19 years in May as output failed to keep pace with increased demand from makers of containers and building materials. Rising prices helped boost Alcoa shares by 25 percent in the past year, reaching a two-year high of $36.96 on May 11.
Alcan Inc., the world's second-largest producer, forecast a global supply deficit of about 300,000 tons of primary aluminum in 2006. Consumption will increase 6.8 percent, compared with a 5.7 percent increase in output, the company said Aug. 5.
Aluminum reached a 19-year high of $3,310 a ton on the LME in May. Aluminum for delivery in three months fell $35 to $2,585 today.
``We have prices about twice the long-term historical average for aluminum, which is quite positive for producers of aluminum,'' said Jim Southwood, president of Commodity Metals Management Co. in Wexford, Pennsylvania. ``The risk is on the demand side, where these high prices could be adversely affecting demand.''
Rising costs to run smelters in North America has forced Alcoa Chief Executive Officer Alain Belda to shift production to countries such as Iceland, where energy costs are lower.
Russian Rival
OAO Russian Aluminium, which said yesterday it agreed to buy smaller producer OAO Sual Group, will eclipse Alcoa as the world's biggest aluminum company by output once the transaction is completed. The new business, which will be known as United Company Rusal, will produce about 4 million tons a year. Alcoa had output of 3.55 million tons last year.
Rusal will also produce 11 million tons a year of alumina, which is produced by processing bauxite and then refined into pure aluminum. Alcoa produces 14.6 million tons per year of Alumina.
The combined entity ``in the longer term could increase the competition for top-tier growth projects,'' BMO's Lazarovici said in a note to investors today. ``This could adversely impact the western world aluminum producers and accelerate the industry's consolidation.''
Four to five tons of bauxite yields about two tons of alumina and one ton of aluminum. Bauxite is a rock found mostly in tropical and sub-tropical regions. Alumina is refined from bauxite and converted to pure aluminum.
Net income rose to $537 million, or 61 cents a share, from $289 million, or 33 cents, a year earlier, New York-based Alcoa said today in an e-mailed statement. The average estimate of 16 analysts surveyed by Thomson Financial was 77 cents. Sales rose 19 percent to $7.63 billion.
The shares fell $1.69, or 6 percent, $26.60 at 7:24 p.m. in New York after Alcoa said aluminum production fell to 895,000 tons in the quarter from 904,000 tons a year earlier. Lower output eroded the benefit of a 33 percent rally in the price of metal from Alcoa's smelters. Chief Financial Officer Joseph C. Muscari said defective equipment was been repaired.
``The earnings were a disappointment,'' said Charles Bradford, an analyst at Soleil Securities in New York. ``The plant outages were significant and there was a whole series of little things impacting the result. They came in strong in the second quarter and maybe that set us up for being too optimistic.''
Operating profit from raw aluminum sales doubled to $346 million from $168 million, as Alcoa sold metal on average at $2,620 a metric ton, up from $1,963 a year earlier. Prices were less than the average of $2,530 on the London Metal Exchange. The profit for alumina, a white powder that's used to make aluminum, rose 74 percent to $271 million.
Flat-Rolled Products
The flat-rolled products unit reported a 41 percent drop in operating profit to $48 million because of seasonal shutdowns and mill outages. Alcoa also said it made a ``discretionary'' $200 million pension payment.
Alcoa is the first company in the Dow Jones Industrial Average to report third-quarter profit.
Maintenance at the company's Kitts Green facility, which supplies aerospace components that carry high profit margins, took about 10 days longer than expected and reduced income from continuing operations by $11 million, with other shutdowns cost the company another $13 million, Alcoa said.
Improved Outlook
``We are positive about underlying demand for the fourth quarter, with the exception of the automotive and housing markets,'' Muscari said on a conference call with analysts and investors.
Aluminum prices surged to the highest in at least 19 years in May as output failed to keep pace with increased demand from makers of containers and building materials. Rising prices helped boost Alcoa shares by 25 percent in the past year, reaching a two-year high of $36.96 on May 11.
Alcan Inc., the world's second-largest producer, forecast a global supply deficit of about 300,000 tons of primary aluminum in 2006. Consumption will increase 6.8 percent, compared with a 5.7 percent increase in output, the company said Aug. 5.
Aluminum reached a 19-year high of $3,310 a ton on the LME in May. Aluminum for delivery in three months fell $35 to $2,585 today.
``We have prices about twice the long-term historical average for aluminum, which is quite positive for producers of aluminum,'' said Jim Southwood, president of Commodity Metals Management Co. in Wexford, Pennsylvania. ``The risk is on the demand side, where these high prices could be adversely affecting demand.''
Rising costs to run smelters in North America has forced Alcoa Chief Executive Officer Alain Belda to shift production to countries such as Iceland, where energy costs are lower.
Russian Rival
OAO Russian Aluminium, which said yesterday it agreed to buy smaller producer OAO Sual Group, will eclipse Alcoa as the world's biggest aluminum company by output once the transaction is completed. The new business, which will be known as United Company Rusal, will produce about 4 million tons a year. Alcoa had output of 3.55 million tons last year.
Rusal will also produce 11 million tons a year of alumina, which is produced by processing bauxite and then refined into pure aluminum. Alcoa produces 14.6 million tons per year of Alumina.
The combined entity ``in the longer term could increase the competition for top-tier growth projects,'' BMO's Lazarovici said in a note to investors today. ``This could adversely impact the western world aluminum producers and accelerate the industry's consolidation.''
Four to five tons of bauxite yields about two tons of alumina and one ton of aluminum. Bauxite is a rock found mostly in tropical and sub-tropical regions. Alumina is refined from bauxite and converted to pure aluminum.
Tuesday, October 10, 2006
Copper futures in New York were lower at the open on Tuesday, reversing the prior session's strength, as concerns over demand growth from the world's largest copper consumer weighed on sentiment, sources said.
"Chinese demand this year has not been what it was the last couple of years. The Chinese would rather tap into domestic stockpiles ... it's a little too price-sensitive for them to come into the market right now and buy," said one copper broker at a New York trading house.
By 10:28 a.m. EDT (1428 GMT), copper for December delivery was down 3.50 cents at $3.3780 a lb. on the New York Mercantile Exchange's COMEX division, near the lower half of its $3.3625 to $3.4325 trading band.
Spot October fell 4.65 cents to its morning low at $3.36.
Trading continued to be on the light side due to this week's London Metal Exchange Dinner Week, with COMEX volume at 10 a.m. estimated at a mere 3,000 lots.
The annual convention is attended by producers, consumers, traders, and analysts, who get together to discuss trends in the market.
China, which accounts for nearly 20 percent of global demand for the red metal, imported 34.5 percent less refined copper in August than in the same month a year ago. For the first eight months of the year, total import volume fell 42.3 percent to 526,846 tonnes, while Chinese output in the same period was up 23 percent at 1.9 million tonnes.
However, with expectations of declining prices in 2007, the price-sensitive Chinese may reenter the market in 2007, after taking a breather this year, analysts said.
Meanwhile, Chinese scrap copper demand promises to increase in the fourth quarter as fabricators favor quality scrap over expensive refined copper, traders said.
In currencies, the dollar charged to a three-month high of $1.2523 per euro on Tuesday on expectations the U.S. economy might be in better shape than previously thought.
London Metal Exchange warehouse stocks rose 325 tonnes to 114,025 tonnes on Tuesday, while COMEX stocks fell 394 short tons to 21,198 tons on Monday.
On the fundamental front, workers at Chile's Andina copper division, owned by mining giant Codelco, agreed to a new three-year contract that includes a 3 percent wage increase and two bonus payments worth about $12,000.
LME three-months copper traded at $7,420 a tonne, down $30 from Monday's kerb close.
"Chinese demand this year has not been what it was the last couple of years. The Chinese would rather tap into domestic stockpiles ... it's a little too price-sensitive for them to come into the market right now and buy," said one copper broker at a New York trading house.
By 10:28 a.m. EDT (1428 GMT), copper for December delivery
Spot October
Trading continued to be on the light side due to this week's London Metal Exchange Dinner Week, with COMEX volume at 10 a.m. estimated at a mere 3,000 lots.
The annual convention is attended by producers, consumers, traders, and analysts, who get together to discuss trends in the market.
China, which accounts for nearly 20 percent of global demand for the red metal, imported 34.5 percent less refined copper in August than in the same month a year ago. For the first eight months of the year, total import volume fell 42.3 percent to 526,846 tonnes, while Chinese output in the same period was up 23 percent at 1.9 million tonnes.
However, with expectations of declining prices in 2007, the price-sensitive Chinese may reenter the market in 2007, after taking a breather this year, analysts said.
Meanwhile, Chinese scrap copper demand promises to increase in the fourth quarter as fabricators favor quality scrap over expensive refined copper, traders said.
In currencies, the dollar charged to a three-month high of $1.2523 per euro on Tuesday on expectations the U.S. economy might be in better shape than previously thought.
London Metal Exchange warehouse stocks rose 325 tonnes to 114,025 tonnes on Tuesday, while COMEX stocks fell 394 short tons to 21,198 tons on Monday.
On the fundamental front, workers at Chile's Andina copper division, owned by mining giant Codelco, agreed to a new three-year contract that includes a 3 percent wage increase and two bonus payments worth about $12,000.
LME three-months copper
Monday, October 09, 2006
Copper futures in New York climbed to a one-week high at the open on Monday, buoyed by firmer overseas prices and another draw-down in inventory levels, sources said.
"London is up about $100 (a tonne), so we are probably getting a little support from that. But, other than that, it is really quiet. There is nothing behind this move ... we're stalling at the high at $3.45," said one floor dealer.
Copper for December delivery rose 5.05 cents, or 1.5 percent, at $3.4390 a lb. on the New York Mercantile Exchange's COMEX division by 10:24 a.m. EDT (1424 GMT). Trading ranged from $3.3875 to $3.45, its best level since Oct. 2.
Spot October gained 4.65 cents to $3.43, just off its morning peak at $3.44.
Volume at 10 a.m. was estimated at 3,000 lots.
Analysts predicted thin, choppy price action in the copper market this week due to the London Metal Exchange Week and Monday's Columbus Day holiday in the United States.
During LME Week, metal producers, consumers, traders, and analysts attend a series of meeting, seminars, and parties to discuss different topics in the market.
"A U.S. holiday today, coupled with LME Week this week, saw players cover short positions as continued falls in stocks and tight supply were seen as price supportive in the short-term," said John Reade, metals analyst with investment bank UBS.
London Metal Exchange warehouse stocks fell by 350 tonnes on Monday to 113,700 tonnes -- less than three days worth of global usage. COMEX stocks increased 216 short tons to 21,592 tons on Friday.
In industry news, workers at Chile's Andina copper division, owned by mining giant Codelco, agreed to a new three-year contract that includes a 3 percent wage increase and two bonus payments worth about $12,000.
Strong domestic demand has powered a recovery of Italy's copper and alloy products sector this year,, despite high and volatile metals prices, but its future depends on competing with China, industry leaders said.
Meanwhile, with analysts seeing world prices of base metals trading lower next year, price-sensitive Chinese copper users may develop a strong appetite in 2007, after taking a breather this year.
The latest weekly Commitments of Traders data issued by the Commodity Futures Trading Commission showed the net noncommercial short position in COMEX copper futures grew to 12,293 lots in the week ended Oct. 3, from 9,601 lots the previous week.
Open interest increased to 69,400 lots for the week, against 67,977 lots in the prior week.
LME three-months copper traded at $7,540 a tonne, up $80 from Friday's kerb close.
"London is up about $100 (a tonne), so we are probably getting a little support from that. But, other than that, it is really quiet. There is nothing behind this move ... we're stalling at the high at $3.45," said one floor dealer.
Copper for December delivery
Spot October
Volume at 10 a.m. was estimated at 3,000 lots.
Analysts predicted thin, choppy price action in the copper market this week due to the London Metal Exchange Week and Monday's Columbus Day holiday in the United States.
During LME Week, metal producers, consumers, traders, and analysts attend a series of meeting, seminars, and parties to discuss different topics in the market.
"A U.S. holiday today, coupled with LME Week this week, saw players cover short positions as continued falls in stocks and tight supply were seen as price supportive in the short-term," said John Reade, metals analyst with investment bank UBS.
London Metal Exchange warehouse stocks fell by 350 tonnes on Monday to 113,700 tonnes -- less than three days worth of global usage. COMEX stocks increased 216 short tons to 21,592 tons on Friday.
In industry news, workers at Chile's Andina copper division, owned by mining giant Codelco, agreed to a new three-year contract that includes a 3 percent wage increase and two bonus payments worth about $12,000.
Strong domestic demand has powered a recovery of Italy's copper and alloy products sector this year,, despite high and volatile metals prices, but its future depends on competing with China, industry leaders said.
Meanwhile, with analysts seeing world prices of base metals trading lower next year, price-sensitive Chinese copper users may develop a strong appetite in 2007, after taking a breather this year.
The latest weekly Commitments of Traders data issued by the Commodity Futures Trading Commission showed the net noncommercial short position in COMEX copper futures grew to 12,293 lots in the week ended Oct. 3, from 9,601 lots the previous week.
Open interest increased to 69,400 lots for the week, against 67,977 lots in the prior week.
LME three-months copper
Friday, October 06, 2006
Copper fell in London on speculation that a job report may indicate a slowdown in economic growth in the U.S., the world's second-largest user of the metal.
Employers probably added 120,000 workers to payrolls last month, the fewest in four months, according to the median estimate of 73 economists surveyed by Bloomberg News. Copper, used in wiring and plumbing, has dropped 3.7 percent this week as declines in oil prices spurred selling by index-linked funds that track both commodities.
``Positive market fundamentals in copper have been arrested because of concern about the U.S. economy and oil prices,'' said Alex Heath, director of base metals trading in London at RBC Capital Markets, which trades on the London Metal Exchange. ``Our overall view here is that the U.S. economy is undoubtedly slowing.''
Copper for delivery in three months on the LME fell $32, or 0.4 percent, to $7,267 a metric ton as of 9:28 a.m. local time, heading for its first weekly drop in three. The metal is down 18 percent from the record $8,800 a ton traded on May 11.
The jobs report for the U.S. Labor Department is set for release at 1:30 p.m. London time.
Six of 12 analysts, investors and traders surveyed by Bloomberg yesterday forecast copper will drop next week. Four expected a gain and two predicted little change. Next week is London Metal Exchange Week, when there tends to be ``some fairly big moves'' in metals prices, Kevin Norrish, Barclays Capital's director of commodities research in London, said yesterday.
China in the world's largest user of copper.
Most other metals on the LME also dropped. Aluminum declined $6.50, or 0.3 percent, to $2,535 a ton. Nickel slipped $100 to $28,800, zinc fell $18 to $3,422 and lead was $15 lower at $1,380. Tin rose $50 to $9,100.
Employers probably added 120,000 workers to payrolls last month, the fewest in four months, according to the median estimate of 73 economists surveyed by Bloomberg News. Copper, used in wiring and plumbing, has dropped 3.7 percent this week as declines in oil prices spurred selling by index-linked funds that track both commodities.
``Positive market fundamentals in copper have been arrested because of concern about the U.S. economy and oil prices,'' said Alex Heath, director of base metals trading in London at RBC Capital Markets, which trades on the London Metal Exchange. ``Our overall view here is that the U.S. economy is undoubtedly slowing.''
Copper for delivery in three months on the LME fell $32, or 0.4 percent, to $7,267 a metric ton as of 9:28 a.m. local time, heading for its first weekly drop in three. The metal is down 18 percent from the record $8,800 a ton traded on May 11.
The jobs report for the U.S. Labor Department is set for release at 1:30 p.m. London time.
Six of 12 analysts, investors and traders surveyed by Bloomberg yesterday forecast copper will drop next week. Four expected a gain and two predicted little change. Next week is London Metal Exchange Week, when there tends to be ``some fairly big moves'' in metals prices, Kevin Norrish, Barclays Capital's director of commodities research in London, said yesterday.
China in the world's largest user of copper.
Most other metals on the LME also dropped. Aluminum declined $6.50, or 0.3 percent, to $2,535 a ton. Nickel slipped $100 to $28,800, zinc fell $18 to $3,422 and lead was $15 lower at $1,380. Tin rose $50 to $9,100.
Thursday, October 05, 2006
Copper rose by more than $100 a tonne, or 1.5 percent, on Thursday after sharp losses earlier in the week left the metal looking cheap in the face of a declining supply surplus.
Copper for delivery in three months on the London Metal Exchange cost $7,140 a tonne by 0551 GMT versus $7,030 at the last London close, when the contract lost $310, or 4.2 percent of its value.
"Copper looks cheap near $7,000," a trader said.
Commodity-specific investment funds in the first half of the year bought up copper on forecasts of strong demand and limited supply, driving prices as high as $8,800 a tonne by May -- double the price in early January -- only to stage steady exits from the market in favour of profits over the last several months.
Copper prices have been in near-steady decline since July.
"The professional money appears to be switching out of copper into aluminium," BNP Paribas commodities analyst David Thurtell said in a report.
Traders said below around $7,200 a tonne copper could attract wide buying interest, particularly given dwindling supplies of the metal.
The latest inventory data shows LME warehouse stocks -- regarded as a supply source of last resort -- totalling only 116,975 tonnes, which is less than three days worth of global usage.
"From a support standpoint, $7,170 is an important level," a trader said.
However, trading was light across Asia due to a week-long holiday in China that has idled the Shanghai Futures Exchange.
Copper for December delivery on the New York Mercantile Exchange's COMEX division was up 3.45 cents at $3.2400 a lb.
U.S. crude oil futures traded higher after heavy losses earlier in the week, underpinning positive sentiment across commodities markets, traders said.
A modest $3 per ounce rise in spot gold prices also added to bullishness among investors in base metals.
Firmer metals prices also underpinned a rise in the heavily mining-weighted Australian Stock Exchange.
Australia's benchmark S&P/ASX 200 Index gained about 1.3 percent.
The world's top miner BHP Billiton rose 1 percent, while the second biggest, Rio Tinto Ltd., was up 1.9 percent.
Three-month aluminium was up $17 at $2,492 a tonne.
Dealers said the metal, widely used in construction and aerospace, was finding some support on modest declines in inventories held in LME warehouses, which were 13 percent below the 52-week high of 793,625 tonnes.
Three-month zinc was $20 higher at $3,325 a tonne.
Copper for delivery in three months on the London Metal Exchange cost $7,140 a tonne by 0551 GMT versus $7,030 at the last London close, when the contract lost $310, or 4.2 percent of its value.
"Copper looks cheap near $7,000," a trader said.
Commodity-specific investment funds in the first half of the year bought up copper on forecasts of strong demand and limited supply, driving prices as high as $8,800 a tonne by May -- double the price in early January -- only to stage steady exits from the market in favour of profits over the last several months.
Copper prices have been in near-steady decline since July.
"The professional money appears to be switching out of copper into aluminium," BNP Paribas commodities analyst David Thurtell said in a report.
Traders said below around $7,200 a tonne copper could attract wide buying interest, particularly given dwindling supplies of the metal.
The latest inventory data shows LME warehouse stocks -- regarded as a supply source of last resort -- totalling only 116,975 tonnes, which is less than three days worth of global usage.
"From a support standpoint, $7,170 is an important level," a trader said.
However, trading was light across Asia due to a week-long holiday in China that has idled the Shanghai Futures Exchange.
Copper for December delivery on the New York Mercantile Exchange's COMEX division was up 3.45 cents at $3.2400 a lb.
U.S. crude oil futures traded higher after heavy losses earlier in the week, underpinning positive sentiment across commodities markets, traders said.
A modest $3 per ounce rise in spot gold prices also added to bullishness among investors in base metals.
Firmer metals prices also underpinned a rise in the heavily mining-weighted Australian Stock Exchange.
Australia's benchmark S&P/ASX 200 Index gained about 1.3 percent.
The world's top miner BHP Billiton rose 1 percent, while the second biggest, Rio Tinto Ltd., was up 1.9 percent.
Three-month aluminium was up $17 at $2,492 a tonne.
Dealers said the metal, widely used in construction and aerospace, was finding some support on modest declines in inventories held in LME warehouses, which were 13 percent below the 52-week high of 793,625 tonnes.
Three-month zinc was $20 higher at $3,325 a tonne.
Wednesday, October 04, 2006
Copper tumbled more than 4 per cent in London on Tuesday night amid concerns about oversupply and a slowdown in manufacturing, while oil traded at a seven-month low of $US58.27 a barrel.
The plunge in commodities reverberated through the Australian market yesterday, sending the S&P/ASX 300 Metals & Mining Index almost 4 per cent lower to 3203.1 points.
BHP shares plunged almost 5 per cent, losing $1.19 to $24.76, while Rio Tinto shed $1.99 to $68.01.
Copper for January delivery traded as low as $US7215 a tonne yesterday, from a close of $US7371 a tonne in London.
The price of copper, which is used in everything from electrical leads to motors, has fallen almost 20 per cent from its peak of $US8800 in May.
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Analysts blamed the sharp fall this week on disappointing manufacturing figures in the United States and new forecasts by the International Copper Study Group (ICSG).
The ISM manufacturing index, which measures the health of the US manufacturing industry, fell to its lowest level in 18 months in September.
Chip Hanlon, president of Delta Global Advisors in California, said: "The soft economic data raises new fears that we are moving toward an economic recession and diminished demand for commodities."
Also weighing on the copper price was a report by the ICSG, which forecast a "modest surplus" of copper this year and a 1.8 per cent decline in China's copper consumption.
Base metals, including copper, were BHP's biggest earner in 2005-06, contributing $US5.4 billion to earnings before interest and tax.
Rio relies even more heavily on copper production, with the metal responsible for almost half of the company's earnings in the six months to June 30.
The plunge in commodities reverberated through the Australian market yesterday, sending the S&P/ASX 300 Metals & Mining Index almost 4 per cent lower to 3203.1 points.
BHP shares plunged almost 5 per cent, losing $1.19 to $24.76, while Rio Tinto shed $1.99 to $68.01.
Copper for January delivery traded as low as $US7215 a tonne yesterday, from a close of $US7371 a tonne in London.
The price of copper, which is used in everything from electrical leads to motors, has fallen almost 20 per cent from its peak of $US8800 in May.
Perform A Background Check On Anyone, Anywhere
Analysts blamed the sharp fall this week on disappointing manufacturing figures in the United States and new forecasts by the International Copper Study Group (ICSG).
The ISM manufacturing index, which measures the health of the US manufacturing industry, fell to its lowest level in 18 months in September.
Chip Hanlon, president of Delta Global Advisors in California, said: "The soft economic data raises new fears that we are moving toward an economic recession and diminished demand for commodities."
Also weighing on the copper price was a report by the ICSG, which forecast a "modest surplus" of copper this year and a 1.8 per cent decline in China's copper consumption.
Base metals, including copper, were BHP's biggest earner in 2005-06, contributing $US5.4 billion to earnings before interest and tax.
Rio relies even more heavily on copper production, with the metal responsible for almost half of the company's earnings in the six months to June 30.
Tuesday, October 03, 2006
Copper prices tumbled the most in three weeks on speculation a slowdown in the U.S. economy, the world's largest, may reduce demand for commodities, including metals.
The Reuters/Jefferies CRB Index dropped 12 percent in the third quarter, the most since at least 1956. Copper in New York is down 18 percent from a record $4.04 a pound a metric ton in mid- May. U.S. manufacturing expanded less than analysts estimated in August and spending on home construction dropped for a fifth straight month, reports showed yesterday.
``The concern on the U.S. economy is far from over,'' said Roy Carson, a London-based analyst at Triland Metals Ltd. Triland is one of 11 companies that trade on the floor of the London Metal Exchange.
Copper futures for December delivery fell 11.45 cents, or 3.3 percent, to $3.315 a pound at 9:27 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since Sept. 11.
Before today, prices were up 68 percent this year. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
Copper for delivery in three months dropped $250, or 3.3 percent, to $7,270 a metric ton on the LME. Before today, prices had almost doubled from a year ago.
The Institute for Supply Management's manufacturing index fell to 52.9. The gauge was expected to fall to 53.5 from 54.5 the prior month, based on the median of 64 forecasts in a Bloomberg News survey. Private residential construction spending dropped 1.5 percent, the Commerce Department said yesterday.
Xstrata Outlook
Industrial metals have dropped in the past four months after interest-rate increases worldwide spurred speculation that investment and consumer demand for the metals may dwindle.
The outlook for metals, including copper and nickel, is ``very strong'' in the next six months because miners are not producing enough to meet demand, Xstrata Plc Chief Executive Officer Mick Davis said today in an interview in London.
``I would be somewhat surprised if we ended up with a surplus next year'' of copper and nickel, Davis said.
Copper supplies from mines and scrap yards will outpace demand in 2007 by 176,000 metric tons, down from a surplus of 239,000 tons this year, the Lisbon-based International Copper Study Group said yesterday in a report.
Lead prices gained after inventories declined the most in 16 months. Stockpiles monitored by the LME fell 2,625 tons, or 4.4 percent, to 57,425 tons today.
Lead climbed $14, or 1 percent, to $1,390 a ton in London.
The Reuters/Jefferies CRB Index dropped 12 percent in the third quarter, the most since at least 1956. Copper in New York is down 18 percent from a record $4.04 a pound a metric ton in mid- May. U.S. manufacturing expanded less than analysts estimated in August and spending on home construction dropped for a fifth straight month, reports showed yesterday.
``The concern on the U.S. economy is far from over,'' said Roy Carson, a London-based analyst at Triland Metals Ltd. Triland is one of 11 companies that trade on the floor of the London Metal Exchange.
Copper futures for December delivery fell 11.45 cents, or 3.3 percent, to $3.315 a pound at 9:27 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since Sept. 11.
Before today, prices were up 68 percent this year. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
Copper for delivery in three months dropped $250, or 3.3 percent, to $7,270 a metric ton on the LME. Before today, prices had almost doubled from a year ago.
The Institute for Supply Management's manufacturing index fell to 52.9. The gauge was expected to fall to 53.5 from 54.5 the prior month, based on the median of 64 forecasts in a Bloomberg News survey. Private residential construction spending dropped 1.5 percent, the Commerce Department said yesterday.
Xstrata Outlook
Industrial metals have dropped in the past four months after interest-rate increases worldwide spurred speculation that investment and consumer demand for the metals may dwindle.
The outlook for metals, including copper and nickel, is ``very strong'' in the next six months because miners are not producing enough to meet demand, Xstrata Plc Chief Executive Officer Mick Davis said today in an interview in London.
``I would be somewhat surprised if we ended up with a surplus next year'' of copper and nickel, Davis said.
Copper supplies from mines and scrap yards will outpace demand in 2007 by 176,000 metric tons, down from a surplus of 239,000 tons this year, the Lisbon-based International Copper Study Group said yesterday in a report.
Lead prices gained after inventories declined the most in 16 months. Stockpiles monitored by the LME fell 2,625 tons, or 4.4 percent, to 57,425 tons today.
Lead climbed $14, or 1 percent, to $1,390 a ton in London.
Monday, October 02, 2006
Copper prices rose, extending Friday's gains, as the red metal found support from steadier oil and gold markets, declining stocks and concerns over possible supply disruptions ahead.
At 2.32 pm, LME copper for 3-month delivery was up at 7,635.00 usd against 7,545.00 usd at the close Friday. Other metals were also higher.
Aluminium rose to 2,596.50 usd against 2,584.00 usd, lead was up at 1,395.00 usd against 1,380.00 usd, zinc rose to 3,400.00 usd from 3,330.00 usd, tin went up to 8,925.00 usd from 8,850.00 usd and nickel was up at 29,600.00 usd against 29,350.00 usd.
'Copper has opened higher this morning, as has the rest of the group, brushing off news out over the weekend that Highland Valley has reached a tentative labour agreement with its unions,' said Man Financial analyst Ed Meir.
The Highland Valley copper mine in Canada is owned by Teck Cominco Ltd. Concerns about possible strike action at the mine helped copper post gains on Friday.
It has continued higher today, underpinned by news of further declines in stockpile levels. The LME said today that copper stocks in its warehouses fell 700 tonnes to 116,875 - equivalent to less than 3 days of global consumption.
Furthermore, steadier oil and gold prices are lending support. Oil prices have begun steadying from a month-long slump, as traders weigh swelling energy stocks against the threat of output cuts by the OPEC cartel.
The firmer tone in oil is supporting the metals across the board, said Meir.
Specifically on copper, he said the metal continues to draw support from news that two unions at Codelco's Andina copper mine are to negotiate separate contracts with management, increasing the odds of drawn out negotiations.
'We see copper as having trouble passing the 7,770 usd (level) in the short term (the next two days), but the odds of a successful pass
above this level are increasing as we enter the fourth quarter.
-- a time when participants could get increasingly nervous about possible labour trouble at Codelco,' said Meir.
At 2.32 pm, LME copper for 3-month delivery was up at 7,635.00 usd against 7,545.00 usd at the close Friday. Other metals were also higher.
Aluminium rose to 2,596.50 usd against 2,584.00 usd, lead was up at 1,395.00 usd against 1,380.00 usd, zinc rose to 3,400.00 usd from 3,330.00 usd, tin went up to 8,925.00 usd from 8,850.00 usd and nickel was up at 29,600.00 usd against 29,350.00 usd.
'Copper has opened higher this morning, as has the rest of the group, brushing off news out over the weekend that Highland Valley has reached a tentative labour agreement with its unions,' said Man Financial analyst Ed Meir.
The Highland Valley copper mine in Canada is owned by Teck Cominco Ltd. Concerns about possible strike action at the mine helped copper post gains on Friday.
It has continued higher today, underpinned by news of further declines in stockpile levels. The LME said today that copper stocks in its warehouses fell 700 tonnes to 116,875 - equivalent to less than 3 days of global consumption.
Furthermore, steadier oil and gold prices are lending support. Oil prices have begun steadying from a month-long slump, as traders weigh swelling energy stocks against the threat of output cuts by the OPEC cartel.
The firmer tone in oil is supporting the metals across the board, said Meir.
Specifically on copper, he said the metal continues to draw support from news that two unions at Codelco's Andina copper mine are to negotiate separate contracts with management, increasing the odds of drawn out negotiations.
'We see copper as having trouble passing the 7,770 usd (level) in the short term (the next two days), but the odds of a successful pass
above this level are increasing as we enter the fourth quarter.
-- a time when participants could get increasingly nervous about possible labour trouble at Codelco,' said Meir.
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