Copper steadied above 7,000.00 usd per tonne, having posted gains yesterday on a stronger than expected revision to US third quarter GDP data and on rising oil prices, but analysts said with volumes thin they see choppy trading conditions ahead.
At 1.05 pm, LME (London Metal Exchange) copper for three month delivery was unchanged from yesterday's close at 7,020.00 usd.
'Over the last three days copper's been swishing around quite wildly, a reflection of illiquid markets. It's been pretty barren ... and markets are inching in either direction,' said Standard Bank analyst Mike Skinner.
Copper was boosted yesterday by gains in oil prices and data showing US GDP grew by 2.2 pct in the third quarter against a previous estimate of 1.6 pct growth. It was also boosted by the possibility of supply disruptions at Codelco.
Codelco, the world's largest copper producer, is negotiating a new labour contract with workers, as the old one expires on Dec 31, but the talks have dragged and there has been little news about their progress.
Analysts said while the Codelco talks are limiting the downside today, copper remains under pressure fron concerns over slowing US growth, notwithstanding yesterday's slightly stronger numbers.
Specifically, traders are concerned about the US housing sector, which has seen its biggest decline in over 15 years. They are also eyeing a near 40 pct rise in LME stockpile levels since mid-October.
'People know that next week could be more choppy for copper, it has not really moved that much today. Copper has been dormant for the last couple of months so other metals have caught the eye more,' said Skinner.
Nickel, for example, has been benefiting from critically low stocks and an array of supply problems, with today's announcement from BHP Billiton lifting the metal once again, he said.
BHP said earlier the start-up of its Ravensthorp project in Western Australia has been delayed until the first quarter of 2008 from an original schedule of mid-2007.
'Implications of this news is that the deficit we had for 2007 of 5,000 tonnes is now likely to increase to about 30,000 tonnes,' said UBS Investment Bank analyst Robin Bhar.
He added news earlier this week that CVRD-Inco's Goro nickel project has been delayed until 2008 is also boosting nickel, as are rumblings from Xstrata that its Koniambo project is likely to slip further down the timescale.
LME nickel for three month delivery edged up to 33,500.00 usd against 32,750.00 usd at the close yesterday.
Other metals, except for aluminium, were also up.
Three month zinc was up at 4,375.00 usd against 4,340.00 usd, tin was up at 10,550.00 usd against 10,350.00 usd, aluminium was down at 2,699.50 usd against 2,701.00 usd, while lead was up at 1,650.00 usd against 1,640.00 usd.
Thursday, November 30, 2006
Wednesday, November 29, 2006
Copper prices fell back below 7,000 usd, having traded up earlier in the session, as traders weighed concerns that the US economic growth slowdown will crimp demand against worries over potential supply disruptions in Chile.
At 3.07 pm, LME copper for three month delivery was down at 6,947.50 usd a tonne against 6,975.00 usd at the close yesterday.
Copper prices rose earlier after BHP Billiton, the world's biggest metals miner, said it sees strong demand for copper going forward and after Japanese data showed a higher than forecast 1.6 pct rise in industrial production.
Prices have since retreated, however, as concerns over the slowdown in the rate of US economic growth continued to weigh on the market despite a stronger than expected upwards revision to third quarter US GDP growth.
'We're in a holding pattern right now. The weakness in the US (economy) is really exerting pressure on the downside and the upside is lifted by uncertainty about labour talks in Chile,' said Man Financial analyst Ed Meir.
Chile's Codelco, the world's largest copper producer, is negotiating a new labour contract with workers, as the old one expires on Dec 31. However, the talks have dragged and there has been little news out about their progress.
'I'm kind of surprised the market is not a bit more nervous given that we have not heard anything,' on the talks, said Meir.
Elsewhere, nickel was lower even after LME data released earlier showed nickel inventories, which are already at critically low levels, fell by another 96 tonnes to total 6,9564 tonnes.
The metal traded up earlier, boosted by comments from BHP Billiton that cost pressure and low labour productivity has impacted progress at its Ravensthorpe nickel mine in Western Australia.
LME nickel for three month delivery edged down to 32,800.00 usd against 33,500.00 usd at the close yesterday.
Other metals were mixed.
Three month zinc was down at 4,325.00 usd against 4,375.00 usd, tin was up at 10,300.00 usd against 10,150.00 usd, aluminium was down at 2,683.00 usd against 2,704.00 usd and lead was up at 1,617.50 usd against 1,590.00 usd.
At 3.07 pm, LME copper for three month delivery was down at 6,947.50 usd a tonne against 6,975.00 usd at the close yesterday.
Copper prices rose earlier after BHP Billiton, the world's biggest metals miner, said it sees strong demand for copper going forward and after Japanese data showed a higher than forecast 1.6 pct rise in industrial production.
Prices have since retreated, however, as concerns over the slowdown in the rate of US economic growth continued to weigh on the market despite a stronger than expected upwards revision to third quarter US GDP growth.
'We're in a holding pattern right now. The weakness in the US (economy) is really exerting pressure on the downside and the upside is lifted by uncertainty about labour talks in Chile,' said Man Financial analyst Ed Meir.
Chile's Codelco, the world's largest copper producer, is negotiating a new labour contract with workers, as the old one expires on Dec 31. However, the talks have dragged and there has been little news out about their progress.
'I'm kind of surprised the market is not a bit more nervous given that we have not heard anything,' on the talks, said Meir.
Elsewhere, nickel was lower even after LME data released earlier showed nickel inventories, which are already at critically low levels, fell by another 96 tonnes to total 6,9564 tonnes.
The metal traded up earlier, boosted by comments from BHP Billiton that cost pressure and low labour productivity has impacted progress at its Ravensthorpe nickel mine in Western Australia.
LME nickel for three month delivery edged down to 32,800.00 usd against 33,500.00 usd at the close yesterday.
Other metals were mixed.
Three month zinc was down at 4,325.00 usd against 4,375.00 usd, tin was up at 10,300.00 usd against 10,150.00 usd, aluminium was down at 2,683.00 usd against 2,704.00 usd and lead was up at 1,617.50 usd against 1,590.00 usd.
Tuesday, November 28, 2006
Copper futures in New York slipped nearly 2 percent in early business on Tuesday, after a sharper than expected drop in U.S. durable goods orders raised concerns over slowing demand for industrial metals, sources said.
"The durable good number was negative. It kind of confirms what we have been talking about in terms of questions over the durability of demand," said Steve Platt, an analyst with Archer Financials in Chicago.
"With that in mind, the recovery rally, which we saw last week, was probably overdone and it narrowly was a correction in a market that seems to be suffering from weak demand," Platt added.
Copper for March delivery fell 6.05 cents, or 1.88 percent, at $3.1550 a lb by 11:01 a.m. EST (1601 GMT) at the COMEX division of the New York Mercantile Exchange, near the lower end of its early $3.1375-$3.2310 trading band.
December copper, which goes into delivery on Thursday, lost 5.75 cents at $3.13 a lb, dealing from $3.11 to $3.2030.
Estimated COMEX copper futures volume at 10:00 a.m. reached 5,000 contracts, with 973 lots in switches.
Speculative players will continue to roll out of the December contract, repositioning their holdings in futures to avoid taking actual physical delivery of the metal when delivery begins on Thursday, Nov. 30.
New orders for U.S.-made durable goods tumbled much more than anticipated in October on a big drop in civilian aircraft but were also down unexpectedly when transportation was stripped from the total, a government report suggesting economic weakness showed on Tuesday.
Durables goods -- big-ticket items expected to last three years or longer -- fell 8.3 percent, the biggest drop since July 2000. The decline was propelled by a 21.7 percent fall in transportation orders, the Commerce Department said.
Despite a slight uptick in the pace of U.S. existing home sales, analysts were still doubtful of how healthy the housing market will be heading into 2007.[ID:nN28239734]
Investor concerns over the slowdown in the U.S. economy and softer demand growth from China, the world's largest consumer of the red metal, have placed a limitation on the market's upside potential.
The latest weekly Commitments of Traders report issued by the Commodity Futures Trading Commission reflected the market's limited interest after the data showed the net speculative short position in COMEX copper futures rose 6 percent to 18,102 contracts from 17,010 the previous week.
Fundamentally, the constant threat of supply disruptions in the market would continue to underpin copper prices.
"The durable good number was negative. It kind of confirms what we have been talking about in terms of questions over the durability of demand," said Steve Platt, an analyst with Archer Financials in Chicago.
"With that in mind, the recovery rally, which we saw last week, was probably overdone and it narrowly was a correction in a market that seems to be suffering from weak demand," Platt added.
Copper for March delivery
December copper
Estimated COMEX copper futures volume at 10:00 a.m. reached 5,000 contracts, with 973 lots in switches.
Speculative players will continue to roll out of the December contract, repositioning their holdings in futures to avoid taking actual physical delivery of the metal when delivery begins on Thursday, Nov. 30.
New orders for U.S.-made durable goods tumbled much more than anticipated in October on a big drop in civilian aircraft but were also down unexpectedly when transportation was stripped from the total, a government report suggesting economic weakness showed on Tuesday.
Durables goods -- big-ticket items expected to last three years or longer -- fell 8.3 percent, the biggest drop since July 2000. The decline was propelled by a 21.7 percent fall in transportation orders, the Commerce Department said.
Despite a slight uptick in the pace of U.S. existing home sales, analysts were still doubtful of how healthy the housing market will be heading into 2007.[ID:nN28239734]
Investor concerns over the slowdown in the U.S. economy and softer demand growth from China, the world's largest consumer of the red metal, have placed a limitation on the market's upside potential.
The latest weekly Commitments of Traders report issued by the Commodity Futures Trading Commission reflected the market's limited interest after the data showed the net speculative short position in COMEX copper futures rose 6 percent to 18,102 contracts from 17,010 the previous week.
Fundamentally, the constant threat of supply disruptions in the market would continue to underpin copper prices.
Friday, November 24, 2006
Copper may drop next week on speculation that demand will keep slowing in China and the U.S., the world's two largest consumers of the metal.
Thirteen of 23 analysts, investors and traders surveyed by Bloomberg yesterday and Nov. 22 forecast copper will decline next week. Nine expected a gain and one little change.
Consumption in China fell 6.9 percent in the nine months to September, the World Bureau of Metal Statistics said Nov. 22. Usage in the U.S. is ``depressed,'' the Lisbon-based International Copper Study Group said last week.
``The demand just isn't there,'' said Warren Gelman, president of Kataman Metals Inc., a trading company in St. Louis. ``With the lack of any major business going on between now and the end of the year, this market has to come off.''
Housing starts in the U.S., the second-biggest copper user after China, fell to a six-year low in October as falling home sales and swollen inventory discouraged construction. The building industry is the nation's largest consumer of copper, with the average house containing about 400 pounds of copper.
Copper has declined 20 percent since trading at a record $8,800 in London May 11. Chinese copper imports were 1.7 million tons in the first 10 months of the year, 22 percent less than a year earlier. Imports have been falling since October 2005.
Chinese reliance on copper imports will drop as domestic production rises 12 percent this year, China Minmetals Corp., the nation's largest metals trader, said earlier this month. Declining demand in China and the U.S. tipped the global market into a surplus of 228,000 metric tons in the nine months to September, the Hertfordshire, England-base WBMS said.
Housing Slowdown
Copper for delivery in three months on the London Metal Exchange gained $90, or 1.3 percent, to $7,070 a metric ton as of 7:24 a.m. local time. It has risen 4 percent this week.
On the Comex division of the New York Mercantile Exchange, copper for March delivery rose 2 percent to $3.197 a pound in after-hours electronic trading. Copper for delivery in January on the Shanghai Futures Exchange added 2.8 percent to close at 65,690 yuan ($8,363) a ton. Chinese prices include 17 percent tax and 2 percent duty.
The U.S. house market is slowing after the Federal Reserve raised borrowing costs for two years through June, lifting the target rate for overnight loans between banks to 5.25 percent
``It's very difficult for copper to rise in an environment where interest rates are higher and there are slower economic factors,'' said Ron Goodis, retail trading director at Equidex Brokerage Group Inc. in Closter, New Jersey.
Global demand for copper still rose 2 percent in the first nine months of 2006, according to the WBMS. The metal's rally may not be over because of tight supply, Richard Adkerson, Chief Executive Officer of New Orleans-based copper miner Freeport- McMoRan Copper & Gold Inc., said Nov. 20.
Analysts at Citigroup Inc., the biggest U.S. bank, said the same day that the ``super cycle'' in metals is still intact, with the so-called fundamentals of supply and demand keeping prices for copper above historical averages.
Investors surveyed by Bloomberg who expected prices to rise cited gains in the amount of LME copper stockpiles bought and due for future deliveries, known as canceled warrants. Canceled warrants have tripled to 21,025 tons in the past week, the highest level since June 8. That metal is in South Korea and Singapore, in the nearest LME-registered warehouses to China.
Thirteen of 23 analysts, investors and traders surveyed by Bloomberg yesterday and Nov. 22 forecast copper will decline next week. Nine expected a gain and one little change.
Consumption in China fell 6.9 percent in the nine months to September, the World Bureau of Metal Statistics said Nov. 22. Usage in the U.S. is ``depressed,'' the Lisbon-based International Copper Study Group said last week.
``The demand just isn't there,'' said Warren Gelman, president of Kataman Metals Inc., a trading company in St. Louis. ``With the lack of any major business going on between now and the end of the year, this market has to come off.''
Housing starts in the U.S., the second-biggest copper user after China, fell to a six-year low in October as falling home sales and swollen inventory discouraged construction. The building industry is the nation's largest consumer of copper, with the average house containing about 400 pounds of copper.
Copper has declined 20 percent since trading at a record $8,800 in London May 11. Chinese copper imports were 1.7 million tons in the first 10 months of the year, 22 percent less than a year earlier. Imports have been falling since October 2005.
Chinese reliance on copper imports will drop as domestic production rises 12 percent this year, China Minmetals Corp., the nation's largest metals trader, said earlier this month. Declining demand in China and the U.S. tipped the global market into a surplus of 228,000 metric tons in the nine months to September, the Hertfordshire, England-base WBMS said.
Housing Slowdown
Copper for delivery in three months on the London Metal Exchange gained $90, or 1.3 percent, to $7,070 a metric ton as of 7:24 a.m. local time. It has risen 4 percent this week.
On the Comex division of the New York Mercantile Exchange, copper for March delivery rose 2 percent to $3.197 a pound in after-hours electronic trading. Copper for delivery in January on the Shanghai Futures Exchange added 2.8 percent to close at 65,690 yuan ($8,363) a ton. Chinese prices include 17 percent tax and 2 percent duty.
The U.S. house market is slowing after the Federal Reserve raised borrowing costs for two years through June, lifting the target rate for overnight loans between banks to 5.25 percent
``It's very difficult for copper to rise in an environment where interest rates are higher and there are slower economic factors,'' said Ron Goodis, retail trading director at Equidex Brokerage Group Inc. in Closter, New Jersey.
Global demand for copper still rose 2 percent in the first nine months of 2006, according to the WBMS. The metal's rally may not be over because of tight supply, Richard Adkerson, Chief Executive Officer of New Orleans-based copper miner Freeport- McMoRan Copper & Gold Inc., said Nov. 20.
Analysts at Citigroup Inc., the biggest U.S. bank, said the same day that the ``super cycle'' in metals is still intact, with the so-called fundamentals of supply and demand keeping prices for copper above historical averages.
Investors surveyed by Bloomberg who expected prices to rise cited gains in the amount of LME copper stockpiles bought and due for future deliveries, known as canceled warrants. Canceled warrants have tripled to 21,025 tons in the past week, the highest level since June 8. That metal is in South Korea and Singapore, in the nearest LME-registered warehouses to China.
Wednesday, November 22, 2006
Copper rose to $7,000 a metric ton on the London Metal Exchange for the first time since Nov. 10, after stockpiles declined for two straight days, suggesting demand for the metal is picking up. Zinc jumped 3.3 percent.
Inventory monitored by the exchange fell 0.4 percent to 157,250 tons, the LME said today in a report. The stockpiles booked and due for future deliveries to buyers, known as ``canceled warrants,'' jumped to the highest in five months.
``The rise in canceled warrants is very important and the stockpile data are positive,'' said Martin Squires, an analyst at JPMorgan Chase & Co. in London.
Copper for delivery in three months on the LME gained $70, or 1 percent, to $7,050 a ton as of 10:03 a.m. local time. Prior to the LME stockpile report at 9 a.m., the contract dropped as much as 0.8 percent to $6,925 a ton. Prices have dropped 20 percent from a record $8,800 a ton on May 11.
Prices of copper, used in electrical wires and air conditioning tubes, advanced 71 percent in the past 12 months as supplies are below four days of global consumption, fuelling speculation that demand may exceed production this year. A slowdown in U.S. housing and lower imports of the metal to China triggered declines in prices in the past five months. Both countries are the world's largest users of the metal.
``China isn't a worry,'' said Squires, who last week visited the world's most populous country. More construction of buildings and infrastructure in the nation will continue to spur demand for copper, he added.
Copper production exceeded demand by 84,000 metric tons in the first eight months of the year, the Lisbon-based International Copper Study Group said this week in a report. World usage expanded by 3 percent in the period as growth in Europe, Japan and India offset declines in China and the U.S., the group said.
Zinc gained as much as $140, or 3.3 percent, to $4,430 a ton as inventory was at the lowest in 15 years. The exchange-monitored stockpiles declined 0.6 percent today to 88,950 tons, a level last seen in April 1991. The contract has more than doubled in the past year, trading at record $4,580 a ton Nov. 10.
Aluminum added $27, or 1 percent, to $2,705 a ton, nickel increased $170, or 0.5 percent, to $31,470. Lead rose 2.1 percent to $1,575 a ton and tin advanced $50 to $10,000 a ton.
Inventory monitored by the exchange fell 0.4 percent to 157,250 tons, the LME said today in a report. The stockpiles booked and due for future deliveries to buyers, known as ``canceled warrants,'' jumped to the highest in five months.
``The rise in canceled warrants is very important and the stockpile data are positive,'' said Martin Squires, an analyst at JPMorgan Chase & Co. in London.
Copper for delivery in three months on the LME gained $70, or 1 percent, to $7,050 a ton as of 10:03 a.m. local time. Prior to the LME stockpile report at 9 a.m., the contract dropped as much as 0.8 percent to $6,925 a ton. Prices have dropped 20 percent from a record $8,800 a ton on May 11.
Prices of copper, used in electrical wires and air conditioning tubes, advanced 71 percent in the past 12 months as supplies are below four days of global consumption, fuelling speculation that demand may exceed production this year. A slowdown in U.S. housing and lower imports of the metal to China triggered declines in prices in the past five months. Both countries are the world's largest users of the metal.
``China isn't a worry,'' said Squires, who last week visited the world's most populous country. More construction of buildings and infrastructure in the nation will continue to spur demand for copper, he added.
Copper production exceeded demand by 84,000 metric tons in the first eight months of the year, the Lisbon-based International Copper Study Group said this week in a report. World usage expanded by 3 percent in the period as growth in Europe, Japan and India offset declines in China and the U.S., the group said.
Zinc gained as much as $140, or 3.3 percent, to $4,430 a ton as inventory was at the lowest in 15 years. The exchange-monitored stockpiles declined 0.6 percent today to 88,950 tons, a level last seen in April 1991. The contract has more than doubled in the past year, trading at record $4,580 a ton Nov. 10.
Aluminum added $27, or 1 percent, to $2,705 a ton, nickel increased $170, or 0.5 percent, to $31,470. Lead rose 2.1 percent to $1,575 a ton and tin advanced $50 to $10,000 a ton.
Tuesday, November 21, 2006
Copper declined on speculation a U.S. housing slowdown has created an oversupply of the metal used in wires and pipes.
Copper production exceeded demand by 84,000 metric tons in the first eight months of the year, the Lisbon-based International Copper Study Group said yesterday in a report. Consumption in the U.S., the world's second-largest user of the metal, was flat in the period, and ``depressed'' in August, the group added.
``The copper market will continue easing in the next few years as the U.S. housing market is going to impact prices,'' David Thurtell, a London-based analyst at BNP Paribas, said today.
Copper for delivery in three months on the London Metal Exchange fell as much as $75, or 1.1 percent, and traded at $6,830 a metric ton as of 10:19 a.m. local time. The contract has fallen 22 percent from the May 11 peak of $8,800 a ton as higher U.S. interest rates hurt demand for industrial metals.
China, the world's largest copper user, used 6.9 percent less copper in the first eight months, the ICSG said. Still, demand growth in Europe, Japan and India helped world usage to expand by 3 percent in the period, it added.
The number of U.S. housing starts in October was the weakest since July 2000 and was down 27 percent from a year earlier, the Commerce Department reported Nov. 17. Building permits dropped to a 1.535 million annual pace, a record ninth straight decline and the lowest since December 1997.
Stockpiles of copper monitored by the LME fell 100 tons to 157,925 tons, the exchange said today. Inventory has increased 76 percent this year, to the highest since April 2004.
Copper Surcharge
Codelco, the world's largest copper producer, raised the surcharge it's seeking from Chinese buyers of the metal next year by $5 a ton to $130, according to Huang Xiaotian, general manager of copper at Golden Dragon Precise Copper Tube Inc. in Shanghai. The surcharge, or premium, is the sum added to the LME copper price for immediate delivery and includes shipping and insurance costs.
``The small rise reflects Codelco's expectations that China's demand will remain strong,'' Thurtell said.
Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Richard Adkerson said yesterday that this year's record rally in copper may not be over because demand for the metal has grown and major new supplies are getting harder to find.
``There's nothing to say that we've seen the peak of copper prices,'' Adkerson said. Freeport, based in New Orleans, yesterday agreed to buy copper producer Phelps Dodge Corp. for about $25.5 billion.
Supply Fundamentals
Copper prices will be buoyed by ``strong fundamental supply and demand factors,'' Adkerson said. ``Inventories have risen, somewhat, but fundamentally, supplies are very tight. When you look at the demand factors, the way that copper is used, the need for urbanization and industrialization around the world, the outlook remains strong for the metal.''
Citigroup Inc., the biggest U.S. bank, said yesterday the ``super cycle'' in metals it forecast more than 18 months ago is still intact and the so-called fundamentals of supply and demand will keep prices for copper, zinc and nickel above historical averages.
Citigroup analysts led by Sydney-based Alan Heap boosted their 2007 average copper-price forecast by 7.3 percent to $2.95 a pound, or $6,503 a metric ton. Prices will average $2.50 a pound in 2010, more than double a previous forecast, they added.
Heap's 2007 copper forecast is 7 percent higher than the median $2.75 prediction of nine analysts surveyed by Bloomberg News as of last week. Copper averaged $1.03 a pound in the past 10 years, according to data compiled by Bloomberg.
Among other LME-traded metals, aluminum fell $19, or 0.7 percent, to $2,636 a ton and zinc slipped $59, or 1.4 percent, to $4,110 a ton. Lead fell $3 to $1,517, while nickel gained $250 to $30,500 a ton. Tin was unchanged at $9,850 a ton.
Copper production exceeded demand by 84,000 metric tons in the first eight months of the year, the Lisbon-based International Copper Study Group said yesterday in a report. Consumption in the U.S., the world's second-largest user of the metal, was flat in the period, and ``depressed'' in August, the group added.
``The copper market will continue easing in the next few years as the U.S. housing market is going to impact prices,'' David Thurtell, a London-based analyst at BNP Paribas, said today.
Copper for delivery in three months on the London Metal Exchange fell as much as $75, or 1.1 percent, and traded at $6,830 a metric ton as of 10:19 a.m. local time. The contract has fallen 22 percent from the May 11 peak of $8,800 a ton as higher U.S. interest rates hurt demand for industrial metals.
China, the world's largest copper user, used 6.9 percent less copper in the first eight months, the ICSG said. Still, demand growth in Europe, Japan and India helped world usage to expand by 3 percent in the period, it added.
The number of U.S. housing starts in October was the weakest since July 2000 and was down 27 percent from a year earlier, the Commerce Department reported Nov. 17. Building permits dropped to a 1.535 million annual pace, a record ninth straight decline and the lowest since December 1997.
Stockpiles of copper monitored by the LME fell 100 tons to 157,925 tons, the exchange said today. Inventory has increased 76 percent this year, to the highest since April 2004.
Copper Surcharge
Codelco, the world's largest copper producer, raised the surcharge it's seeking from Chinese buyers of the metal next year by $5 a ton to $130, according to Huang Xiaotian, general manager of copper at Golden Dragon Precise Copper Tube Inc. in Shanghai. The surcharge, or premium, is the sum added to the LME copper price for immediate delivery and includes shipping and insurance costs.
``The small rise reflects Codelco's expectations that China's demand will remain strong,'' Thurtell said.
Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Richard Adkerson said yesterday that this year's record rally in copper may not be over because demand for the metal has grown and major new supplies are getting harder to find.
``There's nothing to say that we've seen the peak of copper prices,'' Adkerson said. Freeport, based in New Orleans, yesterday agreed to buy copper producer Phelps Dodge Corp. for about $25.5 billion.
Supply Fundamentals
Copper prices will be buoyed by ``strong fundamental supply and demand factors,'' Adkerson said. ``Inventories have risen, somewhat, but fundamentally, supplies are very tight. When you look at the demand factors, the way that copper is used, the need for urbanization and industrialization around the world, the outlook remains strong for the metal.''
Citigroup Inc., the biggest U.S. bank, said yesterday the ``super cycle'' in metals it forecast more than 18 months ago is still intact and the so-called fundamentals of supply and demand will keep prices for copper, zinc and nickel above historical averages.
Citigroup analysts led by Sydney-based Alan Heap boosted their 2007 average copper-price forecast by 7.3 percent to $2.95 a pound, or $6,503 a metric ton. Prices will average $2.50 a pound in 2010, more than double a previous forecast, they added.
Heap's 2007 copper forecast is 7 percent higher than the median $2.75 prediction of nine analysts surveyed by Bloomberg News as of last week. Copper averaged $1.03 a pound in the past 10 years, according to data compiled by Bloomberg.
Among other LME-traded metals, aluminum fell $19, or 0.7 percent, to $2,636 a ton and zinc slipped $59, or 1.4 percent, to $4,110 a ton. Lead fell $3 to $1,517, while nickel gained $250 to $30,500 a ton. Tin was unchanged at $9,850 a ton.
Monday, November 20, 2006
Copper gained most in more than a week in London on speculation the metal may attract investors amid increased demand from China, the world's largest consumer.
China's demand may double to a rate of 8 percent next year, Credit Suisse Group said in Nov. 2 report. The growth will create a supply shortfall of 252,000 tons in 2007, the bank said.
``Some people still buying into super-cycle see this decline as a good buying opportunity,'' Neil Buxton, managing director of GFMS Metals Consulting Ltd., said today by telephone. He referred to forecasts by banks including Citigroup Inc., the world's largest, that commodities including copper will stay near multiyear highs on demand from China.
Copper for delivery in three months on the LME rose $100, or 1.5 percent, to $6,900 a metric ton as of 1:07 p.m. local time. That's the largest intraday gain since Nov. 9. The contract fell 1.7 percent to $6,800 a ton last week, the lowest closing price since June 27. The metal has fallen 20 percent from its all-time high of $8,800 a ton on May 11.
The contract for delivery in March gained 1.65 cents, or 0.5 percent, at $3.0525 a pound on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
LME copper's so-called relative-strength index registered a reading of 34.75 on Nov. 17, indicating the contract was due for a rebound. The index, or RSI, identifies possible turning points for a commodity by calculating the degree by which gains outpace losses in a given time period. Readings at or below 30 suggest to chart watchers that a commodity or stock is poised to rise.
The Reuters/Jefferies CRB index, which tracks prices of 19 commodities including industrial metals and energy products, rose from a four-week low today to 305.79.
More Consolidation?
Copper production will rise in the next few years, increasing supplies of the metal used in wires and pipes. Freeport McMoRan Copper & Gold Inc. agreed today to buy Phelps Dodge Corp. for $25.9 billion in cash and stock to create the world's largest publicly traded copper producer. The combined company will expand copper production by 25 percent over the next three years.
``With metal prices fueling strong cash flows and the expectation by companies that prices will stay stronger for longer, more miners would want to acquire to add value,'' said Tim Barker at BT Financial Group, which manages $54 billion of assets including mining stocks, in Sydney.
Buxton said copper probably will decline in the next 12 months as demand from the U.S., the world's second-largest user, has weakened due to a slowdown in the residential housing sector. An average U.S. home contains 400 pounds of copper. The analyst maintains his price forecast for 2007, saying the metal for immediate delivery will average $6,000 a ton. The contract has averaged $6,727 a ton this year.
The number of housing starts in October was the weakest since July 2000 and was down 27 percent from a year earlier, the Commerce Department reported Nov. 17. Building permits dropped to a 1.535 million annual pace, a record ninth straight decline and the lowest since December 1997.
Among other LME-traded metals, aluminum fell 45, or 0.2 percent, to $2,620 a ton and nickel gained $400, or 1.3 percent, to $30,300 a ton. Lead added $6 at $1,490, tin advanced $100 at $9,800 and zinc rose $55 at $4,080 a ton.
China's demand may double to a rate of 8 percent next year, Credit Suisse Group said in Nov. 2 report. The growth will create a supply shortfall of 252,000 tons in 2007, the bank said.
``Some people still buying into super-cycle see this decline as a good buying opportunity,'' Neil Buxton, managing director of GFMS Metals Consulting Ltd., said today by telephone. He referred to forecasts by banks including Citigroup Inc., the world's largest, that commodities including copper will stay near multiyear highs on demand from China.
Copper for delivery in three months on the LME rose $100, or 1.5 percent, to $6,900 a metric ton as of 1:07 p.m. local time. That's the largest intraday gain since Nov. 9. The contract fell 1.7 percent to $6,800 a ton last week, the lowest closing price since June 27. The metal has fallen 20 percent from its all-time high of $8,800 a ton on May 11.
The contract for delivery in March gained 1.65 cents, or 0.5 percent, at $3.0525 a pound on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
LME copper's so-called relative-strength index registered a reading of 34.75 on Nov. 17, indicating the contract was due for a rebound. The index, or RSI, identifies possible turning points for a commodity by calculating the degree by which gains outpace losses in a given time period. Readings at or below 30 suggest to chart watchers that a commodity or stock is poised to rise.
The Reuters/Jefferies CRB index, which tracks prices of 19 commodities including industrial metals and energy products, rose from a four-week low today to 305.79.
More Consolidation?
Copper production will rise in the next few years, increasing supplies of the metal used in wires and pipes. Freeport McMoRan Copper & Gold Inc. agreed today to buy Phelps Dodge Corp. for $25.9 billion in cash and stock to create the world's largest publicly traded copper producer. The combined company will expand copper production by 25 percent over the next three years.
``With metal prices fueling strong cash flows and the expectation by companies that prices will stay stronger for longer, more miners would want to acquire to add value,'' said Tim Barker at BT Financial Group, which manages $54 billion of assets including mining stocks, in Sydney.
Buxton said copper probably will decline in the next 12 months as demand from the U.S., the world's second-largest user, has weakened due to a slowdown in the residential housing sector. An average U.S. home contains 400 pounds of copper. The analyst maintains his price forecast for 2007, saying the metal for immediate delivery will average $6,000 a ton. The contract has averaged $6,727 a ton this year.
The number of housing starts in October was the weakest since July 2000 and was down 27 percent from a year earlier, the Commerce Department reported Nov. 17. Building permits dropped to a 1.535 million annual pace, a record ninth straight decline and the lowest since December 1997.
Among other LME-traded metals, aluminum fell 45, or 0.2 percent, to $2,620 a ton and nickel gained $400, or 1.3 percent, to $30,300 a ton. Lead added $6 at $1,490, tin advanced $100 at $9,800 and zinc rose $55 at $4,080 a ton.
Copper prices rose as the market recovered from last week's slump, aided by news Freeport-McMoRan will acquire Phelps Dodge for approximately 25.9 bln usd in cash and shares.
However, with stockpiles still rising and recent US economic data providing fresh cause for concern over growth prospects in the world's largest economy, analysts warned copper's gains might be limited.
At 1.15 pm, LME copper for three-month delivery rose to 6,900.00 usd a tonne against 6,800.00 usd at the close yesterday, and aluminium climbed to 2,647.50 usd against 2,625.00.
Other base metals were also higher.
Nickel rose to 30,400.00 usd against 29,900.00 usd, lead climbed to 1,512.50 usd against 1,484.00 usd, zinc was up at 4,145.00 usd against 4,025.00 usd, while tin was up at 9,850.00 against 9,700.00 usd.
'The big story of the day giving the copper complex somewhat of a boost is news that Freeport-McMoRan Copper & Gold has agreed to buy Phelps Dodge Corp. for 25.9 bln in cash and stock,' said Man Financial analyst Ed Meir.
The merger will create the world's largest publicly traded copper company and represents the world's biggest mining takeover.
Meir added, however, that 'as this news (merger) wears off, we expect the market to focus once again on rising stocks and a slowing US macro environment'.
The LME said today copper stocks monitored in its warehouse rose by another 2,050 tonnes to total 158,025 tonnes. LME copper stocks have now risen 44 pct from a recent low of 109,600 tonnes.
'Copper looks like it will be in a small surplus next year and we expect more downward pressure on prices. We see prices closer to 6,000 than 7,000 over the next few months,' said Adam Rowley, an analyst at Macquarie Research.
Copper closed slightly lower on Friday after data showing a very sharp decline in new home construction in the US sparked concerns that slowing US growth could crimp demand for metals.
However UBS Investment Bank analyst Robin Bhar said the metal's performance was 'better than expected given the negative macro (US and Chinese economy) and micro (rising stocks, easing spreads) background'.
However, with stockpiles still rising and recent US economic data providing fresh cause for concern over growth prospects in the world's largest economy, analysts warned copper's gains might be limited.
At 1.15 pm, LME copper for three-month delivery rose to 6,900.00 usd a tonne against 6,800.00 usd at the close yesterday, and aluminium climbed to 2,647.50 usd against 2,625.00.
Other base metals were also higher.
Nickel rose to 30,400.00 usd against 29,900.00 usd, lead climbed to 1,512.50 usd against 1,484.00 usd, zinc was up at 4,145.00 usd against 4,025.00 usd, while tin was up at 9,850.00 against 9,700.00 usd.
'The big story of the day giving the copper complex somewhat of a boost is news that Freeport-McMoRan Copper & Gold has agreed to buy Phelps Dodge Corp. for 25.9 bln in cash and stock,' said Man Financial analyst Ed Meir.
The merger will create the world's largest publicly traded copper company and represents the world's biggest mining takeover.
Meir added, however, that 'as this news (merger) wears off, we expect the market to focus once again on rising stocks and a slowing US macro environment'.
The LME said today copper stocks monitored in its warehouse rose by another 2,050 tonnes to total 158,025 tonnes. LME copper stocks have now risen 44 pct from a recent low of 109,600 tonnes.
'Copper looks like it will be in a small surplus next year and we expect more downward pressure on prices. We see prices closer to 6,000 than 7,000 over the next few months,' said Adam Rowley, an analyst at Macquarie Research.
Copper closed slightly lower on Friday after data showing a very sharp decline in new home construction in the US sparked concerns that slowing US growth could crimp demand for metals.
However UBS Investment Bank analyst Robin Bhar said the metal's performance was 'better than expected given the negative macro (US and Chinese economy) and micro (rising stocks, easing spreads) background'.
Saturday, November 18, 2006
Copper futures in New York ended in positive territory on Friday after an early test below $3.00 a lb failed to attract further long liquidation, leaving traders to ponder the market's next move.
"The market is still consolidating its recent move from last week, and until it decides on which way it wants to go, we'll continue to be stuck in rangebound dealings," said one broker at a New York trading house.
Copper for December delivery settled up 1.65 cents at $3.0575 a lb on the New York Mercantile Exchange's COMEX division, after dealing from an overnight ACCESS low at $2.9750 to $3.0650.
Floor dealers noted the market's failure to break below the overnight low in early COMEX trade, prompted a late bout of covering.
"Locals drove it down to a low of $2.98, not even through the overnight low. We bounced on either side of $3.00 for the remainder of the morning, and then all of a sudden, at around noon, a late flurry of buying came in ... probably some shorts covering into the close," said one.
The now most-active March contract rose 1.75 cents to settle at $3.0925. Spot November gained 1.65 cents to $3.0525, and back months closed with gains ranging from 1.70 to 1.85 cents.
COMEX final copper volume was estimated at 15,000 lots, compared with Thursday's official count at 11,058 lots.
Broad-based liquidation in commodity markets on Friday, led by sharp declines in the energy markets, pressured COMEX copper futures at the open, with additional weakness stemming from a weaker-than-expected report on U.S. housing starts in October.
The U.S. Commerce Department reported the pace of U.S. home building fell sharply in October as new home starts dropped 14.6 percent to their lowest level in over six years and building permits fell 6.3 percent.
"The housing data is certainly a contributor to copper's slide this morning. The weak housing starts and building permits just continue to add on to the downfall in residential construction," said Michael John Cuoco, research analyst at Mitsui Bussan Commodities (U.S.A.) Inc.
The general slowdown in U.S. home building reflected the recent builds in exchange-monitored stockpiles.
London Metal Exchange copper warehouse inventories surged 4,025 tonnes to 155,975 tonnes on Friday, while COMEX stocks rose 85 short tons at 25,903 short tons on Thursday.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell by 10 percent in the week ended Thursday to 31,576 tonnes, from 35,123 tonnes the week before.
On the production front, the largest workers' union at Chile's Codelco Norte, the giant copper miner's largest division, says the company is going to have to boost bonuses if it wants to avoid a crippling strike.
LME three-months copper closed at $6,790 a tonne, paring earlier losses after hitting a near five-month low at $6,645.
"The market is still consolidating its recent move from last week, and until it decides on which way it wants to go, we'll continue to be stuck in rangebound dealings," said one broker at a New York trading house.
Copper for December delivery
Floor dealers noted the market's failure to break below the overnight low in early COMEX trade, prompted a late bout of covering.
"Locals drove it down to a low of $2.98, not even through the overnight low. We bounced on either side of $3.00 for the remainder of the morning, and then all of a sudden, at around noon, a late flurry of buying came in ... probably some shorts covering into the close," said one.
The now most-active March contract
COMEX final copper volume was estimated at 15,000 lots, compared with Thursday's official count at 11,058 lots.
Broad-based liquidation in commodity markets on Friday, led by sharp declines in the energy markets, pressured COMEX copper futures at the open, with additional weakness stemming from a weaker-than-expected report on U.S. housing starts in October.
The U.S. Commerce Department reported the pace of U.S. home building fell sharply in October as new home starts dropped 14.6 percent to their lowest level in over six years and building permits fell 6.3 percent.
"The housing data is certainly a contributor to copper's slide this morning. The weak housing starts and building permits just continue to add on to the downfall in residential construction," said Michael John Cuoco, research analyst at Mitsui Bussan Commodities (U.S.A.) Inc.
The general slowdown in U.S. home building reflected the recent builds in exchange-monitored stockpiles.
London Metal Exchange copper warehouse inventories surged 4,025 tonnes to 155,975 tonnes on Friday, while COMEX stocks rose 85 short tons at 25,903 short tons on Thursday.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell by 10 percent in the week ended Thursday to 31,576 tonnes, from 35,123 tonnes the week before.
On the production front, the largest workers' union at Chile's Codelco Norte, the giant copper miner's largest division, says the company is going to have to boost bonuses if it wants to avoid a crippling strike.
LME three-months copper
Friday, November 17, 2006
Copper declined, heading for a fourth successive weekly drop on the London Metal Exchange. Aluminum and nickel also fell.
Copper for delivery in three months on the LME dropped $70, or 1 percent, to $6,740 a ton as of 9:20 a.m. local time. The metal has lost 2.6 percent this week. It has fallen 23 percent since trading at a record $8,800 on May 11.
Aluminum declined $48, or 1.8 percent, to $2,620 a ton and nickel fell $200 to $29,400. Zinc dropped $65 to $4,160 and lead was $45 lower at $1,490. Tin slid $100 to $9,700.
Copper for delivery in three months on the LME dropped $70, or 1 percent, to $6,740 a ton as of 9:20 a.m. local time. The metal has lost 2.6 percent this week. It has fallen 23 percent since trading at a record $8,800 on May 11.
Aluminum declined $48, or 1.8 percent, to $2,620 a ton and nickel fell $200 to $29,400. Zinc dropped $65 to $4,160 and lead was $45 lower at $1,490. Tin slid $100 to $9,700.
Thursday, November 16, 2006
Copper in Shanghai fell for the fourth straight day to settle at its lowest in more than three months as charts some traders use to predict price moves signaled further declines may be in store.
Prices of the metal haven fallen 7.5 percent since the close of Nov. 10 amid speculation that demand may ease from China and the U.S., the world's biggest users. The decline has taken Shanghai copper to below 65,000 yuan ($8,260) a metric ton, a level considered as a support, or points where buy orders cluster, trader Li Ling said.
``Technically speaking, as long as prices are below 65,000 yuan, copper prices are in a weak trend,'' Li, a futures trader at Star Futures Co., said by phone from Shanghai today.
Copper for delivery in January fell 20 yuan, or 0.03 percent, to settle at 62,690 yuan a ton on the Shanghai Futures Exchange, the lowest settlement price since July 24.
Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, fell as much as 2,100 yuan, or 3.2 percent, to 64,100 yuan a ton today.
Still, Shanghai futures prices rebounded from an intraday low of 62,080 yuan as some investors judged prices to have fallen low enough to resume buying, analysts such as Wang Zheng said.
``Generally, we saw buying from investors,'' Wang, a futures trader at Shanghai Continent Futures Co., said by phone today. ``Open interest kept rising when prices rebounded, so that is a sign that new buying has surfaced,'' he said, referring to the total number of futures contracts that have not been closed, liquidated or delivered.
Copper for three-month delivery on the benchmark London Metal Exchange fell $45, or 0.7 percent, to $6,865 a ton at 7:50 a.m. London time.
Technical charts suggest ``that the larger trend remains to the downside'' for London copper prices, indicating prices may fall to $6,415 a ton, the lowest posted in June, Barclays Capital analysts led by Jordan Kotick said in a report dated yesterday.
Copper for delivery in March fell 0.75 cent, or 0.2 percent, to $3.1175 a pound in after-hours trade on the Comex division of the New York Mercantile Exchange at 7:50 a.m. London time.
Prices of the metal haven fallen 7.5 percent since the close of Nov. 10 amid speculation that demand may ease from China and the U.S., the world's biggest users. The decline has taken Shanghai copper to below 65,000 yuan ($8,260) a metric ton, a level considered as a support, or points where buy orders cluster, trader Li Ling said.
``Technically speaking, as long as prices are below 65,000 yuan, copper prices are in a weak trend,'' Li, a futures trader at Star Futures Co., said by phone from Shanghai today.
Copper for delivery in January fell 20 yuan, or 0.03 percent, to settle at 62,690 yuan a ton on the Shanghai Futures Exchange, the lowest settlement price since July 24.
Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, fell as much as 2,100 yuan, or 3.2 percent, to 64,100 yuan a ton today.
Still, Shanghai futures prices rebounded from an intraday low of 62,080 yuan as some investors judged prices to have fallen low enough to resume buying, analysts such as Wang Zheng said.
``Generally, we saw buying from investors,'' Wang, a futures trader at Shanghai Continent Futures Co., said by phone today. ``Open interest kept rising when prices rebounded, so that is a sign that new buying has surfaced,'' he said, referring to the total number of futures contracts that have not been closed, liquidated or delivered.
Copper for three-month delivery on the benchmark London Metal Exchange fell $45, or 0.7 percent, to $6,865 a ton at 7:50 a.m. London time.
Technical charts suggest ``that the larger trend remains to the downside'' for London copper prices, indicating prices may fall to $6,415 a ton, the lowest posted in June, Barclays Capital analysts led by Jordan Kotick said in a report dated yesterday.
Copper for delivery in March fell 0.75 cent, or 0.2 percent, to $3.1175 a pound in after-hours trade on the Comex division of the New York Mercantile Exchange at 7:50 a.m. London time.
Wednesday, November 15, 2006
Chile, the world's biggest copper supplier, said its exports of the metal declined in October from the prior month after prices fell.
Exports slid 6.8 percent to $2.943 billion from $3.159 billion in September, the Santiago-based Chilean central bank said today on its Web site. The nation's government will report copper production Nov. 28.
Speculation that demand for copper will weaken in the U.S. and China, the biggest users of the metal, has weighed on prices, said Julio Espinoza, an analyst at BiCE Corredores de Bolsa in Santiago. The nation's copper exports also will slide in 2007 from this year as prices extend a decline from their May record of $4.04 a pound, he said.
``Global growth won't be as spectacular, so you'll see a fall in prices,'' Espinoza said by phone.
Prices will average $2.80 a next year, down from $3.10 a pound this year, the Chilean Copper Commission, a government-run studies group in Santiago, said in October.
Copper for delivery in three months on the LME fell $35, or 0.5 percent, to $6,810 a ton at 12:41 p.m. in London, sliding for a second session.
Exports will decline next year even as the nation's copper production climbs, Espinoza said. Chilean output will rise 5.6 percent next year to 5.7 million metric tons from 2006 after companies boosted investment after prices surged, the Copper Commission estimates.
Exports slid 6.8 percent to $2.943 billion from $3.159 billion in September, the Santiago-based Chilean central bank said today on its Web site. The nation's government will report copper production Nov. 28.
Speculation that demand for copper will weaken in the U.S. and China, the biggest users of the metal, has weighed on prices, said Julio Espinoza, an analyst at BiCE Corredores de Bolsa in Santiago. The nation's copper exports also will slide in 2007 from this year as prices extend a decline from their May record of $4.04 a pound, he said.
``Global growth won't be as spectacular, so you'll see a fall in prices,'' Espinoza said by phone.
Prices will average $2.80 a next year, down from $3.10 a pound this year, the Chilean Copper Commission, a government-run studies group in Santiago, said in October.
Copper for delivery in three months on the LME fell $35, or 0.5 percent, to $6,810 a ton at 12:41 p.m. in London, sliding for a second session.
Exports will decline next year even as the nation's copper production climbs, Espinoza said. Chilean output will rise 5.6 percent next year to 5.7 million metric tons from 2006 after companies boosted investment after prices surged, the Copper Commission estimates.
Tuesday, November 14, 2006
Copper prices edged up as the market consolidated after falling below the critical 7,000 usd a tonne level on Friday, but analysts warned the outlook remains shaky.
At 1.45 pm, LME copper for three-month delivery rose to 6,965.00 usd a tonne against 6,935.00 usd at the close yesterday. Other base metals were also up.
Zinc rose to 4,265.00 usd against 4,245.00 usd, aluminium edged up to 2,732.50 usd against 2,714.00 usd, nickel rose to 30,200.00 usd against 29,900.00 usd while tin climbed to 9,975.00 against 9,925.00 usd.
Lead bucked the trend, however, falling to 1,530.00 usd against 1,570.00 usd.
Copper closed slightly higher yesterday but failed to breach the key 7,000 usd a tonne level, and analysts said the fact that it has failed to breach that level again today is worrying.
BaseMetals.com analyst Martin Hayes said copper was taking slight relief from the fact that LME stocks did not rise as much as expected today, and from yesterday's modest recovery.
'For today the mood is just a little bit better but I think there's a wariness that it won't take much to tip copper back into minus ... there are very few robust buyers around,' he said.
The LME said today stocks monitored in its warehouses rose by another 625 tonnes to 151,925 tonnes. The rise was slightly less than the thousand tonne rises seen over the past few days.
Overall stocks have increased by 42,325 tonnes or 39 pct from a recent low of 109,600 tonnes, however, and some analysts speculate supply may exceed demand next year.
'With copper below the 7,000 usd a tonne level and with weak current fundamentals, a fact underlined by the BME which said a small surplus had emerged ... we would not rule out a test of support at 6,400-6,450 usd a tonne,' said UBS Investment Bank analyst Robin Bhar.
Man Financial analyst Ed Meir pointed out that if copper 'resumes its decline, it is bound to cast its shadow on the rest of the group, putting the sustainability of their recoveries in doubt'.
He added that 'with fund money concentrated primarily in the far more liquid copper and aluminium markets' he cannot see zinc, lead, nickel and tin leading the group higher without their participation.
At 1.45 pm, LME copper for three-month delivery rose to 6,965.00 usd a tonne against 6,935.00 usd at the close yesterday. Other base metals were also up.
Zinc rose to 4,265.00 usd against 4,245.00 usd, aluminium edged up to 2,732.50 usd against 2,714.00 usd, nickel rose to 30,200.00 usd against 29,900.00 usd while tin climbed to 9,975.00 against 9,925.00 usd.
Lead bucked the trend, however, falling to 1,530.00 usd against 1,570.00 usd.
Copper closed slightly higher yesterday but failed to breach the key 7,000 usd a tonne level, and analysts said the fact that it has failed to breach that level again today is worrying.
BaseMetals.com analyst Martin Hayes said copper was taking slight relief from the fact that LME stocks did not rise as much as expected today, and from yesterday's modest recovery.
'For today the mood is just a little bit better but I think there's a wariness that it won't take much to tip copper back into minus ... there are very few robust buyers around,' he said.
The LME said today stocks monitored in its warehouses rose by another 625 tonnes to 151,925 tonnes. The rise was slightly less than the thousand tonne rises seen over the past few days.
Overall stocks have increased by 42,325 tonnes or 39 pct from a recent low of 109,600 tonnes, however, and some analysts speculate supply may exceed demand next year.
'With copper below the 7,000 usd a tonne level and with weak current fundamentals, a fact underlined by the BME which said a small surplus had emerged ... we would not rule out a test of support at 6,400-6,450 usd a tonne,' said UBS Investment Bank analyst Robin Bhar.
Man Financial analyst Ed Meir pointed out that if copper 'resumes its decline, it is bound to cast its shadow on the rest of the group, putting the sustainability of their recoveries in doubt'.
He added that 'with fund money concentrated primarily in the far more liquid copper and aluminium markets' he cannot see zinc, lead, nickel and tin leading the group higher without their participation.
Monday, November 13, 2006
Copper fell to a fresh four-month trough and lead tumbled 12.0 percent to a 3-1/2-week low on Monday as investors took profits on growing worries about rising stocks, while zinc fell 6.5 percent.
Lead for delivery in three months tumbled to $1,470 a tonne, the lowest since October 18, on the London Metal Exchange after last week's contract high of $1,755 a tonne.
"It was time for some profit-taking after copper's sell-off ... Copper didn't recover and it was zinc's and lead's turn today," a trader said. "Higher copper inventories and more lead on the market next year are part of the reason."
Zinc hit a session low of $4,020 a tonne, the lowest since October 25, from $4,300 on Friday when it surged to an alltime peak at $4,580 on inventories, the lowest since 1991.
Zinc traded at $4,100 in the second official LME rings from Friday's $4,300 close, lead traded at $1,525 from $1,675 and copper at $6,761, the lowest since June 28, from $6,900.
Copper has fallen more than 20 percent since the record top of $8,800 a tonne hit on May 11.
"There has been a lot of destocking in the copper market and it looks like consumption has been falling," William Adams, analyst at BaseMetals.com said.
"However ... there has been some substitution ... In China aluminium is being used in things like power cables ... But it's not across the board substitution."
CHINA COPPER
China's copper imports fell 22.4 percent in the 10 months to the end of October, partly, analysts say, because the country's Strategic Reserve Bureau has been selling copper.
That has dented sentiment, as have expectations of an oversupply next year if current stock trends persist.
Copper stocks at LME-registered warehouses have risen to more than 150,000 tonnes from little more than 25,000 tonnes in July last year.
Both lead and zinc have been boosted in recent weeks by worries about dwindling stocks. But while zinc stocks are expected to stay low for much of next year, lead stocks are seen rising from the first quarter onwards, analysts said.
LME-registered zinc stocks have dropped below 100,000 tonnes from more than 750,000 tonnes in April 2005, while lead stocks around 46,000 tonnes, down from nearly 120,000 tonnes in June.
"There are reports from China of a short-term growth in refined zinc exports," Macquarie said in a research note.
"Domestic zinc prices have fallen well below LME prices as the growth rate in domestic production appears to be exceeding that of domestic consumption for the first time this year."
Overall, producer selling on Friday reinforced the negative sentiment of investors watching the economic slowdown in the United States and slowing demand for base metals.
"We are also seeing some buying from consumers taking advantage of falling prices," a trader said. "There was a lot of talk about strikes in the summer and there haven't really been any ... That's been a dampener."
News that Peru's mining unions are preparing a national strike to oppose government proposals to change profit-sharing plans has done little to boost base metals.
But traders say that could change as the country is the world's third-biggest producer of copper and zinc.
Meanwhile Chile's giant Escondida mine, majority owned by BHP Billiton Ltd/Plc, has opened 2007 copper treatment and refining charge talks with Chinese smelters with an offer a third lower than in 2006.
The miner offered $60 per tonne for treating and 6 cents per pound for refining its concentrate in 2007, from $90 a tonne and 9 cents a pound, with price participation, in 2006..
Aluminium traded at $2,647 a tonne, up from an earlier 4-week low of $2,615 and $2,695 at Friday's close.
Nickel gained to $29,600 from $29,400 and tin shed $75 to $9,775. Earlier nickel and tin traded traded at 5-week and 3-week lows of $28,700 and $9,700 respectively.
Lead for delivery in three months tumbled to $1,470 a tonne, the lowest since October 18, on the London Metal Exchange after last week's contract high of $1,755 a tonne.
"It was time for some profit-taking after copper's sell-off ... Copper didn't recover and it was zinc's and lead's turn today," a trader said. "Higher copper inventories and more lead on the market next year are part of the reason."
Zinc hit a session low of $4,020 a tonne, the lowest since October 25, from $4,300 on Friday when it surged to an alltime peak at $4,580 on inventories, the lowest since 1991.
Zinc traded at $4,100 in the second official LME rings from Friday's $4,300 close, lead traded at $1,525 from $1,675 and copper at $6,761, the lowest since June 28, from $6,900.
Copper has fallen more than 20 percent since the record top of $8,800 a tonne hit on May 11.
"There has been a lot of destocking in the copper market and it looks like consumption has been falling," William Adams, analyst at BaseMetals.com said.
"However ... there has been some substitution ... In China aluminium is being used in things like power cables ... But it's not across the board substitution."
CHINA COPPER
China's copper imports fell 22.4 percent in the 10 months to the end of October, partly, analysts say, because the country's Strategic Reserve Bureau has been selling copper.
That has dented sentiment, as have expectations of an oversupply next year if current stock trends persist.
Copper stocks at LME-registered warehouses have risen to more than 150,000 tonnes from little more than 25,000 tonnes in July last year.
Both lead and zinc have been boosted in recent weeks by worries about dwindling stocks. But while zinc stocks are expected to stay low for much of next year, lead stocks are seen rising from the first quarter onwards, analysts said.
LME-registered zinc stocks have dropped below 100,000 tonnes from more than 750,000 tonnes in April 2005, while lead stocks around 46,000 tonnes, down from nearly 120,000 tonnes in June.
"There are reports from China of a short-term growth in refined zinc exports," Macquarie said in a research note.
"Domestic zinc prices have fallen well below LME prices as the growth rate in domestic production appears to be exceeding that of domestic consumption for the first time this year."
Overall, producer selling on Friday reinforced the negative sentiment of investors watching the economic slowdown in the United States and slowing demand for base metals.
"We are also seeing some buying from consumers taking advantage of falling prices," a trader said. "There was a lot of talk about strikes in the summer and there haven't really been any ... That's been a dampener."
News that Peru's mining unions are preparing a national strike to oppose government proposals to change profit-sharing plans has done little to boost base metals.
But traders say that could change as the country is the world's third-biggest producer of copper and zinc.
Meanwhile Chile's giant Escondida mine, majority owned by BHP Billiton Ltd/Plc, has opened 2007 copper treatment and refining charge talks with Chinese smelters with an offer a third lower than in 2006.
The miner offered $60 per tonne for treating and 6 cents per pound for refining its concentrate in 2007, from $90 a tonne and 9 cents a pound, with price participation, in 2006..
Aluminium traded at $2,647 a tonne, up from an earlier 4-week low of $2,615 and $2,695 at Friday's close.
Nickel gained to $29,600 from $29,400 and tin shed $75 to $9,775. Earlier nickel and tin traded traded at 5-week and 3-week lows of $28,700 and $9,700 respectively.
Friday, November 10, 2006
Copper prices fell at the London Metal Exchange on Friday as reported stocks rose further, fund managers said.
Three-months futures were quoted at $7,135/7,145 per tonne at 1120 GMT, down $175 or 2.4 percent from Thursday's kerb close.
"I'm not moving money out of copper, it's more to do with the fact that stocks are increasing. It's the only metal where they are," said a Geneva-based fund manager.
Stocks in warehouses that report their positions to the LME are a closely watched indicator of metal availability.
Copper stocks rose by 1,625 tonnes on Friday to 148,200, up 54 percent from the start of the year.
"Still, I'm not keen to go short of copper. I think it may be tight again," he said.
In a sign that copper smelters might continue to chase tight concentrate next year, Chile's Escondida has opened 2007 copper treatment and refining charge talks with Chinese smelters with an offer a third lower than charges for 2006.
The miner offered $60 per tonne for treating and 6 cents per pound for refining its concentrate in 2007, from $90 a tonne and 9 cents a pound, with price participation, in 2006.
DECOUPLING FROM COPPER?
Other metals were mostly unchanged, which analysts saw as a sign that copper's tradtional dominance of the market might be weakening.
"Copper continues to probe recent lows this morning but so far the other metals are not following suit," said UBS metals strategist Robin Bhar.
"Over the past few weeks evidence has been mounting that the other metals are not slavishly following copper and perhaps have managed to decouple from the red metal," he said.
Zinc , which has been serially recording new peaks as stocks fall, hit another new high of $4,580 in earlier trading before slipping to $4,450/4,480, down $80 from Thursday's close.
Aluminium was down $20 at $2,805/2,810 and nickel up $300 at $30,600/30,800.
The LME said on Friday that as of Monday it would lift the $300 per tonne per day nickel backwardation limit it imposed in August.
Three-months futures were quoted at $7,135/7,145 per tonne at 1120 GMT, down $175 or 2.4 percent from Thursday's kerb close.
"I'm not moving money out of copper, it's more to do with the fact that stocks are increasing. It's the only metal where they are," said a Geneva-based fund manager.
Stocks in warehouses that report their positions to the LME are a closely watched indicator of metal availability.
Copper stocks rose by 1,625 tonnes on Friday to 148,200, up 54 percent from the start of the year.
"Still, I'm not keen to go short of copper. I think it may be tight again," he said.
In a sign that copper smelters might continue to chase tight concentrate next year, Chile's Escondida has opened 2007 copper treatment and refining charge talks with Chinese smelters with an offer a third lower than charges for 2006.
The miner offered $60 per tonne for treating and 6 cents per pound for refining its concentrate in 2007, from $90 a tonne and 9 cents a pound, with price participation, in 2006.
DECOUPLING FROM COPPER?
Other metals were mostly unchanged, which analysts saw as a sign that copper's tradtional dominance of the market might be weakening.
"Copper continues to probe recent lows this morning but so far the other metals are not following suit," said UBS metals strategist Robin Bhar.
"Over the past few weeks evidence has been mounting that the other metals are not slavishly following copper and perhaps have managed to decouple from the red metal," he said.
Zinc , which has been serially recording new peaks as stocks fall, hit another new high of $4,580 in earlier trading before slipping to $4,450/4,480, down $80 from Thursday's close.
Aluminium was down $20 at $2,805/2,810 and nickel up $300 at $30,600/30,800.
The LME said on Friday that as of Monday it would lift the $300 per tonne per day nickel backwardation limit it imposed in August.
Thursday, November 09, 2006
Zinc prices fell flat after several days of successive record highs on the London Metal Exchange, but copper firmed on Thursday after sharp falls the previous day.
"People are getting more and more sceptical, prices have been overdone and copper is probably one of the most overpriced commodities out there," a European trader said.
Three months copper dropped over four percent in the previous session but by 1157 GMT was quoted at $7,190/7,205 a tonne, up one percent since the close of $7,120.
Initial support was seen at $7,120 but traders said the market might test $6,500 and go lower if it broke below $7,000.
"It could be a few thousand bucks correction and on the upside we will see it capped -- at the moment people will take profit on any rally," the trader said.
Copper remained under pressure and dampened sentiment in the rest of the metals market as stocks continued to rise.
LME warehouse inventories rose 2,325 tonnes to 146,575, and traders said more stocks could be on their way.
Stocks have risen by 25 percent since mid-October.
"If you look at the physical market there is more and more copper available so you are bound to see the cash price come off a bit and a slight contango at the front," the trader said.
Rising stocks erased copper's cash premium earlier this month for the first time in three years.
Cash copper is now trading at a discount, or contango, of $17/12 a tonne, compared with a $240 premium, or backwardation, at its peak in June.
A backwardation allows investors to make money by lending metal to the market by selling cash and simultaneously buying three-months contracts, pocketing the difference.
"Whether or not that contango will stay depends on how much demand will pick up," the trader said.
ROLLING FORWARD
Copper and aluminium were also under pressure as commodity index investors rolled positions forward, which was seen keeping a lid on prices to the end of the week.
Investors would be monitoring contract talks at the Codelco Norte division of Codelco.
Also, investors were keeping an eye on Zambia's Konkola Copper Mines (KCM), which halted copper production at its Tailings Leach Plant after a spill polluted a river.
Before the production halt, KCM planned to produce 200,000 tonnes of finished copper by December 2006.
Aluminium lost 2.8 percent in the previoUs session but was supported by consumer buying at the lower numbers.
Three months aluminium was indicated at $2,742/2,745, up 0.9 percent, against $2,717 on Wednesday.
Prices rose from around $2,450 in mid-July to a high of $2,832 on October 30, with speculators putting more than $5 billion into the aluminium market in the past five months.
"The sheer quantity of metal the major funds have had to buy...suggests a large, and very unstable, long position which could make the market very problematic once the year-end tightness is past," economist John Kemp at Sempra Metals said.
ZINC AND LEAD SOFTER
Zinc and lead softened on profit-taking after recording new highs of $4,535 and $1,755, respectively, on Wednesday.
"There is a sense among many of the investment funds that copper is now yesterday's trading play and can be safely ignored and even allowed to retreat even as the others continue to make fresh highs," Kemp said in a note.
Zinc was flat at $4,420/4,440 after falling 1.8 percent in the previous session.
LME stocks continue to slide, down 925 tonnes to 96,800, their lowest since March 1991.
Prices have soared by more than 130 percent since the start of the year as consumption has outpaced production, taking stocks to critically low levels.
Lead was quoted at $1,700/1,720, down 0.9 percent against $1,715.
Nickel was quoted at $29,750/29,950 versus $30,100 on Wednesday, when the metal dipped by nearly 4 percent.
"People are getting more and more sceptical, prices have been overdone and copper is probably one of the most overpriced commodities out there," a European trader said.
Three months copper dropped over four percent in the previous session but by 1157 GMT was quoted at $7,190/7,205 a tonne, up one percent since the close of $7,120.
Initial support was seen at $7,120 but traders said the market might test $6,500 and go lower if it broke below $7,000.
"It could be a few thousand bucks correction and on the upside we will see it capped -- at the moment people will take profit on any rally," the trader said.
Copper remained under pressure and dampened sentiment in the rest of the metals market as stocks continued to rise.
LME warehouse inventories rose 2,325 tonnes to 146,575, and traders said more stocks could be on their way.
Stocks have risen by 25 percent since mid-October.
"If you look at the physical market there is more and more copper available so you are bound to see the cash price come off a bit and a slight contango at the front," the trader said.
Rising stocks erased copper's cash premium earlier this month for the first time in three years.
Cash copper is now trading at a discount, or contango, of $17/12 a tonne, compared with a $240 premium, or backwardation, at its peak in June.
A backwardation allows investors to make money by lending metal to the market by selling cash and simultaneously buying three-months contracts, pocketing the difference.
"Whether or not that contango will stay depends on how much demand will pick up," the trader said.
ROLLING FORWARD
Copper and aluminium were also under pressure as commodity index investors rolled positions forward, which was seen keeping a lid on prices to the end of the week.
Investors would be monitoring contract talks at the Codelco Norte division of Codelco.
Also, investors were keeping an eye on Zambia's Konkola Copper Mines (KCM), which halted copper production at its Tailings Leach Plant after a spill polluted a river.
Before the production halt, KCM planned to produce 200,000 tonnes of finished copper by December 2006.
Aluminium lost 2.8 percent in the previoUs session but was supported by consumer buying at the lower numbers.
Three months aluminium was indicated at $2,742/2,745, up 0.9 percent, against $2,717 on Wednesday.
Prices rose from around $2,450 in mid-July to a high of $2,832 on October 30, with speculators putting more than $5 billion into the aluminium market in the past five months.
"The sheer quantity of metal the major funds have had to buy...suggests a large, and very unstable, long position which could make the market very problematic once the year-end tightness is past," economist John Kemp at Sempra Metals said.
ZINC AND LEAD SOFTER
Zinc and lead softened on profit-taking after recording new highs of $4,535 and $1,755, respectively, on Wednesday.
"There is a sense among many of the investment funds that copper is now yesterday's trading play and can be safely ignored and even allowed to retreat even as the others continue to make fresh highs," Kemp said in a note.
Zinc was flat at $4,420/4,440 after falling 1.8 percent in the previous session.
LME stocks continue to slide, down 925 tonnes to 96,800, their lowest since March 1991.
Prices have soared by more than 130 percent since the start of the year as consumption has outpaced production, taking stocks to critically low levels.
Lead was quoted at $1,700/1,720, down 0.9 percent against $1,715.
Nickel was quoted at $29,750/29,950 versus $30,100 on Wednesday, when the metal dipped by nearly 4 percent.
Wednesday, November 08, 2006
BHP Billiton Ltd, the world's largest miner, will cut copper processing fees paid to smelters in South Korea and India for 2007 contracts, people involved in the price negotiations said.
BHP will pay $60 a metric ton for treatment charges and 6.0 cents a pound for refining charges to turn copper ore and concentrate into refined metal for the year that starts Jan. 1, said the people, who asked not to be identified because of the confidentiality of the negotiations.
The 2007 fees compare with previous settlements of $95 a ton and 9.5 cents a pound for calendar 2006. BHP also terminated a 30-year so-called ``price participation'' clause, which could depress earnings at so-called custom smelters that don't have their own mines and use BHP agreements as a benchmark.
The clause allows processors to raise fees when copper prices gain. Up to the calendar 2006 contract, smelters charged an extra 10 percent of the increase in copper prices once they rose above 90 cents a pound.
Smelters that settled the 2007 processing fees with BHP include Vedanta Resources Plc, India's largest producer of copper and zinc, and South Korea's LS-Nikko Copper Inc, the world's third-largest copper smelter, the people said.
BHP will pay $60 a metric ton for treatment charges and 6.0 cents a pound for refining charges to turn copper ore and concentrate into refined metal for the year that starts Jan. 1, said the people, who asked not to be identified because of the confidentiality of the negotiations.
The 2007 fees compare with previous settlements of $95 a ton and 9.5 cents a pound for calendar 2006. BHP also terminated a 30-year so-called ``price participation'' clause, which could depress earnings at so-called custom smelters that don't have their own mines and use BHP agreements as a benchmark.
The clause allows processors to raise fees when copper prices gain. Up to the calendar 2006 contract, smelters charged an extra 10 percent of the increase in copper prices once they rose above 90 cents a pound.
Smelters that settled the 2007 processing fees with BHP include Vedanta Resources Plc, India's largest producer of copper and zinc, and South Korea's LS-Nikko Copper Inc, the world's third-largest copper smelter, the people said.
Tuesday, November 07, 2006
Annual copper mine capacity over the 2005-to-2009 period is projected to grow at an average rate of 4.6% a year to 19.9 million metric tons by 2009, an increase of 3.3 million metric tons from 2005, the International Copper Study Group said in a report released Tuesday.
Of the total increase, copper in concentrate production is expected to rise by 1.8 million metric tons, or by an average annual rate of 3.1%, and solvent extraction-electrowinning production by 1.5 million metric tons, or by an average annual rate of 10.2%.
Smelter capacity is projected to reach 17.5 million metric tons by 2009, an increase of 1.2 million metric tons, or 7.5%, from that in 2005.
During the first two years of the projection, 2006-07, an annual smelter growth rate of 2.2% is projected to exceed a corresponding annual concentrate growth rate of 1.7% a year.
However, the ICSG said the situation will be reversed in 2008-09, when concentrate capacity growth will exceed smelter capacity growth.
A projected average annual smelter capacity growth rate for the period 2005-09 of 1.8% is 1.3% lower than the projected growth in concentrate capacity, the group said.
"Assuming that smelter capacity utilization rates rise from the current low level to their historical average, smelter capacity over the entire forecast period should be sufficient to treat additional concentrate production," the ICSG said. "There could, however, be short-term shifts in the concentrate supply-demand balance owing to the unequal distribution of growth."
In 2009, the ICSG expects world refinery capacity to reach 23.3 million metric tons, an increase of 3 million metric tons from that in 2005.
About 1.53 million metric tons of the expansion is expected to come from electrolytic refineries and 1.48 million metric tons is expected to come from electrowinning, the ICSG said.
The average annual growth rate in the period 2005-09 for electrolytic refineries is projected to be 2.3%, slightly above the projected growth in smelter capacity. The annual growth rate for electrowinning capacity - at the refinery level - is expected to be 10%.
The projected developments include existing capacity at mines and plants that are currently on care and maintenance or are temporarily cut back, also known as swing capacity.
According to ICSG research, this swing capacity is currently minimal for mines.
With the definitive closure of two U.S. plants at the end of 2005 that had been on care and maintenance since 2001, total idled capacity for smelters declined to 180,000 metric tons and idled refinery capacity fell to 370,000 metric tons.
Of the total increase, copper in concentrate production is expected to rise by 1.8 million metric tons, or by an average annual rate of 3.1%, and solvent extraction-electrowinning production by 1.5 million metric tons, or by an average annual rate of 10.2%.
Smelter capacity is projected to reach 17.5 million metric tons by 2009, an increase of 1.2 million metric tons, or 7.5%, from that in 2005.
During the first two years of the projection, 2006-07, an annual smelter growth rate of 2.2% is projected to exceed a corresponding annual concentrate growth rate of 1.7% a year.
However, the ICSG said the situation will be reversed in 2008-09, when concentrate capacity growth will exceed smelter capacity growth.
A projected average annual smelter capacity growth rate for the period 2005-09 of 1.8% is 1.3% lower than the projected growth in concentrate capacity, the group said.
"Assuming that smelter capacity utilization rates rise from the current low level to their historical average, smelter capacity over the entire forecast period should be sufficient to treat additional concentrate production," the ICSG said. "There could, however, be short-term shifts in the concentrate supply-demand balance owing to the unequal distribution of growth."
In 2009, the ICSG expects world refinery capacity to reach 23.3 million metric tons, an increase of 3 million metric tons from that in 2005.
About 1.53 million metric tons of the expansion is expected to come from electrolytic refineries and 1.48 million metric tons is expected to come from electrowinning, the ICSG said.
The average annual growth rate in the period 2005-09 for electrolytic refineries is projected to be 2.3%, slightly above the projected growth in smelter capacity. The annual growth rate for electrowinning capacity - at the refinery level - is expected to be 10%.
The projected developments include existing capacity at mines and plants that are currently on care and maintenance or are temporarily cut back, also known as swing capacity.
According to ICSG research, this swing capacity is currently minimal for mines.
With the definitive closure of two U.S. plants at the end of 2005 that had been on care and maintenance since 2001, total idled capacity for smelters declined to 180,000 metric tons and idled refinery capacity fell to 370,000 metric tons.
Copper futures in Shanghai rose for a second day on expectations that buyers in China, the world's largest user of the metal, will rebuild inventories.
Copper stockpiles in Shanghai Futures Exchange warehouses fell 12.6 percent last week to 30,410 tons, the lowest in more than six months, the exchange said Nov. 3. Imports of refined copper into China fell 41 percent in the first nine months. Buyers in China have refrained from purchases as copper futures prices have soared 85 percent in the past year.
``Some investors believe that Chinese demand stays healthy,'' Wang Zheng, a metal futures trader at Dalu Futures Co., said by phone from Shanghai today. ``End users will have to replenish depleted stocks soon.''
Copper for delivery in January gained 480 yuan, or 0.7 percent, to settle at 68,270 yuan ($8,667) when trading ended at 3:00 p.m. local time.
Benchmark London Metal Exchange copper for delivery in three months gained $40, or 0.5 percent, to $7,400 a ton at 7:59 a.m. London time.
Gains in other base metals, such as aluminum, also supported the copper market in Shanghai, Wang said.
Aluminum in Shanghai for delivery for January rose for a third consecutive day, gaining 290 yuan, or 1.4 percent, to settle at 20,370 yuan a ton. The contract has gained 3.4 percent in the past three days.
Copper for delivery in December gained 2.05 cent, or 0.6 percent, to $3.3575 a pound on the Comex division of the New York Mercantile Exchange, in after-hours electronic trading at 8:03 a.m. London time.
Monday, November 06, 2006
Copper futures Shanghai gained as buyers in China, the world's largest user of the metal, increased purchases after prices touched a two-month low, and stockpiles declined.
Imports of refined copper into China fell 41 percent in the first nine months of this year as prices in London soared to a record in May. Shanghai futures fell 3.8 percent last week to settle at their lowest since September.
``To copper users in China, the current price looks attractive, and they've got demand,'' Yu Mengguo, metal futures trader at Jinpeng Futures Co., said by phone from Beijing today.
Copper for delivery in January on the Shanghai Futures Exchange rose 130 yuan, or 0.2 percent, to settle at 67,790 yuan ($8,604) when trading ended at 3:00 p.m. local time.
Benchmark London Metal Exchange copper for delivery in three months gained $5, or 0.1 percent, to $7,335 a ton at 7:37 a.m. local time.
``Demand on the physical copper market remained quite healthy in China,'' said Yuan Fang, metal futures trader at Shanghai Dongya Futures Co. ``Declining stockpiles also provided the futures prices some support.''
Copper stockpiles in Shanghai Futures Exchange warehouses fell 12.6 percent last week to 30,410 tons, the lowest in more than six months, the exchange said Nov. 3. Aluminum stockpiles fell by 16.6 percent to 29,638 tons last week.
Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, traded little changed between 69,000 and 69,200 yuan.
Aluminum Prices
Rising aluminum prices also supported copper, said Zhou Jie, metals trader at China International Futures (Shanghai) Co.
Aluminum in Shanghai for delivery in January gained 230 yuan, or 1.2 percent, to settle at 20,080 yuan at 3:00 p.m. Shanghai time.
Copper for delivery in December fell 0.25 cent, or 0.1 percent, to $3.32 a pound on the Comex division of the New York Mercantile Exchange, in after-hours electronic trading at 7:40 a.m. London time.
A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
Friday, November 03, 2006
Copper futures in New York traded higher at the open on Friday, with inventory declines in Shanghai offsetting the recent three-week build in London stocks, sources said.
By 10:30 a.m. EST (1530 GMT), copper for December delivery climbed 3.65 cents at $3.3280 a lb on the New York Mercantile Exchange's COMEX division, just off its morning peak at $3.3310.
Spot November rose 3.10 cents to a morning peak at $3.3150.
COMEX copper volume at 10 a.m. was estimated at 3,000 lots.
The steady declines of copper stocks in Shanghai warehouses reflected the country's strong consumption growth, investment bank UBS said in a daily market comment.
"The country is a significant net importer of copper in various forms and although the government is keen to reduce the country's reliance on high-priced imports of refined metal, restocking will be required sooner than later which will help to support copper prices," they said.
Copper inventories monitored by the Shanghai Futures Exchange fell 13 percent to 30,410 tonnes in the week ended Thursday, from 34,796 tonnes the previous week.
London Metal Exchange warehouse stocks added 1,925 tonnes to 141,400 tonnes on Friday, while COMEX stocks rose 72 short tons to 23,174 tons on Thursday.
Separately, some fabricators in eastern China have resumed their tolling business after a local customs bureau allowed them to import refined copper duty-free this week even though Beijing has not released clear policies on it yet.
On a net basis, China imported 46,767 tonnes of refined copper in September, an increased of 2 percent compared with August, but Chinese copper imports are still half of what they were in September last year.
Meanwhile, ongoing labor negotiations at Codelco's Norte division in Chile continued to be a supportive factor in the market.
The majority of unionized mine workers at Codelco Norte, the largest division of government-owned copper miner Codelco, said on Thursday they will not negotiate a preliminary agreement with the company, but a minority said they expected a company proposal soon.[nN02447770]
Negotiations at Codelco Norte follow a 25-day strike in August at Escondida, the world's largest copper mine.
On Wednesday, Escondida suspended operations for 24 hours due to an accident that killed one worker.
A spokesman for Escondida did not say whether the suspension had affected production at the mine.
LME three-months copper last traded $7,335 a tonne, up $90 from Thursday's kerb close.
By 10:30 a.m. EST (1530 GMT), copper for December delivery
Spot November
COMEX copper volume at 10 a.m. was estimated at 3,000 lots.
The steady declines of copper stocks in Shanghai warehouses reflected the country's strong consumption growth, investment bank UBS said in a daily market comment.
"The country is a significant net importer of copper in various forms and although the government is keen to reduce the country's reliance on high-priced imports of refined metal, restocking will be required sooner than later which will help to support copper prices," they said.
Copper inventories monitored by the Shanghai Futures Exchange fell 13 percent to 30,410 tonnes in the week ended Thursday, from 34,796 tonnes the previous week.
London Metal Exchange warehouse stocks added 1,925 tonnes to 141,400 tonnes on Friday, while COMEX stocks rose 72 short tons to 23,174 tons on Thursday.
Separately, some fabricators in eastern China have resumed their tolling business after a local customs bureau allowed them to import refined copper duty-free this week even though Beijing has not released clear policies on it yet.
On a net basis, China imported 46,767 tonnes of refined copper in September, an increased of 2 percent compared with August, but Chinese copper imports are still half of what they were in September last year.
Meanwhile, ongoing labor negotiations at Codelco's Norte division in Chile continued to be a supportive factor in the market.
The majority of unionized mine workers at Codelco Norte, the largest division of government-owned copper miner Codelco, said on Thursday they will not negotiate a preliminary agreement with the company, but a minority said they expected a company proposal soon.[nN02447770]
Negotiations at Codelco Norte follow a 25-day strike in August at Escondida, the world's largest copper mine.
On Wednesday, Escondida suspended operations for 24 hours due to an accident that killed one worker.
A spokesman for Escondida did not say whether the suspension had affected production at the mine.
LME three-months copper
Thursday, November 02, 2006
Copper prices were higher on Thursday with the market keeping an eye on a possible strike at a big producer and re-stocking by major consumer China, traders said.
"Copper has been trading sideways for many months and it lacks impetus," Adam Rowley, analyst at Macquarie Bank, said.
"The two key drivers now are whether workers at Codelco's Norte division will strike later this year and whether Chinese demand will bounce back."
Labour contracts for some 6,000 workers at Codelco's Norte division expire at the end of December and unions are expected to bargain hard for a share of soaring profits due to record metals prices.
"Ahead of Codelco's labour contract renewal, there is an understandable reluctance to sell copper," Rowley said.
He added: "There has been a lot of de-stocking this year in China and there is a strong possibility that we will see buying early next year."
On a net basis, China imported 46,767 tonnes of refined copper in September, an increase of 2 percent compared with August, but Chinese copper imports are still half of what they were in September last year.
Some analysts attribute the fall in imports to sales from a Chinese government stockpile, while others think outright Chinese demand is falling.
STOCKS RISING
Copper in delivery in three months on the London Metal Exchange was quoted at $7,200/7,220 a tonne at 1045 GMT, from $7,150 on Wednesday when the market lost more than three percent after a sharp rise in stocks.
On Thursday, stocks rose 4,300 tonnes to 139,475, just under three days of global consumption.
Analysts noted that rising stocks of metal on the LME, which are up 20 percent since mid-October to their highest since May 2004, was putting pressure on the market.
"Coming to the end of the year you could expect people to put metal on warrant to cut their working capital. But two consecutive weeks of rises, and quite punchy rises, are significant," ABN AMRO analyst Nick Moore said.
"It also runs counter to what we are seeing in zinc and aluminium, where stocks are falling and adds to the view that Chinese demand has been overestimated."
Increased availability has depressed cash copper prices to the point where the premium against the three-month contract moved to a discount for the first time in three years earlier this week.
ALUMINIUM
Aluminium was up $26 at $2,756/2,760 a tonne.
"The market is recovering a little. For whatever reason, all the metals sold off late in the afternoon. Short-term support is around $2,680-2,700 and if we break below there it could get pretty nasty," a trader said.
"On the upside, the target is $2,950/3,000. If the market does get up to those levels it will get sold off pretty quickly."
China lifted the export tax on copper, nickel and aluminium to 15 percent to ease investment in energy-intensive sectors last week, which drove Chinese smelters to deliver thousands of tonnes of primary aluminium ingot to bonded warehouses at Chinese ports this week to avoid a higher tax on the metal..
Lead and zinc both of which hit fresh contract peaks on Wednesday were steady at $1,655/1,665 and $4,210/4,230 respectively.
"Zinc looks incredibly tight and will only get tighter over the next six months and prices will go significantly higher," Rowley said.
"Copper has been trading sideways for many months and it lacks impetus," Adam Rowley, analyst at Macquarie Bank, said.
"The two key drivers now are whether workers at Codelco's Norte division will strike later this year and whether Chinese demand will bounce back."
Labour contracts for some 6,000 workers at Codelco's Norte division expire at the end of December and unions are expected to bargain hard for a share of soaring profits due to record metals prices.
"Ahead of Codelco's labour contract renewal, there is an understandable reluctance to sell copper," Rowley said.
He added: "There has been a lot of de-stocking this year in China and there is a strong possibility that we will see buying early next year."
On a net basis, China imported 46,767 tonnes of refined copper in September, an increase of 2 percent compared with August, but Chinese copper imports are still half of what they were in September last year.
Some analysts attribute the fall in imports to sales from a Chinese government stockpile, while others think outright Chinese demand is falling.
STOCKS RISING
Copper in delivery in three months on the London Metal Exchange was quoted at $7,200/7,220 a tonne at 1045 GMT, from $7,150 on Wednesday when the market lost more than three percent after a sharp rise in stocks.
On Thursday, stocks rose 4,300 tonnes to 139,475, just under three days of global consumption.
Analysts noted that rising stocks of metal on the LME, which are up 20 percent since mid-October to their highest since May 2004, was putting pressure on the market.
"Coming to the end of the year you could expect people to put metal on warrant to cut their working capital. But two consecutive weeks of rises, and quite punchy rises, are significant," ABN AMRO analyst Nick Moore said.
"It also runs counter to what we are seeing in zinc and aluminium, where stocks are falling and adds to the view that Chinese demand has been overestimated."
Increased availability has depressed cash copper prices to the point where the premium against the three-month contract moved to a discount for the first time in three years earlier this week.
ALUMINIUM
Aluminium was up $26 at $2,756/2,760 a tonne.
"The market is recovering a little. For whatever reason, all the metals sold off late in the afternoon. Short-term support is around $2,680-2,700 and if we break below there it could get pretty nasty," a trader said.
"On the upside, the target is $2,950/3,000. If the market does get up to those levels it will get sold off pretty quickly."
China lifted the export tax on copper, nickel and aluminium to 15 percent to ease investment in energy-intensive sectors last week, which drove Chinese smelters to deliver thousands of tonnes of primary aluminium ingot to bonded warehouses at Chinese ports this week to avoid a higher tax on the metal..
Lead and zinc both of which hit fresh contract peaks on Wednesday were steady at $1,655/1,665 and $4,210/4,230 respectively.
"Zinc looks incredibly tight and will only get tighter over the next six months and prices will go significantly higher," Rowley said.
Wednesday, November 01, 2006
Copper edged lower in London on Wednesday under pressure from a sharp jump in stocks, but lead prices sustained gains and pushed to a new high, dealers said.
Three-month copper on the London Metal Exchange (LME) eased to $7,316 a tonne in the second open-outcry session of the day, from $7,380 on Tuesday.
Lead, however, extended its rise to post a fresh contract high of $1,650, up $40 from Tuesday.
"People are getting excited about the less-liquid contracts like lead, which are hitting new peaks," a fund source said.
"But perhaps there are better buying opportunities in bigger volume contracts such as copper, which have under-performed."
The source said a view held earlier this year by much of the market that copper was going to spike in the fourth quarter was changing.
"But there are signs of life, signs of buying from China, and I think there is potential for prices to get back to May's peaks."
Copper stocks rose 4,675 tonnes overnight to 135,175, up 20 percent since mid-October.
Increased availability has meant that the premium for cash metal has given way to a discount, known as a contango.
The cash-threes spread was at a $20/$10 contango, maintaining the discount for a second day for the first time since late 2003.
"The forward spreads have really collapsed. There are expectations that material is going to continue to come in and I really can't understand why the copper price doesn't have a six at the start of it," a trader said.
"And even at $6,000, I would say it was over-priced. It's probably the strength in gold that is supporting the market."
Spot gold was trading about $5 higher at $610.40 an ounce, while oil was down 30 cents at $58.43 a barrel.
PRICE FALL
Copper prices have fallen by almost 16 percent since they hit a record $8,800 in May on a flood of fund buying, which has largely dried up.
"There is a shift in emphasis away from a market in deficit, transitioning towards one in balance or surplus, and the inventories are a window on this," ABN AMRO commodity analyst Nick Moore said.
Despite falling from its peaks, copper remains well above long-term average prices around $2,100, and Mexico's Southern Copper Corp., one of the world's top producers of copper and a unit of Grupo Mexico, sees prices holding strong because of hefty demand from China.
Zinc was indicated $10 higher at $4,220/4,235 after touching a fresh record high of $4,290 on Tuesday.
Dealers say zinc stocks, currently just above 100,000 tonnes, to continue to fall for the rest of this year and that prices may touch $5,000. Stocks have fallen in a straight line from around 620,000 tonnes in mid-2005.
Three-month aluminium was down $10 at $2,780/2,781.
"A lot of the fund interest in aluminium is via the options market. There is a big slice of call options at $3,000 for December and there is a good chance the market will hit $3,000 in early December, a second trader said.
"The interesting thing will be to see what happens after those options expire and whether prices can be sustained at anywhere near these levsl," he added.
Three-month copper on the London Metal Exchange (LME) eased to $7,316 a tonne in the second open-outcry session of the day, from $7,380 on Tuesday.
Lead, however, extended its rise to post a fresh contract high of $1,650, up $40 from Tuesday.
"People are getting excited about the less-liquid contracts like lead, which are hitting new peaks," a fund source said.
"But perhaps there are better buying opportunities in bigger volume contracts such as copper, which have under-performed."
The source said a view held earlier this year by much of the market that copper was going to spike in the fourth quarter was changing.
"But there are signs of life, signs of buying from China, and I think there is potential for prices to get back to May's peaks."
Copper stocks rose 4,675 tonnes overnight to 135,175, up 20 percent since mid-October.
Increased availability has meant that the premium for cash metal has given way to a discount, known as a contango.
The cash-threes spread was at a $20/$10 contango, maintaining the discount for a second day for the first time since late 2003.
"The forward spreads have really collapsed. There are expectations that material is going to continue to come in and I really can't understand why the copper price doesn't have a six at the start of it," a trader said.
"And even at $6,000, I would say it was over-priced. It's probably the strength in gold that is supporting the market."
Spot gold was trading about $5 higher at $610.40 an ounce, while oil was down 30 cents at $58.43 a barrel.
PRICE FALL
Copper prices have fallen by almost 16 percent since they hit a record $8,800 in May on a flood of fund buying, which has largely dried up.
"There is a shift in emphasis away from a market in deficit, transitioning towards one in balance or surplus, and the inventories are a window on this," ABN AMRO commodity analyst Nick Moore said.
Despite falling from its peaks, copper remains well above long-term average prices around $2,100, and Mexico's Southern Copper Corp., one of the world's top producers of copper and a unit of Grupo Mexico, sees prices holding strong because of hefty demand from China.
Zinc was indicated $10 higher at $4,220/4,235 after touching a fresh record high of $4,290 on Tuesday.
Dealers say zinc stocks, currently just above 100,000 tonnes, to continue to fall for the rest of this year and that prices may touch $5,000. Stocks have fallen in a straight line from around 620,000 tonnes in mid-2005.
Three-month aluminium was down $10 at $2,780/2,781.
"A lot of the fund interest in aluminium is via the options market. There is a big slice of call options at $3,000 for December and there is a good chance the market will hit $3,000 in early December, a second trader said.
"The interesting thing will be to see what happens after those options expire and whether prices can be sustained at anywhere near these levsl," he added.
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