Phelps Dodge Corp., which has agreed to a buyout by copper mining rival Freeport McMoran Copper & Gold Inc., said Monday its fourth-quarter earnings surged due to sharply higher copper prices, even as production slipped.
Net income grew to $1.32 billion, or $6.50 per share, in the three months ended Dec. 31 from $121.3 million, or 60 cents per share, in the prior-year period.
Revenue surged 43 percent to $3.24 billion from $2.26 billion a year ago. Costs rose a more modest 7 percent to $1.88 billion.
The latest quarter included a special gain of $364.1 million, or $1.79 per share, while the 2005 quarter included a one-time charge of $204.2 million, or $1.01 per share. Excluding the gain in the latest quarter, Phelps Dodge would have earned $$4.71 a share.
Analysts polled by Thomson Financial forecast earnings of $4.28 per share, excluding one-time items, on $3.49 billion in sales.
Copper production fell slightly to 320,000 tons from 321,800 tons in year-earlier quarter. But copper prices averaged $3.206 per pound on the London Metal Exchange, up sharply from $1.951 in the year-ago quarter and down slightly from the $3.479 averaged in the third quarter.
Molybdenum production grew to 16.8 million pounds from 14.5 million pounds.
For the full year, earnings increased to $3.02 billion, or $14.83 per share, from $1.55 billion, or $7.69 per share. Revenue rose to $11.91 billion from $8.29 billion.
Phelps Dodge agreed in November to a $25.9 billion cash-and-stock takeover by Freeport McMoran. The deal, expected to close in March, would create the world's largest publicly traded copper company.
Phelps Dodge shares fell 72 cents to $123.55 in morning trading on the New York Stock Exchange. They are still near their 52-week high of $124.77.
Monday, January 29, 2007
Friday, January 26, 2007
Rising stocks knocked copper market sentiment on Friday, but analysts say expectations of strong demand growth from China will underpin the metal and possibly push prices back above $6,000 over coming days.
Nickel for three months delivery on the London Metal Exchange touched a new all-time high of $38,950 a tonne on worries about low stocks and supply shortages, while tin was hovering below this week's record high of $12,500.
Three-month copper traded down at $5,755 a tonne in the official rings from $5,850 on Thursday, when it touched a two-week high of $5,910.
"There is some profit-taking going on in copper, but it could go higher again in the afternoon," a trader said. "It's quite possible we could see $6,000 within days."
Stocks of copper in LME warehouses rose 4,325 tonnes to 207,700 tonnes, more than double the levels seen last January.
China's copper imports rose 59.4 percent year-on-year in December to 95,831 tonnes, suggesting consumers there were restocking after running down inventories through most of 2006.
"In the last week or so there's definitely been some price stability," said Adam Rowley, analyst at Macquarie Bank.
"There are some signs of increased consumer buying and obviously the Chinese import figures helped. Over the next couple of months if Chinese buying continues to pick up the market could be fairly balanced for a period."
Economic slowdown in the United States, falling demand and rising stocks have hit copper in recent months. Prices are down more than 30 percent since May's record high of $8,800.
Nickel for three months delivery on the London Metal Exchange touched a new all-time high of $38,950 a tonne on worries about low stocks and supply shortages, while tin was hovering below this week's record high of $12,500.
Three-month copper traded down at $5,755 a tonne in the official rings from $5,850 on Thursday, when it touched a two-week high of $5,910.
"There is some profit-taking going on in copper, but it could go higher again in the afternoon," a trader said. "It's quite possible we could see $6,000 within days."
Stocks of copper in LME warehouses rose 4,325 tonnes to 207,700 tonnes, more than double the levels seen last January.
China's copper imports rose 59.4 percent year-on-year in December to 95,831 tonnes, suggesting consumers there were restocking after running down inventories through most of 2006.
"In the last week or so there's definitely been some price stability," said Adam Rowley, analyst at Macquarie Bank.
"There are some signs of increased consumer buying and obviously the Chinese import figures helped. Over the next couple of months if Chinese buying continues to pick up the market could be fairly balanced for a period."
Economic slowdown in the United States, falling demand and rising stocks have hit copper in recent months. Prices are down more than 30 percent since May's record high of $8,800.
Thursday, January 25, 2007
Mining giant BHP Billiton Ltd./Plc. maintained its copper output in the second quarter but said price adjustments to sales would reduce its first-half earnings by $220 million, reflecting a declining world copper price.
BHP Billiton, the world's top miner, said its total copper production was steady at 300,700 tonnes in the three months to December 31, helped by strong contributions from its South American operations.
"Escondida achieved a quarterly production record due to continued ramp-up of the sulphide leach project, which produced 20,700 tonnes for the half-year ended December 2006," it said.
Increased mill runs and richer ore grades contributed to near record half-year and quarterly production at the company's Antamina, Peru, operation, BHP Billiton added.
In contrast, in 2001 BHP Billiton cut production runs in South America to help combat then-depressed copper prices of around $1,650 a tonne.
Copper traded at around $5,775 on Thursday. It hit a record high of $8,800 in May last year as miners struggled to keep pace with demand, but it has retreated in the face of uncertainty over the outlook for demand, forcing BHP Billiton to trim its earnings expectations.
BHP Billiton, the world's top miner, said its total copper production was steady at 300,700 tonnes in the three months to December 31, helped by strong contributions from its South American operations.
"Escondida achieved a quarterly production record due to continued ramp-up of the sulphide leach project, which produced 20,700 tonnes for the half-year ended December 2006," it said.
Increased mill runs and richer ore grades contributed to near record half-year and quarterly production at the company's Antamina, Peru, operation, BHP Billiton added.
In contrast, in 2001 BHP Billiton cut production runs in South America to help combat then-depressed copper prices of around $1,650 a tonne.
Copper traded at around $5,775 on Thursday. It hit a record high of $8,800 in May last year as miners struggled to keep pace with demand, but it has retreated in the face of uncertainty over the outlook for demand, forcing BHP Billiton to trim its earnings expectations.
Wednesday, January 24, 2007
Shanghai copper futures charged 3.3% higher on Wednesday as concerns grew about tight spot market supply and a major Chinese producer warned its warehouse stocks were very low.
"There is only a little refined copper in our warehouse. We are nearly empty now," Pan Qifang, a senior official at Jiangxi Copper, said.
Shanghai copper futures were sharply higher, with the most active March contract rising 1 730 yuan, or 3.3%, to 53&Nbsp;990 yuan a tonne by the midday break on Wednesday.
Jiangxi is China's largest copper producer, with an annual output of around 440 000 tonnes, most of which is sold on a long-term basis.
"Some of our mining facilities are under annual maintenance now, which I believe will impact production," Pan said.
He added that stocks were down to around 1 000 tonnes, and while the company was meeting its long-term obligations, it was unable to supply to the spot market.
A spot trader said: "Supply is short in Shanghai these days, especially for Chilean copper."
Spot copper prices in Shanghai were up 1 025 yuan, quoted between 56 650 yuan and 57 000 yuan.
"Import increases cannot meet demand in the domestic cash market as several Chinese smelters are being overhauled," Shen Haihua, an analyst at Maike Futures, said.
Copper for delivery in three months on the London Metal Exchange were $70 higher at $5 730 a tonne at 05:28 GMT.
"There is only a little refined copper in our warehouse. We are nearly empty now," Pan Qifang, a senior official at Jiangxi Copper, said.
Shanghai copper futures were sharply higher, with the most active March contract rising 1 730 yuan, or 3.3%, to 53&Nbsp;990 yuan a tonne by the midday break on Wednesday.
Jiangxi is China's largest copper producer, with an annual output of around 440 000 tonnes, most of which is sold on a long-term basis.
"Some of our mining facilities are under annual maintenance now, which I believe will impact production," Pan said.
He added that stocks were down to around 1 000 tonnes, and while the company was meeting its long-term obligations, it was unable to supply to the spot market.
A spot trader said: "Supply is short in Shanghai these days, especially for Chilean copper."
Spot copper prices in Shanghai were up 1 025 yuan, quoted between 56 650 yuan and 57 000 yuan.
"Import increases cannot meet demand in the domestic cash market as several Chinese smelters are being overhauled," Shen Haihua, an analyst at Maike Futures, said.
Copper for delivery in three months on the London Metal Exchange were $70 higher at $5 730 a tonne at 05:28 GMT.
Wednesday, January 17, 2007
THE slump in the copper price has been brought to a halt, at least temporarily, by renewed Chinese purchases.
Continued rapid growth by China and the prospect that the downturn in the US housing market will be short-lived is bringing buyers back to the market, with a possibility that prices may start climbing again later this year.
On Tuesday, the copper price reached its lowest point since last April of $US5470 a tonne in trade on the London Metals Exchange (LME).
However, the price bounced to $US5710 following reports of falling LME stocks, particularly in its warehouses in Singapore and South Korea.
A build-up in LME stocks to 199,500 tonnes, about double their level of a year ago, has been the main reason for the plunge in the copper price from its $US8500-a-tonne peak reached in May.
Citigroup commodities analyst Alan Heap says one of the reasons for the accumulation of stocks was lower demand from China.
"Apparent consumption was very subdued, because of a combination of substitution of other materials and de-stocking by consumers."
The bureau that holds China's strategic stocks of copper also transferred some of its metal to LME warehouses in Asia. Although shifting stocks from one place to another does not alter the global supply, the LME stocks are recorded, whereas the Chinese strategic stocks are not.
Mr Heap said China's imports of copper, in all forms, reached 220,000 tonnes in November, compared with an average of 150,000 tonnes a month in the first half of last year.
Industry newsletter Metals Insider calculated that Chinese imports of refined copper metal were just under 100,000 tonnes in December, which is the highest since the peak of the Chinese metals boom in the third quarter of 2005.
It said the strength of Chinese demand explained why copper was selling on the Shanghai exchange for $US130 a tonne more than in London.
Mr Heap said the downturn in the US housing market was still depressing US copper consumption. New housing accounts for about 30 per cent of copper demand in the US. The US motor industry has also been weak.
However, there is a growing conviction that the housing downturn will be short-lived, and that it will have little effect on other sectors of the US economy or on the world economy at large.
International Monetary Fund managing director Rodrigo de Rato presented an upbeat assessment of world economic growth on Tuesday, arguing that it would reach almost 5 per cent, making the strongest five-year run of growth in 30 years.
"While the US economy has slowed down, in large part due to the correction in the housing market, a soft landing now seems more assured as lower energy prices have supported employment growth and consumption," he said.
Continued rapid growth by China and the prospect that the downturn in the US housing market will be short-lived is bringing buyers back to the market, with a possibility that prices may start climbing again later this year.
On Tuesday, the copper price reached its lowest point since last April of $US5470 a tonne in trade on the London Metals Exchange (LME).
However, the price bounced to $US5710 following reports of falling LME stocks, particularly in its warehouses in Singapore and South Korea.
A build-up in LME stocks to 199,500 tonnes, about double their level of a year ago, has been the main reason for the plunge in the copper price from its $US8500-a-tonne peak reached in May.
Citigroup commodities analyst Alan Heap says one of the reasons for the accumulation of stocks was lower demand from China.
"Apparent consumption was very subdued, because of a combination of substitution of other materials and de-stocking by consumers."
The bureau that holds China's strategic stocks of copper also transferred some of its metal to LME warehouses in Asia. Although shifting stocks from one place to another does not alter the global supply, the LME stocks are recorded, whereas the Chinese strategic stocks are not.
Mr Heap said China's imports of copper, in all forms, reached 220,000 tonnes in November, compared with an average of 150,000 tonnes a month in the first half of last year.
Industry newsletter Metals Insider calculated that Chinese imports of refined copper metal were just under 100,000 tonnes in December, which is the highest since the peak of the Chinese metals boom in the third quarter of 2005.
It said the strength of Chinese demand explained why copper was selling on the Shanghai exchange for $US130 a tonne more than in London.
Mr Heap said the downturn in the US housing market was still depressing US copper consumption. New housing accounts for about 30 per cent of copper demand in the US. The US motor industry has also been weak.
However, there is a growing conviction that the housing downturn will be short-lived, and that it will have little effect on other sectors of the US economy or on the world economy at large.
International Monetary Fund managing director Rodrigo de Rato presented an upbeat assessment of world economic growth on Tuesday, arguing that it would reach almost 5 per cent, making the strongest five-year run of growth in 30 years.
"While the US economy has slowed down, in large part due to the correction in the housing market, a soft landing now seems more assured as lower energy prices have supported employment growth and consumption," he said.
Wednesday, January 10, 2007
Copper prices rose in New York for the second-straight day on concern output by Chile's state-owned Codelco, the world's biggest producer, may be disrupted.
Codelco said yesterday a rockslide may occur at the Chuquicamata mine, the company's largest. A cave-in there last year cut output. Copper prices reached a record $4.04 a pound in May after strikes and mine accidents curbed production.
``Chile is still struggling to boost its output of copper and other non-ferrous metals, lagging behind producers in Africa and Asia,'' John Kemp, a London-based analyst at Sempra Metals, said in a report.
Copper futures for March delivery gained 4.25 cents, or 1.7 percent, to $2.5985 a pound at 9:13 a.m. on the Comex division of the New York Mercantile Exchange. Prices gained 1.1 percent yesterday, snapping a six-session slide.
Before today, the metal had dropped 11 percent this month after climbing 41 percent in 2006, the fifth-consecutive annual gain.
A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
``I'm looking for a close above $2.70,'' said Win Chung, a trader at Triland USA Inc. in New York.
Inventories monitored by the London Metal Exchange rose 0.2 percent to 193,825 metric tons. Stockpiles fell 1.2 percent yesterday from the highest since March 2004.
``The Codelco story could cause some nervousness, but copper needs to put together a string of gains'' before buyers ``come back in any meaningful way,'' Edward Meir, an analyst at Man Financial Inc. in Darien, Connecticut, said in a report.
China
Copper users in China, the world's largest consumer of the metal, may rebuild stockpiles after prices tumbled, according to a Bloomberg survey yesterday of seven analysts, traders and processors.
China accounts for 20 percent of the annual world's copper consumption, while Asia accounts for 50 percent, John Tumazos, senior vice president at Prudential Equity Group LLP, said yesterday. The U.S. consumes about 13 percent of the metal, and Europe accounts for 20 percent of the annual consumption, he said.
Codelco said yesterday a rockslide may occur at the Chuquicamata mine, the company's largest. A cave-in there last year cut output. Copper prices reached a record $4.04 a pound in May after strikes and mine accidents curbed production.
``Chile is still struggling to boost its output of copper and other non-ferrous metals, lagging behind producers in Africa and Asia,'' John Kemp, a London-based analyst at Sempra Metals, said in a report.
Copper futures for March delivery gained 4.25 cents, or 1.7 percent, to $2.5985 a pound at 9:13 a.m. on the Comex division of the New York Mercantile Exchange. Prices gained 1.1 percent yesterday, snapping a six-session slide.
Before today, the metal had dropped 11 percent this month after climbing 41 percent in 2006, the fifth-consecutive annual gain.
A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
``I'm looking for a close above $2.70,'' said Win Chung, a trader at Triland USA Inc. in New York.
Inventories monitored by the London Metal Exchange rose 0.2 percent to 193,825 metric tons. Stockpiles fell 1.2 percent yesterday from the highest since March 2004.
``The Codelco story could cause some nervousness, but copper needs to put together a string of gains'' before buyers ``come back in any meaningful way,'' Edward Meir, an analyst at Man Financial Inc. in Darien, Connecticut, said in a report.
China
Copper users in China, the world's largest consumer of the metal, may rebuild stockpiles after prices tumbled, according to a Bloomberg survey yesterday of seven analysts, traders and processors.
China accounts for 20 percent of the annual world's copper consumption, while Asia accounts for 50 percent, John Tumazos, senior vice president at Prudential Equity Group LLP, said yesterday. The U.S. consumes about 13 percent of the metal, and Europe accounts for 20 percent of the annual consumption, he said.
Monday, January 08, 2007
Copper prices extended last week's heavy losses on Monday as rising stocks in London Metal Exchange warehouses heightened worries about a slowdown in demand.
The fall in copper dragged other metals lower, with lead, zinc and nickel falling by around 4 percent.
"The market has been in a downward channel during the past few weeks...things look weak both technically and fundamentally," a European LME trader said.
Copper futures for delivery in three months were at $5,485/5,505 a tonne at 1129 GMT, down from $5,611 at the close on Friday, when the market dropped by more than 2 percent.
"There is nothing really on the charts to support copper until $5,165," analyst William Adams at BaseMetals.com said.
A Macquarie report said prices would inevitably bounce back as most metals were oversold, but in the short term prices were seen drifting to around $5,000.
Copper's recent fall has come against a backdrop of worries about slowing global growth prospects and rising supply of many key industrial commodities.
Stocks in LME-registered warehouses, seen as a gauge of demand, had risen by more than 12,000 tonnes over the past week.
Another 900 tonnes entered stores on Monday, taking the total to 195,775, the highest since March 2004.
Analysts said the market might change direction in mid-February, when the Chinese were likely to re-stock.
"Chinese New Year on 18th February should see new buying interest from consumers in both physical copper and copper concentrates," John Meyer at Numis Securities said in a note.
At the same time, traders said there was talk the Chinese had lowered their purchasing targets in copper.
"So maybe we will see less support than people hope and it could easily drift down lower fairly quickly," the trader said.
Goldman Sachs said prices could go higher again at the end of 2007 as global growth would pick up.
"While prices in the interim are likely to remain volatile, we continue to believe that prices will see renewed upside momentum towards the end of 2007 and the beginning of 2008," the investment bank said in weekly commodities note.
COPPER DRAGS OTHERS DOWN
On Friday the slide in copper dragged aluminium down by over 3 percent to a close at $2,610. Aluminium was indicated at $2,579/2,584 on Monday.
"If we can get back above $2,700...then the market could be looking quite bullish again," Adams at BaseMetals.com said.
Zinc was at $3,720/3,745, down 4.9 percent versus its close at $4,085 on Friday, when the metal dipped by a similar amount.
"The feeling is that zinc concentrates are becoming more available and there could be a lot of stock on its way to warehouses," another LME trader said.
Stocks in LME-registered warehouses rose by 725 tonnes to 90,975, up by some 7 percent since the start of December.
The Dow Jones AIG index with some $30 billion in assets was putting additional pressure on the markets.
"The re-indexing of the funds and the weakness of the oil price have triggered a lot of liquidation selling and it has caused a lot of CTA (Commodity Trading Advisor) types to go short," Adams said.
Nickel was down 3.8 percent at $31,850/32,000 versus $33,100, and tin was indicated at $10,450/10,550 against its last quote on Friday at $10,600/10,625.
Lead fell by 5.6 percent to hit $1,530 and was later indicated at $1,540/1,550 versus $1,620.
The fall in copper dragged other metals lower, with lead, zinc and nickel falling by around 4 percent.
"The market has been in a downward channel during the past few weeks...things look weak both technically and fundamentally," a European LME trader said.
Copper futures for delivery in three months were at $5,485/5,505 a tonne at 1129 GMT, down from $5,611 at the close on Friday, when the market dropped by more than 2 percent.
"There is nothing really on the charts to support copper until $5,165," analyst William Adams at BaseMetals.com said.
A Macquarie report said prices would inevitably bounce back as most metals were oversold, but in the short term prices were seen drifting to around $5,000.
Copper's recent fall has come against a backdrop of worries about slowing global growth prospects and rising supply of many key industrial commodities.
Stocks in LME-registered warehouses, seen as a gauge of demand, had risen by more than 12,000 tonnes over the past week.
Another 900 tonnes entered stores on Monday, taking the total to 195,775, the highest since March 2004.
Analysts said the market might change direction in mid-February, when the Chinese were likely to re-stock.
"Chinese New Year on 18th February should see new buying interest from consumers in both physical copper and copper concentrates," John Meyer at Numis Securities said in a note.
At the same time, traders said there was talk the Chinese had lowered their purchasing targets in copper.
"So maybe we will see less support than people hope and it could easily drift down lower fairly quickly," the trader said.
Goldman Sachs said prices could go higher again at the end of 2007 as global growth would pick up.
"While prices in the interim are likely to remain volatile, we continue to believe that prices will see renewed upside momentum towards the end of 2007 and the beginning of 2008," the investment bank said in weekly commodities note.
COPPER DRAGS OTHERS DOWN
On Friday the slide in copper dragged aluminium down by over 3 percent to a close at $2,610. Aluminium was indicated at $2,579/2,584 on Monday.
"If we can get back above $2,700...then the market could be looking quite bullish again," Adams at BaseMetals.com said.
Zinc was at $3,720/3,745, down 4.9 percent versus its close at $4,085 on Friday, when the metal dipped by a similar amount.
"The feeling is that zinc concentrates are becoming more available and there could be a lot of stock on its way to warehouses," another LME trader said.
Stocks in LME-registered warehouses rose by 725 tonnes to 90,975, up by some 7 percent since the start of December.
The Dow Jones AIG index with some $30 billion in assets was putting additional pressure on the markets.
"The re-indexing of the funds and the weakness of the oil price have triggered a lot of liquidation selling and it has caused a lot of CTA (Commodity Trading Advisor) types to go short," Adams said.
Nickel was down 3.8 percent at $31,850/32,000 versus $33,100, and tin was indicated at $10,450/10,550 against its last quote on Friday at $10,600/10,625.
Lead fell by 5.6 percent to hit $1,530 and was later indicated at $1,540/1,550 versus $1,620.
Friday, January 05, 2007
Copper for delivery in three months ended the official LME ession at $5,750 per tonne, up $20 from Thursday's kerb close.
At around $5,700, copper is 35 percent below its peak of $8,800 in May last year but still more than double its price three years ago.
"Copper has moved away from the lows aided by consumer bargain hunting and a further rise in cancelled warrants," UBS metals strategist Robin Bhar said.
Cancelled warrants, which indicate metal will soon leave warehouses, stood at 17,325 tonnes on Friday, up from around 6,000 at the beginning of the week.
Analysts said users of copper in China, the biggest consumer of the metal, would be looking to pick up supplies after the big price drop.
Other market sources said Chinese consumers would remain cautious, expecting further falls in prices.
"Chinese fabricators are not willing to buy large volumes of copper," said Zhou Yixing, a senior trader with Jiangsu Suwu Futures.
Copper's fall has come against a backdrop of worries about slowing global growth prospects and rising supply of many key industrial commodities.
"I am a trend-follower and I am very happy to be so in markets like this. I would hate to have to try and work out the fundamental outlook for these things," a U.S. fund manager said.
"People need a clearer picture. The employment numbers are due later and traders tell me they are not going to touch anything until then."
U.S. non-farm payrolls data for December are due at 1330 GMT, with analysts predicting a rise of 100,000 jobs.
"Copper prices have been falling since mid-December as sentiment deteriorated against rising LME inventories and a perception of slowing demand, especially in the USA," said Peter Richardson, chief metals economist at Deutsche Bank.
Stocks in LME-registered warehouses, seen as a gauge of demand, have risen by more than 12,000 tonnes this week. Another 1,700 tonnes entered stores on Friday, taking the total to 194,875, the highest since March 2004.
Stocks in Shanghai Exchange warehouses fell 257 tonnes in the week ended Thursday to 31,043 tonnes.
Nickel stocks fell 150 tonnes in London on Friday to 6,084 tonnes, just over 1.5 days of global consumption, while the premium for cash metal, or backwardation, flared to $900/1,100 a tonne, from $700 at the end of 2006.
Nickel ended the official session at $33,900, down $300.
Aluminium was down $20 at $2,680 and zinc was down $35 at $4,050.
Tin was indicated at $10,795/10,800, down $80 from Thursday's last quote, and lead was at $1,660/1,663, down $25.
Mining stocks Xstrata and Rio Tinto were lower by early afternoon in London, all three declining more sharply than the FTSE 100 index.
At around $5,700, copper is 35 percent below its peak of $8,800 in May last year but still more than double its price three years ago.
"Copper has moved away from the lows aided by consumer bargain hunting and a further rise in cancelled warrants," UBS metals strategist Robin Bhar said.
Cancelled warrants, which indicate metal will soon leave warehouses, stood at 17,325 tonnes on Friday, up from around 6,000 at the beginning of the week.
Analysts said users of copper in China, the biggest consumer of the metal, would be looking to pick up supplies after the big price drop.
Other market sources said Chinese consumers would remain cautious, expecting further falls in prices.
"Chinese fabricators are not willing to buy large volumes of copper," said Zhou Yixing, a senior trader with Jiangsu Suwu Futures.
Copper's fall has come against a backdrop of worries about slowing global growth prospects and rising supply of many key industrial commodities.
"I am a trend-follower and I am very happy to be so in markets like this. I would hate to have to try and work out the fundamental outlook for these things," a U.S. fund manager said.
"People need a clearer picture. The employment numbers are due later and traders tell me they are not going to touch anything until then."
U.S. non-farm payrolls data for December are due at 1330 GMT, with analysts predicting a rise of 100,000 jobs.
"Copper prices have been falling since mid-December as sentiment deteriorated against rising LME inventories and a perception of slowing demand, especially in the USA," said Peter Richardson, chief metals economist at Deutsche Bank.
Stocks in LME-registered warehouses, seen as a gauge of demand, have risen by more than 12,000 tonnes this week. Another 1,700 tonnes entered stores on Friday, taking the total to 194,875, the highest since March 2004.
Stocks in Shanghai Exchange warehouses fell 257 tonnes in the week ended Thursday to 31,043 tonnes.
Nickel stocks fell 150 tonnes in London on Friday to 6,084 tonnes, just over 1.5 days of global consumption, while the premium for cash metal, or backwardation, flared to $900/1,100 a tonne, from $700 at the end of 2006.
Nickel ended the official session at $33,900, down $300.
Aluminium was down $20 at $2,680 and zinc was down $35 at $4,050.
Tin was indicated at $10,795/10,800, down $80 from Thursday's last quote, and lead was at $1,660/1,663, down $25.
Mining stocks Xstrata and Rio Tinto were lower by early afternoon in London, all three declining more sharply than the FTSE 100 index.
Thursday, January 04, 2007
Copper fell to an eight-month low in New York, extending a slide that began in May, as a slowdown in U.S. housing and rising inventories fueled concern that demand will lag behind supply.
Prices have fallen 36 percent from a record high on May 11 as new-home construction in the U.S. fell the most in 15 years and global stockpiles of the metal rose to the highest levels in more than a year. Builders are the biggest users of copper in the U.S., the world's second-largest consumer.
``It's going to be a long time before residential housing bounces back,'' said Michael Smith, owner of T&K Futures and Options Inc. in Port Saint Lucie, Florida. ``Housing is such a big consumer. It's going to be tough on old copper, unless something changes.''
Copper for delivery in March fell 7 cents, or 2.6 percent, to $2.579 a pound at 8:50 a.m. on the Comex division of the New York Mercantile Exchange. Prices earlier touched $2.5565, the lowest since April 5. The metal plunged 7.7 percent yesterday, the biggest drop since June.
Copper futures still gained 40 percent last year on supply disruptions. A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
On the London Metal Exchange, copper for delivery in three months fell for a third session, dropping $180, or 3.1 percent, to $5,675 a metric ton. The metal declined below $6,000 a ton yesterday for the first time since April.
Prices have fallen 36 percent from a record high on May 11 as new-home construction in the U.S. fell the most in 15 years and global stockpiles of the metal rose to the highest levels in more than a year. Builders are the biggest users of copper in the U.S., the world's second-largest consumer.
``It's going to be a long time before residential housing bounces back,'' said Michael Smith, owner of T&K Futures and Options Inc. in Port Saint Lucie, Florida. ``Housing is such a big consumer. It's going to be tough on old copper, unless something changes.''
Copper for delivery in March fell 7 cents, or 2.6 percent, to $2.579 a pound at 8:50 a.m. on the Comex division of the New York Mercantile Exchange. Prices earlier touched $2.5565, the lowest since April 5. The metal plunged 7.7 percent yesterday, the biggest drop since June.
Copper futures still gained 40 percent last year on supply disruptions. A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
On the London Metal Exchange, copper for delivery in three months fell for a third session, dropping $180, or 3.1 percent, to $5,675 a metric ton. The metal declined below $6,000 a ton yesterday for the first time since April.
Wednesday, January 03, 2007
Copper dropped the most in three months in London, trading below $6,000 a ton, on expectations a private report will show U.S. manufacturing industry is stagnating. Zinc had its largest drop in more than six weeks.
Copper, used in wires and pipes, is erasing part of last year's 44 percent gain as supplies increase and consumption growth slows. U.S. manufacturing was on the verge of shrinking in December, economists expect a report from the Institute for Supply Management to show today. The U.S. is the second-largest user of copper, after China.
``We will see more weakness in demand and prices in 2007,'' said Jean-Bernard Guyon, who manages about $211 million at Global Gestion France in Paris. Guyon doesn't hold copper- related stocks and has reduced his holdings in nickel and zinc shares, he said without elaborating.
Copper for delivery in three months on the London Metal Exchange lost $218, or 3.6 percent, to $5,892 a metric ton as of 2:22 p.m. local time. It's the first time copper has traded below $6,000 since April 12. The contract earlier fell as much as 4.6 percent, the largest intraday loss since Oct. 4. Zinc, used to galvanize steel, had its largest one-day loss since Nov. 17, falling as much as $210, or 5.1 percent, to $3,920 a ton.
The ISM's manufacturing index was at 50 in December, compared with 49.5 in November, according to the median forecast of 60 economists surveyed by Bloomberg News. A reading below 50 signals a contraction. The November reading was the first slowdown in more than three years. The Tempe, Arizona-based institute will release the report at 10 a.m. Washington time.
Price Quadruples
Copper futures for March delivery fell 19.55 cents, or 6.8 percent, to $2.6755 a pound on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since June 13.
The metal has quadrupled since 2002, and traded at a record $8,800 a ton May 11, as China's booming economy combined with strikes and disruption at mines from Indonesia to Chile to put a squeeze on supplies. Mining companies such as Chile's Codelco, the world's biggest producer, and BHP Billiton Ltd. have since ramped up production to take advantage of the higher prices.
``The scarcity fear is going to disappear,'' said Peter Fertig, a commodity analyst at Dresdner Kleinwort in Frankfurt. A U.S. slowdown ``clearly reduces demand for the metal.''
Further declines in copper are likely, said analysts including Neil Buxton at London-based GFMS Metals Consulting Ltd. A drop below $6,000 a ton would trigger more technical chart-based selling, sending prices toward $5,000, Fertig said. He expects prices to rebound on increased orders from China later this year.
Goldman Sees $5,500
``We have a lot of people sitting on the fence, waiting to place orders,'' said Charles Molnar, owner of Molnar Tools Inc. in Ocean, New Jersey. ``They are waiting for prices to come down.'' Molnar uses about 200,000 pounds of copper a year.
Copper's so-called relative strength index dropped to 21.39 today, suggesting a rebound. The index is used by some investors as a gauge for price direction. A reading below 30 usually indicates the commodity is due for a gain.
The benchmark three-month price probably will fall to $5,500 by the end of this year as supply beats usage by 230,000 tons, Goldman Sachs Group Inc. analysts led by James Gutman in London said in a Dec. 11 report.
LME-monitored copper inventories gained 1,975 tons, or 1 percent, to 192,550 tons, the exchange said today in a daily report. The stockpiles more than doubled last year, easing a shortage.
Mining Stocks Drop
Mining stocks also dropped. Shares of BHP Billiton lost as much as 3.4 percent in London, the most in more than three weeks. Xstrata Plc, the world's second-largest producer of nickel and fourth largest for copper, fell as much as 5.3 percent.
Some producers tried to take lock in copper prices before further declines. Boliden AB, Scandinavia's only copper producer, extended its hedging program by two years through 2009 to secure funds for its 5.3 billion kronor ($780 million) expansion of the Aitik mine.
The company has sold 70 percent of its 2007 production at an average price of $6,394 a metric ton, Stockholm-based Boliden said today in a statement. Seventy percent of output in 2009 is hedged at $5,920.
Other LME-listed metals contracts declined. Aluminum dropped $70 to $2,715 a ton and nickel fell $175 to $32,300. Lead slipped $2 to $1,650, and tin was $475 percent lower at $10,975.
Copper, used in wires and pipes, is erasing part of last year's 44 percent gain as supplies increase and consumption growth slows. U.S. manufacturing was on the verge of shrinking in December, economists expect a report from the Institute for Supply Management to show today. The U.S. is the second-largest user of copper, after China.
``We will see more weakness in demand and prices in 2007,'' said Jean-Bernard Guyon, who manages about $211 million at Global Gestion France in Paris. Guyon doesn't hold copper- related stocks and has reduced his holdings in nickel and zinc shares, he said without elaborating.
Copper for delivery in three months on the London Metal Exchange lost $218, or 3.6 percent, to $5,892 a metric ton as of 2:22 p.m. local time. It's the first time copper has traded below $6,000 since April 12. The contract earlier fell as much as 4.6 percent, the largest intraday loss since Oct. 4. Zinc, used to galvanize steel, had its largest one-day loss since Nov. 17, falling as much as $210, or 5.1 percent, to $3,920 a ton.
The ISM's manufacturing index was at 50 in December, compared with 49.5 in November, according to the median forecast of 60 economists surveyed by Bloomberg News. A reading below 50 signals a contraction. The November reading was the first slowdown in more than three years. The Tempe, Arizona-based institute will release the report at 10 a.m. Washington time.
Price Quadruples
Copper futures for March delivery fell 19.55 cents, or 6.8 percent, to $2.6755 a pound on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since June 13.
The metal has quadrupled since 2002, and traded at a record $8,800 a ton May 11, as China's booming economy combined with strikes and disruption at mines from Indonesia to Chile to put a squeeze on supplies. Mining companies such as Chile's Codelco, the world's biggest producer, and BHP Billiton Ltd. have since ramped up production to take advantage of the higher prices.
``The scarcity fear is going to disappear,'' said Peter Fertig, a commodity analyst at Dresdner Kleinwort in Frankfurt. A U.S. slowdown ``clearly reduces demand for the metal.''
Further declines in copper are likely, said analysts including Neil Buxton at London-based GFMS Metals Consulting Ltd. A drop below $6,000 a ton would trigger more technical chart-based selling, sending prices toward $5,000, Fertig said. He expects prices to rebound on increased orders from China later this year.
Goldman Sees $5,500
``We have a lot of people sitting on the fence, waiting to place orders,'' said Charles Molnar, owner of Molnar Tools Inc. in Ocean, New Jersey. ``They are waiting for prices to come down.'' Molnar uses about 200,000 pounds of copper a year.
Copper's so-called relative strength index dropped to 21.39 today, suggesting a rebound. The index is used by some investors as a gauge for price direction. A reading below 30 usually indicates the commodity is due for a gain.
The benchmark three-month price probably will fall to $5,500 by the end of this year as supply beats usage by 230,000 tons, Goldman Sachs Group Inc. analysts led by James Gutman in London said in a Dec. 11 report.
LME-monitored copper inventories gained 1,975 tons, or 1 percent, to 192,550 tons, the exchange said today in a daily report. The stockpiles more than doubled last year, easing a shortage.
Mining Stocks Drop
Mining stocks also dropped. Shares of BHP Billiton lost as much as 3.4 percent in London, the most in more than three weeks. Xstrata Plc, the world's second-largest producer of nickel and fourth largest for copper, fell as much as 5.3 percent.
Some producers tried to take lock in copper prices before further declines. Boliden AB, Scandinavia's only copper producer, extended its hedging program by two years through 2009 to secure funds for its 5.3 billion kronor ($780 million) expansion of the Aitik mine.
The company has sold 70 percent of its 2007 production at an average price of $6,394 a metric ton, Stockholm-based Boliden said today in a statement. Seventy percent of output in 2009 is hedged at $5,920.
Other LME-listed metals contracts declined. Aluminum dropped $70 to $2,715 a ton and nickel fell $175 to $32,300. Lead slipped $2 to $1,650, and tin was $475 percent lower at $10,975.
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