Some analysts believe the media reports and scattered data are representative of an real economic recovery, and see copper prices rising in the near future; possibly as early as next week.
That is contrary to hedge funds, who have betting copper prices will continue falling. They've been betting against copper since August.
According to a Bloomberg survey, of the twenty analysts queried, thirteen of them believe copper prices will rise next week. Four of them see copper falling, while the other three are neutral on copper prices in the near term.
Traders on the other hand are betting against that positive outlook, believing the price of copper will fall after moving up since November. Inventories climbing to a two-year high is the reasoning there.
Supply of copper has pressured prices downward, as they've doubled since September. Even so, Barclays (BCS) says within the next six months stockpiles will fall and shortages will return.
According to Barclays, China and North America account for 53 percent of copper demand, so how they go, overall, so will go copper. Optimistic growth estimates of 8.3 percent in the second and third quarters for China and 2.8 percent for America, may drive up the copper demand.
The question is whether this is being far too optimistic.
In the two middle quarters, Barclays sees copper demand soaring by 288,000 tons, reducing the surplus to 56,000 tons. Goldman Sachs (GS) is also bullish on copper, predicting copper will reach $9,000 in six months.
Data from the U.S. Commodity Futures Trading Commission sow traders aren't as optimistic with copper, as they hold a net-short position of 7,172 futures and options as of February 26, the highest amount since Aug. 14, compared with a net-long position of 11,413 contracts the prior week.
As measured by warehouses tracked by LME, it appears at this time that hedge funds and speculators may be closer to the truth, as inventories jumped on Wednesday to 481,225. There was a plunge in copper withdrawal orders, which dropped 68 percent since early January 2013. On March 6 they stood at a nine-month low.
Assuming the U.S. and China do grow at projected levels, the other key player in copper demand is Europe, which accounts for 17 percent of global demand. With the recession continuing there, and another year of contraction expected by the IMF, demand could dwindle significantly which would increase supply.
As usual there are mixed signals that aren't easy to interpret. But my thought is copper supply will probably continue to outpace demand, and prices in 2013 are likely to remain under some pressure.
There is simply nothing economically to suggest the global economy is growing at a pace that contradicts that high probability. Europe is really worse than is presently being reported, and it's quite possible that's the same with China and the U.S.
We need to tread carefully with copper, keeping a skeptical eye on the reports the media seem to be trying to spin so positively.
Showing posts with label China Copper Demand. Show all posts
Showing posts with label China Copper Demand. Show all posts
Thursday, March 7, 2013
Wednesday, March 6, 2013
Freeport (FCX) Could Double China Copper Sales in 3 Years
Mining giant Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) could double its copper sales to China over the next three years, said Freeport's senior vice president of marketing and sales, Javier Targhetta.
At this time Freeport provides about 500,000 tons of copper to China, with expectations growth will soar to between 800,000 to 1 million metric tons by 2016.
Targhetta says since 2005 find the sale of copper concentrate to China have jumped 10 times. Copper concentrate is the material used in wiring and pipes.
“We hope to significantly increase sales to China in the coming three years,” Targhetta said. “We are one of the ones increasing our mined production. Certainly the Chinese market is a good one for us to place part of new concentrate that we will be producing.”
In 2013, estimates are China will increase its imports of copper concentrate by about 17 percent.
Now the price of copper needs to reverse to make it more profitable for Freeport and other copper suppliers.
At this time Freeport provides about 500,000 tons of copper to China, with expectations growth will soar to between 800,000 to 1 million metric tons by 2016.
Targhetta says since 2005 find the sale of copper concentrate to China have jumped 10 times. Copper concentrate is the material used in wiring and pipes.
“We hope to significantly increase sales to China in the coming three years,” Targhetta said. “We are one of the ones increasing our mined production. Certainly the Chinese market is a good one for us to place part of new concentrate that we will be producing.”
In 2013, estimates are China will increase its imports of copper concentrate by about 17 percent.
Now the price of copper needs to reverse to make it more profitable for Freeport and other copper suppliers.
Monday, February 11, 2013
Goldman: Precious Metals, Livestock to Lead Commodities Over Next Year
Goldman Sachs (NYSE: GS) predicts over the next 12 months, livestock and precious metals will lead commodities to about a 1.1 percent jump in prices.
Precious metals will climb the most according to Goldman, estimating a jump of 5 percent, while it sees livestock prices rising 4.5 percent during the same period.
In other commodity sectors, Goldman sees energy increasing 2 percent; industrial metals will drop by 1 percent; and agriculture in general will fall 3.5 percent.
“Renewed optimism has been mostly based on momentum and forward-looking survey data and far less on hard data and physical markets, which remain lackluster,” Goldman analyst Jeffrey Currie wrote in the report. “We are maintaining our price targets and recommendations and will wait for hard data and physical markets to confirm the optimism before raising estimates.”
Citing the Chinese housing completion cycle, Goldman suggest investors acquire copper. The financial giant also sees benefit in taking a position in the Brent GSCI Index in order to take advantage of the low crude inventories which has produced backwardation.
Rolling over nearby contracts to longer contracts will result in profitable returns, said Goldman.
Precious metals will climb the most according to Goldman, estimating a jump of 5 percent, while it sees livestock prices rising 4.5 percent during the same period.
In other commodity sectors, Goldman sees energy increasing 2 percent; industrial metals will drop by 1 percent; and agriculture in general will fall 3.5 percent.
“Renewed optimism has been mostly based on momentum and forward-looking survey data and far less on hard data and physical markets, which remain lackluster,” Goldman analyst Jeffrey Currie wrote in the report. “We are maintaining our price targets and recommendations and will wait for hard data and physical markets to confirm the optimism before raising estimates.”
Citing the Chinese housing completion cycle, Goldman suggest investors acquire copper. The financial giant also sees benefit in taking a position in the Brent GSCI Index in order to take advantage of the low crude inventories which has produced backwardation.
Rolling over nearby contracts to longer contracts will result in profitable returns, said Goldman.
Thursday, September 6, 2012
Copper Traders Bullish on Stimulus Expectations
There is no doubt that stimulus expectations are the economic story and source behind the rise in stock prices and commodities, as investors and traders are basing their strategy, for the most part, on the belief there will be plenty of more stimulus in the near term to battle the faltering global economy from various countries, including the Federal Reserve in the U.S.
That has resulted in a much more bullish outlook for copper, which is now more favored by analysts than it has been in about 11 months.
With that in mind, hedge funds are starting to re-enter copper for the first time since May, expecting copper prices to jump in response to the stimulus they're looking for.
Another factor is that copper watched by the London Metal Exchange show that stockpiles it monitors have dropped to four-year lows for the metals, generating the probability that supply may struggle to meet demand if the stimulus efforts result in increased global business.
In the first half of 2013, Barclays Plc says that it expects demand to climb above supply for copper, while in the second half increased production should push prices down as demand decreases.
China is also part of the overall equation, as it cut its industrial production estimates for 2012 to 10 percent from 11 percent on September 5. China accounts for 40 percent of all copper consumption.
Europe is another concern, as the contracting region accounts for 18 percent of copper consumption, and a slowing North American economy, 11 percent.
That has resulted in a much more bullish outlook for copper, which is now more favored by analysts than it has been in about 11 months.
With that in mind, hedge funds are starting to re-enter copper for the first time since May, expecting copper prices to jump in response to the stimulus they're looking for.
Another factor is that copper watched by the London Metal Exchange show that stockpiles it monitors have dropped to four-year lows for the metals, generating the probability that supply may struggle to meet demand if the stimulus efforts result in increased global business.
In the first half of 2013, Barclays Plc says that it expects demand to climb above supply for copper, while in the second half increased production should push prices down as demand decreases.
China is also part of the overall equation, as it cut its industrial production estimates for 2012 to 10 percent from 11 percent on September 5. China accounts for 40 percent of all copper consumption.
Europe is another concern, as the contracting region accounts for 18 percent of copper consumption, and a slowing North American economy, 11 percent.
Wednesday, July 7, 2010
Freeport (NYSE:FCX), Teck (NYSE:TCK), Southern Copper (NYSE:SCCO) and China Effect
Companies like Southern Copper (NYSE:SCCO), Freeport-McMoRan Copper & Gold (NYSE:FCX) and Teck Resources (TCK) would probably be punished the most if the economy of China slows down as expected over past growth levels.
This is all based on their exposure to copper and how China will respond to their too-hot urban property markets.
All three companies tend to move in unison with the China stock market, and how China goes they tend to go.
How deeply this will impact these companies remains to be seen, as we'll need to get a better look at how China responds to the property market, and whether they'll tighten more.
If they do, then copper imports will fall further, which are already down 6 percent on the year, and decreased by 9 percent in May from April's numbers.
This is all based on their exposure to copper and how China will respond to their too-hot urban property markets.
All three companies tend to move in unison with the China stock market, and how China goes they tend to go.
How deeply this will impact these companies remains to be seen, as we'll need to get a better look at how China responds to the property market, and whether they'll tighten more.
If they do, then copper imports will fall further, which are already down 6 percent on the year, and decreased by 9 percent in May from April's numbers.
Tuesday, July 6, 2010
Freeport (NYSE:FCX), BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK), Rio Tinto (NYSE:RTP) Will Get Boost from Increasing Copper Prices
Mining companies like Freeport-McMoRan (NYSE:FCX), BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK) and Rio Tinto (NYSE:RTP), and others with significant exposure to copper will benefit in the long term, as it's expected for demand to increase and supply to dwindle in the years ahead.
There's no doubt copper prices will remain under pressure in the near term, and there's no way of knowing when that will start to change.
But the pent-up demand for copper is still there, and when the global economy and specific economies of countries begin to rebound, copper prices will surge on the built up demand.
Much of this is based on the quality of ore being found by the miners, which has been of a lower quality. That ultimately will lead to higher copper prices because companies will have to go deeper to find higher quality copper deposits, which will require larger inputs or higher costs.
That should put the miners in a stronger position, which will allow them to increase margins. The higher costs of copper would mean nothing if the margins to get it aren't improved.
But the demand will definitely be there, and that should produce both higher copper margins, profits and prices.
There's no doubt copper prices will remain under pressure in the near term, and there's no way of knowing when that will start to change.
But the pent-up demand for copper is still there, and when the global economy and specific economies of countries begin to rebound, copper prices will surge on the built up demand.
Much of this is based on the quality of ore being found by the miners, which has been of a lower quality. That ultimately will lead to higher copper prices because companies will have to go deeper to find higher quality copper deposits, which will require larger inputs or higher costs.
That should put the miners in a stronger position, which will allow them to increase margins. The higher costs of copper would mean nothing if the margins to get it aren't improved.
But the demand will definitely be there, and that should produce both higher copper margins, profits and prices.
Thursday, July 1, 2010
Industrial Metals Lead Commodities Down for Quarter
Commodities experienced their worst quarter in over a year, as industrial metals plummeted in price on an extremely weak U.S. economy, China urban property inflation concerns, and the sovereign debt crisis in Europe.
The worst of the industrial metals was zinc, which fell 25 percent for the quarter, its worst performance since the latter part of 2008. Nickel was much better, dropping 22 percent for the quarter, followed by lead, which was down 19 percent, copper declining 17 percent, and aluminum falling 15 percent.
Heading into the fourth quarter doesn't look much better for commodities, as estimates from Barclays Capital have prices dropping even more, according to a recent report, especially copper and aluminum, which are used heavily in building homes.
With the bottom falling out from the U.S. housing market after the tax break was ended, along with the Chinese battling property inflation in their urban areas, the demand for industrial commodities are under extreme pressure until those situations turn around, which they don't look likely to any time soon.
Gold will continue to be a strong performer, and silver will probably shine when measured against other industrial metals.
The worst of the industrial metals was zinc, which fell 25 percent for the quarter, its worst performance since the latter part of 2008. Nickel was much better, dropping 22 percent for the quarter, followed by lead, which was down 19 percent, copper declining 17 percent, and aluminum falling 15 percent.
Heading into the fourth quarter doesn't look much better for commodities, as estimates from Barclays Capital have prices dropping even more, according to a recent report, especially copper and aluminum, which are used heavily in building homes.
With the bottom falling out from the U.S. housing market after the tax break was ended, along with the Chinese battling property inflation in their urban areas, the demand for industrial commodities are under extreme pressure until those situations turn around, which they don't look likely to any time soon.
Gold will continue to be a strong performer, and silver will probably shine when measured against other industrial metals.
Tuesday, June 22, 2010
Freeport-McMoRan (NYSE:FCX), Southern Copper (NASDAQ:SCCO) and Copper Demand
While everyone got excited yesterday over the decision to all the yuan to float more against the U.S. dollar, it didn't take long for the market to realize it wasn't that significant, even though precious metals like copper moved up quickly, and copper-exposed companies like Freeport-McMoRan (NYSE:FCX) and Southern Copper (NASDAQ:SCCO) plunged, after the brief euphoria left the market.
Calls also drove up the price of Southern Copper yesterday. But it's highly unlikely attempts to move the stock up by 14 percent to make a profit will work, as macro-economics simply aren't going to allow that to happen, as there's nothing out there to justify that happening, even if some temporary event or story causes some short-term optimism.
Several things are working against copper, and some of them very specific to demand. There is the Chinese property market inflation worries, which China is cooling off, and which copper demand will decline. The U.S. new housing starts are plunging as well, with the tax credit eliminated, which immediately resulted in 10 percent less starts.
Finally, there's the sovereign debt crisis in Europe, which is so bad it's impossible to know or predict how long that will last, or the real depths of the crisis.
That will keep copper demand in check for an unknown period of time, and there is little if anything that will change that in the short term, and in the long term it doesn't look much better.
Those excited about the decision of the Chinese with the yuan will need to take into account the parameters imposed upon copper and other precious metals by the ongoing recession, and the global situation is tenuous at best, with demand for raw materials far less than projected not that long ago.
Until the larger economic picture improves, Freeport and Southern Copper are going to struggle to grow. The best thing to look for there is probably buying opportunities through low price-points, with a view to the long term.
Short term there isn't much happening with these and other companies which have large exposure to the copper market.
Neither of the two companies mentioned here have done much of anything in share price since October 2009, and that's unlikely to change.
Calls also drove up the price of Southern Copper yesterday. But it's highly unlikely attempts to move the stock up by 14 percent to make a profit will work, as macro-economics simply aren't going to allow that to happen, as there's nothing out there to justify that happening, even if some temporary event or story causes some short-term optimism.
Several things are working against copper, and some of them very specific to demand. There is the Chinese property market inflation worries, which China is cooling off, and which copper demand will decline. The U.S. new housing starts are plunging as well, with the tax credit eliminated, which immediately resulted in 10 percent less starts.
Finally, there's the sovereign debt crisis in Europe, which is so bad it's impossible to know or predict how long that will last, or the real depths of the crisis.
That will keep copper demand in check for an unknown period of time, and there is little if anything that will change that in the short term, and in the long term it doesn't look much better.
Those excited about the decision of the Chinese with the yuan will need to take into account the parameters imposed upon copper and other precious metals by the ongoing recession, and the global situation is tenuous at best, with demand for raw materials far less than projected not that long ago.
Until the larger economic picture improves, Freeport and Southern Copper are going to struggle to grow. The best thing to look for there is probably buying opportunities through low price-points, with a view to the long term.
Short term there isn't much happening with these and other companies which have large exposure to the copper market.
Neither of the two companies mentioned here have done much of anything in share price since October 2009, and that's unlikely to change.
Thursday, June 17, 2010
Copper Prices Under Pressure
Copper prices are going to remain under downward pressure as housing markets in the United States and China are slowing down, causing copper demand to shrink some.
Companies like Freeport-Mcmoran (NYSE:FCX) will be under pressure as well, as those with heavy copper exposure won't have anything to celebrate for some time to come, as there's nothing to suggest new housing starts in the U.S. will start to rise any time soon, as the tax credit has now ended.
And the Chinese property market is being cooled off in order to battle a potential bubble in the urban areas of the country, making copper demand there slower than expected not too long ago.
So for now, copper prices should fall, or at best, remain level, as there's nothing to indicate demand will rise in the near term.
Companies like Freeport-Mcmoran (NYSE:FCX) will be under pressure as well, as those with heavy copper exposure won't have anything to celebrate for some time to come, as there's nothing to suggest new housing starts in the U.S. will start to rise any time soon, as the tax credit has now ended.
And the Chinese property market is being cooled off in order to battle a potential bubble in the urban areas of the country, making copper demand there slower than expected not too long ago.
So for now, copper prices should fall, or at best, remain level, as there's nothing to indicate demand will rise in the near term.
Wednesday, June 16, 2010
New Housing Starts Crash After Government Props Removed
Confirming the housing starts have been largely a result of the tax credit which expired in May, new homes being built plummeted by 10 percent in the month, showing the reality of the weakness of the housing market.
Compared to a year ago, that's just under an 18 percent drop in new housing starts, which in May 2009 increased by 7.8 percent.
New housing starts in April were also downwardly revised, falling from the previous data where it was said there was a 5.8 percent increase, down to 3.9 percent new housing starts for the month.
With the first-time buyer tax credit now gone, housing starts should continue to plunge, as there's nothing there to create the demand brought on by the government initiative.
It adds to the concern of copper demand and prices, as China is decreasing its demand for copper to battle inflation in their property markets.
Compared to a year ago, that's just under an 18 percent drop in new housing starts, which in May 2009 increased by 7.8 percent.
New housing starts in April were also downwardly revised, falling from the previous data where it was said there was a 5.8 percent increase, down to 3.9 percent new housing starts for the month.
With the first-time buyer tax credit now gone, housing starts should continue to plunge, as there's nothing there to create the demand brought on by the government initiative.
It adds to the concern of copper demand and prices, as China is decreasing its demand for copper to battle inflation in their property markets.
Tuesday, June 8, 2010
Teck (NYSE:TCK) CEO Says Metal Demand Consistent
Teck Resources (NYSE:TCK) (TSE:TCK-B) CEO Don Lindsay said at the RBC Global Mining and Materials Conference in Toronto that even though metal prices have fallen recently, demand has continued to remain steady.
"We don't think there's been any change in fundamental demand," said Lindsay.
I find that assertion hard to believe because of the China inflation problems coming from their overheated urban property market, Europe's sovereign debt crisis, and emerging news the U.S. recovery really isn't one, although many of us already knew that.
With all this in mind, then where is the demand coming from?
Now we must take into consideration when we say China is battling inflation and the consequences will be less metal imports, that doesn't mean there won't be any imports, just less than expected from an economy that had been growing at about a 12 percent rate.
Add that together with the economic conditions in America and Europe though, and the combination makes a huge dent in raw material and metals demand, and it's hard to believe that hasn't affected Teck Resources in any way.
Copper prices alone reveal lowering starts of new homes and commercial properties; the reason why prices have plunged so much over the last month and a half. Since mid-April copper prices have declined by over 20 percent.
If demand has remained steady as Lindsay asserts, then what is driving down the prices of copper?
My problem with the comments made by Lindsay are in the short- and mid-term. I have no doubt in the long-term there will be a rebound, but to say demand has remained steady, implying there has been no decline, is pushing the limits on the realities of the market.
Lindsay believes there will be tight copper and coal markets over the next several years, and that will help Teck.
That may or may not be accurate, but what that means over the next couple of years is the question, and in that regard his assertions aren't convincing to me, but we'll see with the next quarterly report if they line up with the way the company is actually performing.
"We don't think there's been any change in fundamental demand," said Lindsay.
I find that assertion hard to believe because of the China inflation problems coming from their overheated urban property market, Europe's sovereign debt crisis, and emerging news the U.S. recovery really isn't one, although many of us already knew that.
With all this in mind, then where is the demand coming from?
Now we must take into consideration when we say China is battling inflation and the consequences will be less metal imports, that doesn't mean there won't be any imports, just less than expected from an economy that had been growing at about a 12 percent rate.
Add that together with the economic conditions in America and Europe though, and the combination makes a huge dent in raw material and metals demand, and it's hard to believe that hasn't affected Teck Resources in any way.
Copper prices alone reveal lowering starts of new homes and commercial properties; the reason why prices have plunged so much over the last month and a half. Since mid-April copper prices have declined by over 20 percent.
If demand has remained steady as Lindsay asserts, then what is driving down the prices of copper?
My problem with the comments made by Lindsay are in the short- and mid-term. I have no doubt in the long-term there will be a rebound, but to say demand has remained steady, implying there has been no decline, is pushing the limits on the realities of the market.
Lindsay believes there will be tight copper and coal markets over the next several years, and that will help Teck.
That may or may not be accurate, but what that means over the next couple of years is the question, and in that regard his assertions aren't convincing to me, but we'll see with the next quarterly report if they line up with the way the company is actually performing.
HSBC (NYSE:HBC) Upgrades Freeport-Mcmoran (NYSE:FCX)
HSBC (NYSE:HBC) upgraded Freeport-Mcmoran (NYSE:FCX) today from "Neutral" to "Overweight" while cutting their price target on the company from $85 to $80.
The mixed signals are from the uncertainties of the copper market which is highly dependent on demand from China, which is expected to drop as they attack the inflation in connection to their property market, which is a large user of copper.
Over the last 30 days or so, Freeport-Mcmoran has plunged in price by 22 percent, and 15 percent just over the last several days.
With Freeport trading at a forward price-to-earnings ratios of 7.25, it could be reaching a bottom and could be a time to buy, as some analysts believe the selloff in copper stocks has been overdone.
Even so, there is some caution to retain even at these levels, as some of the major Chinese cities experienced drops in property sales as high as 70 percent over the last month, and that has to cut deeply into copper demand.
The mixed signals are from the uncertainties of the copper market which is highly dependent on demand from China, which is expected to drop as they attack the inflation in connection to their property market, which is a large user of copper.
Over the last 30 days or so, Freeport-Mcmoran has plunged in price by 22 percent, and 15 percent just over the last several days.
With Freeport trading at a forward price-to-earnings ratios of 7.25, it could be reaching a bottom and could be a time to buy, as some analysts believe the selloff in copper stocks has been overdone.
Even so, there is some caution to retain even at these levels, as some of the major Chinese cities experienced drops in property sales as high as 70 percent over the last month, and that has to cut deeply into copper demand.
Thursday, June 3, 2010
Freeport-McMoran (NYSE:FCX) Sees Copper Risk from China Inflation Measures
Freeport-McMoran Copper & Gold (NYSE:FCX) says China's attempt to combat inflation by slowing down their economy could significantly reduce demand for copper going forward.
Copper prices have fallen 15 percent over the last couple of months, and is sure to experience some more downward pressure because of the news from China.
This would also put pressure on margins for Freeport and any company with a strong exposure to copper.
Freeport has plans to spend $100 million in 2010 for copper and gold exploration based on assumptions demand will continue. While for gold that's the case without a doubt, copper looks like it could be in for a rough ride as the U.S. market levels and Europe continues to struggle.
Copper prices have fallen 15 percent over the last couple of months, and is sure to experience some more downward pressure because of the news from China.
This would also put pressure on margins for Freeport and any company with a strong exposure to copper.
Freeport has plans to spend $100 million in 2010 for copper and gold exploration based on assumptions demand will continue. While for gold that's the case without a doubt, copper looks like it could be in for a rough ride as the U.S. market levels and Europe continues to struggle.
Wednesday, May 26, 2010
Rio Tinto (NYSE:RTP) Sees Some Metal Demand Doubling in 15 Years
Rio Tinto (NYSE:RTP) CEO Tom Albanese commented at an annual meeting for the company that metals like aluminum, copper and iron ore will increase in demand by twice what they are today in the next 15 years.
Primary drivers of demand, according to Albanese, will be urbanization and industrialization. Those two trends obviously relate to emerging markets, especially China and India, which will continue to grow exponentially during that time, although probably at a couple percentage points down from their growth today.
Albanese also likes the energy sector, where coal and uranium will continue to be in high demand.
“These trends will require a significant response from producers,” Albanese said.
Rio Tinto is positioned strongly to be a major player in these important natural resources, with the major caveat being the macro-economic picture emerging and Europe and inflation in China. These could lower demand for raw materials, and the European sovereign debt crisis could drag us into an even worse recession than we're just starting to recover from.
Even so, it's not a matter of if these raw materials will increase in demand, but when. The 15-year estimate is a good one to me, as it takes into accounts the inevitable swing in demand that accompanies slow economic times, and even if things to get much worse for several years, ultimately they're recover, and mining companies like Rio Tinto should participate in the resultant rise in prices from the growing demand.
Primary drivers of demand, according to Albanese, will be urbanization and industrialization. Those two trends obviously relate to emerging markets, especially China and India, which will continue to grow exponentially during that time, although probably at a couple percentage points down from their growth today.
Albanese also likes the energy sector, where coal and uranium will continue to be in high demand.
“These trends will require a significant response from producers,” Albanese said.
Rio Tinto is positioned strongly to be a major player in these important natural resources, with the major caveat being the macro-economic picture emerging and Europe and inflation in China. These could lower demand for raw materials, and the European sovereign debt crisis could drag us into an even worse recession than we're just starting to recover from.
Even so, it's not a matter of if these raw materials will increase in demand, but when. The 15-year estimate is a good one to me, as it takes into accounts the inevitable swing in demand that accompanies slow economic times, and even if things to get much worse for several years, ultimately they're recover, and mining companies like Rio Tinto should participate in the resultant rise in prices from the growing demand.
Wednesday, April 21, 2010
Copper Imports Rise 53 Percent in China from February to March
Copper demand continues to be strong from China, as imports from February to March surged 53 percent, adding continual support to copper prices.
Even with China attempting to slow down its continually hot economy, that doesn't seem to be having much impact on precious metals, and copper in particular.
But if China does slow things down by a percentage or so, that won't do a lot to alleviate the demand for copper in the country, and copper prices will respond accordingly.
Infrastructure expenditure and increasing demand from the growing Chinese middle class just about guarantees this isn't going to end any time soon, and copper companies should ride this wave to strong earnings for at least a couple of years, and including copper price corrections, will probably continue for another decade or so.
Even with China attempting to slow down its continually hot economy, that doesn't seem to be having much impact on precious metals, and copper in particular.
But if China does slow things down by a percentage or so, that won't do a lot to alleviate the demand for copper in the country, and copper prices will respond accordingly.
Infrastructure expenditure and increasing demand from the growing Chinese middle class just about guarantees this isn't going to end any time soon, and copper companies should ride this wave to strong earnings for at least a couple of years, and including copper price corrections, will probably continue for another decade or so.
Freeport-McMoRan (NYSE:FCX): Copper Demand Rising
Freeport-McMoRan (NYSE:FCX) Chief Executive Officer Richard Adkerson said global demand for copper is rising, and investors seem to agree, as the price of copper has risen for two days in a row on the growing demand.
Adkerson reiterated that the emerging middle class in China with more income will drive the use of copper, and the result has been an increase in copper prices over the last year of 71 percent.
With concerns over the hot Chinese market moving officials in the country to cool of the economy and housing market, some think copper demand could be cut back in response to those decisions, but it'll depend more on Chinese consumers as to whether that will be the case.
Momentum in China alone seems to guarantee copper prices will be strong in 2010, but if major changes do cool of China, then everyone will have to re-evaluate where prices will go if demand falters.
On a conference call concerning quarterly results, Adkerson added that products the company sells seem to be improving in developing countries, which could result in increasing mine output in response.
Copper Prices
Adkerson reiterated that the emerging middle class in China with more income will drive the use of copper, and the result has been an increase in copper prices over the last year of 71 percent.
With concerns over the hot Chinese market moving officials in the country to cool of the economy and housing market, some think copper demand could be cut back in response to those decisions, but it'll depend more on Chinese consumers as to whether that will be the case.
Momentum in China alone seems to guarantee copper prices will be strong in 2010, but if major changes do cool of China, then everyone will have to re-evaluate where prices will go if demand falters.
On a conference call concerning quarterly results, Adkerson added that products the company sells seem to be improving in developing countries, which could result in increasing mine output in response.
Copper Prices
Tuesday, April 20, 2010
Freeport-McMoRan (NYSE:FCX) Quarterly Preview
Freeport-McMoRan (NYSE:FCX) is scheduled to release its quarterly results on Wednesday before the opening bell, and strong Chinese demand is expected to propel the earnings for the company to an estimated $1.91 a share on revenue of $4.5 billion.
Even with the projected lower production levels, that shouldn't hurt the company for the quarter, as increased gold and copper prices during that time should more than offset that.
Most of the increased production costs have come from lower quality grades up ore, and nothing seen in poor management of operations.
Domestic and mature economies aren't expected to help the company much going forward, and China, and to a lesser degree, other emerging markets, will be the main driver of revenue and profits for some years, as the economies of mature countries will take years to recover.
Freeport-McMoRan won't be hard to figure out for some time, as all you have to do is primarily watch demand from China for copper, and to a lesser degree the other emerging markets they serve in a significant way, specifically as they relate to copper demand.
This isn't to completely remove the U.S. economy out of the picture, but that will take time to generate strong demand, although watching the housing and construction market is something that should be part of the tracking of the performance of Freeport-McMoRan.
Another operational cost which needs to be followed is energy costs, which will be higher for the quarter, but again, the higher prices of copper and gold should overcome that with no problem, but it will have to also be watched in the quarterly performances of the company.
Even with the projected lower production levels, that shouldn't hurt the company for the quarter, as increased gold and copper prices during that time should more than offset that.
Most of the increased production costs have come from lower quality grades up ore, and nothing seen in poor management of operations.
Domestic and mature economies aren't expected to help the company much going forward, and China, and to a lesser degree, other emerging markets, will be the main driver of revenue and profits for some years, as the economies of mature countries will take years to recover.
Freeport-McMoRan won't be hard to figure out for some time, as all you have to do is primarily watch demand from China for copper, and to a lesser degree the other emerging markets they serve in a significant way, specifically as they relate to copper demand.
This isn't to completely remove the U.S. economy out of the picture, but that will take time to generate strong demand, although watching the housing and construction market is something that should be part of the tracking of the performance of Freeport-McMoRan.
Another operational cost which needs to be followed is energy costs, which will be higher for the quarter, but again, the higher prices of copper and gold should overcome that with no problem, but it will have to also be watched in the quarterly performances of the company.
Thursday, April 8, 2010
Freeport McMoRan (NYSE:FCX) El Abra Mine Investment
Freeport McMoRan and Codelco El Abra Mine
After discovering more copper at its El Abra mine in Chile, Freeport McMoRan Copper & Gold (NYSE:FCX) is thinking about sinking some serious money into expanding exploration of the mine.
As the resources discovered by Freeport and partner Codelco is significant, so would the exploration investment.
Overall, Freeport is looking to invest about $100 million this year across its various properties in search of gold and copper.
For the El Abra mine, Freeport has controlling interest, owning 51 percent of the project, while Codelco holds the other 49 percent. Codelco is the No. 1 copper producer in the world and Freeport is the second-largest.
Even though copper is plentiful, Freeport and others are taking a cautious approach because of the uncertainty connected to developed markets, which are still mired in deep economic turmoil, while China demand is still strong.
The strength of Chinese demand is obvious, but the problem is they're the only country that can be counted on now, and if anything major happens there, it could have a major impact on copper demand and prices.
Consequently, Freeport is taking a slower move toward increasing copper production because of that, and seems to be looking toward exploration in preparation for when the developed economies return to health.
After discovering more copper at its El Abra mine in Chile, Freeport McMoRan Copper & Gold (NYSE:FCX) is thinking about sinking some serious money into expanding exploration of the mine.
As the resources discovered by Freeport and partner Codelco is significant, so would the exploration investment.
Overall, Freeport is looking to invest about $100 million this year across its various properties in search of gold and copper.
For the El Abra mine, Freeport has controlling interest, owning 51 percent of the project, while Codelco holds the other 49 percent. Codelco is the No. 1 copper producer in the world and Freeport is the second-largest.
Even though copper is plentiful, Freeport and others are taking a cautious approach because of the uncertainty connected to developed markets, which are still mired in deep economic turmoil, while China demand is still strong.
The strength of Chinese demand is obvious, but the problem is they're the only country that can be counted on now, and if anything major happens there, it could have a major impact on copper demand and prices.
Consequently, Freeport is taking a slower move toward increasing copper production because of that, and seems to be looking toward exploration in preparation for when the developed economies return to health.
China Driving Copper Demand
China and Copper Demand
The strength and weakness of copper demand rests solely on China, as everything else pales in reference to copper and price movements in the present and future.
Much of this is predicated upon the fact that the developed countries continue to struggle economically, and contrary to mainstream media reports, the economics of the developed world are far from being in a recovery, and in fact may have never left the recessionary period, as jobs reports and unemployment reveal.
What the means for copper is the only economy that can be counted on to drive demand is China at this time, so it narrows what needs to be watched closely going forward. This of course doesn't mean there won't be some copper demand in other parts of the, just that China is completely driving the demand, and the demand from other countries pale in comparison, and if they were to cut back on copper orders, it wouldn't have much effect on copper prices.
Anglo American (LSE:AAL) said today that because of this copper does have vulnerability, as if China falters so will copper demand and copper prices.
Basically what this means for copper is there will probably be huge swings as news from around the world affects the prices in the next 12 to 18 months.
Over the long term, copper prices will assuredly arise with demand, but there will be ups and downs along that path until things finally level off.
There are far too many economic uncertainties in the developed world, and to a lesser extent in emerging markets to be able to count on stability any time soon. Copper demand and prices will react accordingly.
The strength and weakness of copper demand rests solely on China, as everything else pales in reference to copper and price movements in the present and future.
Much of this is predicated upon the fact that the developed countries continue to struggle economically, and contrary to mainstream media reports, the economics of the developed world are far from being in a recovery, and in fact may have never left the recessionary period, as jobs reports and unemployment reveal.
What the means for copper is the only economy that can be counted on to drive demand is China at this time, so it narrows what needs to be watched closely going forward. This of course doesn't mean there won't be some copper demand in other parts of the, just that China is completely driving the demand, and the demand from other countries pale in comparison, and if they were to cut back on copper orders, it wouldn't have much effect on copper prices.
Anglo American (LSE:AAL) said today that because of this copper does have vulnerability, as if China falters so will copper demand and copper prices.
Basically what this means for copper is there will probably be huge swings as news from around the world affects the prices in the next 12 to 18 months.
Over the long term, copper prices will assuredly arise with demand, but there will be ups and downs along that path until things finally level off.
There are far too many economic uncertainties in the developed world, and to a lesser extent in emerging markets to be able to count on stability any time soon. Copper demand and prices will react accordingly.
Thursday, February 25, 2010
Barclays Capital (NYSE: BCS) Copper Prices
Barclays Capital Copper Prices
Barclays Capital (NYSE: BCS), the investment are of Barclays PLC, is high on copper prices for 2010, saying they see them going as high as $8,000 a ton in just the first half of 2010.
This is quite a change from projected prices of about $6,875 a ton for 2010, $7,000 a ton in 2011, and up to $8,500 in 2012.
The problem I have with these numbers is I think they are being offered on the assumption we are in an actual economic recovery, when in fact we aren't, as data from all over indicate.
With China cutting back significantly on copper imports this year, it does make you wonder where this demand is going to come from, with some throwing out it will be from Economic Cooperation and Development (OECD) countries.
One possible event that could make this happen is the hoarding of copper in anticipation of potential future shortage which would in fact drive up prices significantly for those countries without copper reserves set aside like China has.
Barclays Capital (NYSE: BCS) Copper Prices
Barclays Capital (NYSE: BCS), the investment are of Barclays PLC, is high on copper prices for 2010, saying they see them going as high as $8,000 a ton in just the first half of 2010.
This is quite a change from projected prices of about $6,875 a ton for 2010, $7,000 a ton in 2011, and up to $8,500 in 2012.
The problem I have with these numbers is I think they are being offered on the assumption we are in an actual economic recovery, when in fact we aren't, as data from all over indicate.
With China cutting back significantly on copper imports this year, it does make you wonder where this demand is going to come from, with some throwing out it will be from Economic Cooperation and Development (OECD) countries.
One possible event that could make this happen is the hoarding of copper in anticipation of potential future shortage which would in fact drive up prices significantly for those countries without copper reserves set aside like China has.
Barclays Capital (NYSE: BCS) Copper Prices
Subscribe to:
Posts (Atom)