At a time when it appears there is nothing to stop the disintegration of the commodity bear market, my outlook for Turquoise Hill (NYSE:TRQ) remains strong.
My reasoning is I believe commodities are closing in on their lows in general, and are likely to begin a rebound in the not-too-distant future. But even if there is more downside to come for an extended period of time (meaning about a year or so), I don't see it having a negative impact on those holding a position in Turquoise Hill for the long term. That's because of the timing of the completion of the second phase construction at its flagship property Oyu Tolgoi.
Another reason is gold is going to get a hefty rebound once it bottoms out, and that is the second-most important metal at Oyu Tolgoi, behind Copper. Rounding out the top three is silver.
read more on Turquoise Hill
Showing posts with label Copper. Show all posts
Showing posts with label Copper. Show all posts
Friday, July 24, 2015
Monday, July 6, 2015
Outlook for Copper Mixed
Although copper prices per ton have been rebounding over the last couple of days, it isn't clear as to whether or not it has really found a bottom as some think, or it still has a way to go before bottoming out.
Bank of America Merrill Lynch (NYSE:BAC) is among those that believe copper isn't close to leveling off, as it projects it to drop to about $5,000 per ton over the next year; even after plunging about 9 percent so far in 2015.
In 2014 it was down 14 percent on the year.
read more ...
Bank of America Merrill Lynch (NYSE:BAC) is among those that believe copper isn't close to leveling off, as it projects it to drop to about $5,000 per ton over the next year; even after plunging about 9 percent so far in 2015.
In 2014 it was down 14 percent on the year.
read more ...
Thursday, March 7, 2013
Some Copper Analysts Getting Bullish on Alleged Recovery
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.
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.
Tuesday, November 6, 2012
Rio (RIO), Turquoise (TRQ) Gets Power at Oyu Tolgoi
Rio Tinto (NYSE: RIO) and partner Turquoise Hill Resources (NYSE: TRQ) had good news to announce Monday as the challenge of obtaining the required power to run the mine was successfully navigated. The partners are now set to begin production on the mine in the early part of 2013.
The agreement put in place is a $6 billion deal with Inner Mongolia Power Corp. The deal was held up by differences between Mongolia and China, where much of the power will be provided from.
In as early as six weeks the first ore from Oyu Tolgoi will be processed by Turquoise Hill Resources. The company confirmed its projections of commercial production beginning sometime in early part of next year.
Goals for Turquoise Hill are to have the Oyu Tolgoi mine in full production by 2018. Estimates are it'll cost from $3 billion to $4 billion for the company to accomplish the task.
Underground mining is expected to start in 2016, after a feasibility study is released by Turquoise Hill in 2013.
Annual production estimates for the mine are for 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver.
Turquoise Hill Resources, which owns the mine with the Mongolian government and Rio Tinto, hold a 66 percent stake in Oyu Tolgoi. Rio is running the operations.
Rio and Turqoise still face some uncertainties as the government has asked for Turquoise Hill to renegotiate the contract in place, something the company at this time has refused to do. Until that is solved, a cloud will of uncertainty will hang over the deal.
Once the uncertainty is removed and commercial production begins, Turquoise Hill Resources, especially, should take off in a major way on its share price. It could be one of the biggest mining success stories for many years, bringing shareholders some major success.
Friday, October 12, 2012
Copper, Zinc, Nickel, Tin all Drop
Many commodities took a big hit Friday, as copper, zinc, nickel, tin, gold, silver, platinum and palladium were all trending down, with copper, platinum and palladium taking the biggest hits as measured by percentages, and with platinum and palladium, also falling by the most in U.S. dollars.
Copper has been the major story this month regarding commodities, as it plunged to its lowest levels this week in three months, with falling demand for scrap-metal weighed on the base metal. Most of that is from the slowing demand in China, which has been working on slowing down its heated up economy.
For the last three months, discounts for scrap copper plunged by 25 percent. This is a dramatic turn around from September where copper prices got a boost from the implementation of further stimulus in the United States and Europe.
One of the best leading indicators for copper prices is scrap, and demand has been weakening for the last quarter, even with the bump in copper prices for September.
Copper futures fell to about $3.70 a pound on the Comex in New York for December delivery, at just before 1:30 PM EDT. For the week it is down two percent. Copper futures are trading about 40 cents above No. 2 scrap. That's ten cents above the 30 cents discount it traded at against copper in the 3rd quarter.
Credit Suisse (CS) estimates copper production in 2013 to be at 293,000 metric tons, in contrast to the 102,000 ton shortfall in 2012.
On the London Metal Exchange, copper for December delivery was down to $8,130 a ton ($3.69 a pound), a decline of 1.3 percent.
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.
Monday, July 30, 2012
Southern Copper (SCCO) Earnings Drop Even Though Production Jumps
Even though production of metals silver, copper, molybdenum and zinc were all up for the first half for Southern Copper (SCCO), it wasn't able to translate into earnings, as the company reported a drop in earnings from $658 million million or 77 cents a share for the second quarter of 2011 to $564 million or 66 cents a share for the second quarter of 2012.
For the first half, net income jumped to $1.19 billion, or 1.39 a share, a 4.3 percent increase over the $1.32 a share during the first six months of 2011.
The company received approval from the Board of Directors for $1.5 billion in capital expenditures for 2012. That will be used primarily for projects in Peru and Mexico, and some for replacement capital and maintenance.
For the first half and second quarter, copper production rose significantly based on better recoveries and ore grades.
"This increase was the result of higher production at the Cuajone, La Caridad and Buenavista mines, which increased production by 31 percent, 18 percent and 4 percent, respectively due to higher ore grades and recoveries," said Southern Copper.
In the second quarter copper production rose to 160,595 tons, a 10 percent increase. For the first half copper production was up 16 percent, reaching 270,435 tons.
Silver in the first half rose 14 percent, climbing from from 6,110,000 ounces in the first half of 2011 to 6,934,000 ounces.
Silver mine production rose 10 percent in the second quarter from 3,197,000 ounces in the second-quarter 2011 to 3,514,000 ounces. The company said it was "principally as a result of higher production at our Cuajone (+31 percent), Buenavista (+28 percent) and La Caridad (+12 percent) mines," said the company.
Zinc production was up 8 percent in the first half, rising from 41,361 tons in the first six months of last year to 44,910 tons. In the second quarter it rose from 21,366 tons in the second quarter of 2011 to 22,227 tons, a four percent gain.
Molybdenum production was up 6 percent in the first half, jumping from 8,775 tons during the first half of last year to 9,310 tons. In the second quarter Molybdenum rose from 4,502 tons in the second quarter of 2011 to 4,687 tons.
Talking about the performance of Southern Copper Corporation in the first half, German Larrea said, "Looking beyond the current volatile markets, the medium to long-term outlook remains positive for metals, as strong demand growth from China and the emerging economies is poised to continue."
On July 26, the board of Southern Copper authorized a cash dividend of 24 cents a share, payable on August 28, 2012.
Southern Copper closed Monday at $32.09, gaining $0.42, or 1.33 percent.
For the first half, net income jumped to $1.19 billion, or 1.39 a share, a 4.3 percent increase over the $1.32 a share during the first six months of 2011.
The company received approval from the Board of Directors for $1.5 billion in capital expenditures for 2012. That will be used primarily for projects in Peru and Mexico, and some for replacement capital and maintenance.
For the first half and second quarter, copper production rose significantly based on better recoveries and ore grades.
"This increase was the result of higher production at the Cuajone, La Caridad and Buenavista mines, which increased production by 31 percent, 18 percent and 4 percent, respectively due to higher ore grades and recoveries," said Southern Copper.
In the second quarter copper production rose to 160,595 tons, a 10 percent increase. For the first half copper production was up 16 percent, reaching 270,435 tons.
Silver in the first half rose 14 percent, climbing from from 6,110,000 ounces in the first half of 2011 to 6,934,000 ounces.
Silver mine production rose 10 percent in the second quarter from 3,197,000 ounces in the second-quarter 2011 to 3,514,000 ounces. The company said it was "principally as a result of higher production at our Cuajone (+31 percent), Buenavista (+28 percent) and La Caridad (+12 percent) mines," said the company.
Zinc production was up 8 percent in the first half, rising from 41,361 tons in the first six months of last year to 44,910 tons. In the second quarter it rose from 21,366 tons in the second quarter of 2011 to 22,227 tons, a four percent gain.
Molybdenum production was up 6 percent in the first half, jumping from 8,775 tons during the first half of last year to 9,310 tons. In the second quarter Molybdenum rose from 4,502 tons in the second quarter of 2011 to 4,687 tons.
Talking about the performance of Southern Copper Corporation in the first half, German Larrea said, "Looking beyond the current volatile markets, the medium to long-term outlook remains positive for metals, as strong demand growth from China and the emerging economies is poised to continue."
On July 26, the board of Southern Copper authorized a cash dividend of 24 cents a share, payable on August 28, 2012.
Southern Copper closed Monday at $32.09, gaining $0.42, or 1.33 percent.
Tuesday, July 10, 2012
China's Drop in Imports Not a Sign of Significant Slowdown
At first glance it appeared after the numbers came out in China concerning that the decline in imports pointed to a disaster in China. But that wasn't and isn't the case, but is rather a reflection of a commodity management strategy by the country.
When China announced its growth in imports had been slashed by almost half of analysts projected in June, traders and investors pushed down the price of commodities and equities, as coupled with weak financial reports from American companies, seemed to point to a catastrophic quarter.
Imports in China fell to 6.6 percent year-over-year in June, dropping from the projected 12.7 percent analysts were looking for.
Exports by the Middle Kingdom, on the other hand, jumped to 11.3 percent, easily surpassing the estimated 9.9 percent analysts estimated.
Most of the decline in imports to the company are a result of Chinese buyers building up commodity inventory over the last several months, which resulted in the need to use up those inventories before buying large in the market again.
For June crude oil and copper imports appeared to be hammered, with copper imports falling by 17.5 percent and crude by 15 percent from the prior month. Most should have known that there was something unusual about those numbers, even with the strained global economic situation we're in.
Expectations are China imports will probably be weak for several months while it works down its inventory.
It was noted by analysts covering China that the low imports have nothing to do with consumer spending in China, as it does in the United States, because Chinese imports are mostly commodities used in for infrastructure projects and manufacturing.
For the annual goal of a growth of 10 percent for China in 2012, China will likely reach it, although economically devastated Europe, along with the weak American economy, make it unlikely China's goal of export growth of 10 percent will be met. Exports are probably going to be more in the 8 or 9 percent range for the country.
Chinese imports should climb in the second half as commodity inventory is used up.
When China announced its growth in imports had been slashed by almost half of analysts projected in June, traders and investors pushed down the price of commodities and equities, as coupled with weak financial reports from American companies, seemed to point to a catastrophic quarter.
Imports in China fell to 6.6 percent year-over-year in June, dropping from the projected 12.7 percent analysts were looking for.
Exports by the Middle Kingdom, on the other hand, jumped to 11.3 percent, easily surpassing the estimated 9.9 percent analysts estimated.
Most of the decline in imports to the company are a result of Chinese buyers building up commodity inventory over the last several months, which resulted in the need to use up those inventories before buying large in the market again.
For June crude oil and copper imports appeared to be hammered, with copper imports falling by 17.5 percent and crude by 15 percent from the prior month. Most should have known that there was something unusual about those numbers, even with the strained global economic situation we're in.
Expectations are China imports will probably be weak for several months while it works down its inventory.
It was noted by analysts covering China that the low imports have nothing to do with consumer spending in China, as it does in the United States, because Chinese imports are mostly commodities used in for infrastructure projects and manufacturing.
For the annual goal of a growth of 10 percent for China in 2012, China will likely reach it, although economically devastated Europe, along with the weak American economy, make it unlikely China's goal of export growth of 10 percent will be met. Exports are probably going to be more in the 8 or 9 percent range for the country.
Chinese imports should climb in the second half as commodity inventory is used up.
Monday, October 4, 2010
BHP (NYSE:BHP) Remains Attractive to Dahlman Rose
BHP Billiton (NYSE:BHP) has garnered the attention of the financial media recently largely on their bid for Potash Corp. (NYSE:POT) and the resultant resistance to the potential acquisition from the giant fertilizer company.
But BHP has a lot of other things going on than that, as Dahlman Rose analysts recently said after they toured the South American copper assets held by the company, which have enormous upside potential for expansion.
Even so, they did note there will be huge capital expenditure to bring operations to high levels.
Mines specifically looked at by Dahlman were Spence, Antamina and Escondida, which are among the largest in the world as far as copper ore goes.
Copper prices are expected to continue climbing based on the costs mentioned, but also the shrinking ore grades. That should offer support for copper prices, but demand still plays a factor based on macroeconomic conditions, which continue to remain weak.
BHP was trading at $76.19, down $1.50, or 1.93 percent, at $1:03 PM EDT. Dahlman has a price target of $100 on BHP.
But BHP has a lot of other things going on than that, as Dahlman Rose analysts recently said after they toured the South American copper assets held by the company, which have enormous upside potential for expansion.
Even so, they did note there will be huge capital expenditure to bring operations to high levels.
Mines specifically looked at by Dahlman were Spence, Antamina and Escondida, which are among the largest in the world as far as copper ore goes.
Copper prices are expected to continue climbing based on the costs mentioned, but also the shrinking ore grades. That should offer support for copper prices, but demand still plays a factor based on macroeconomic conditions, which continue to remain weak.
BHP was trading at $76.19, down $1.50, or 1.93 percent, at $1:03 PM EDT. Dahlman has a price target of $100 on BHP.
Tuesday, September 28, 2010
Citigroup (NYSE:C) Says Copper Prices Could Go Either Way
Citigroup (NYSE:C) said copper is in a period of flux depending on reliable economic data and the ongoing depth and length of the weak housing market.
The giant bank said it would take "Some dramatically good economic news" to push copper above its resistance level of $8,000, although the financial institution said there's a 25 percent chance of that happening.
It's hard to see what that 25 percent chance is based upon, but we'll see.
As far a big drop in price, Citi sees that equally possible as a big jump, saying that has about a 25 percent chance of happening as well.
Dropping from five-month highs today, Citi said the probability is copper will remain level for some time until the economics play out.
Expected weak economic growth has the market believing copper will probably pull back some more, as there is nothing in housing to signal a reason that will change.
The giant bank said it would take "Some dramatically good economic news" to push copper above its resistance level of $8,000, although the financial institution said there's a 25 percent chance of that happening.
It's hard to see what that 25 percent chance is based upon, but we'll see.
As far a big drop in price, Citi sees that equally possible as a big jump, saying that has about a 25 percent chance of happening as well.
Dropping from five-month highs today, Citi said the probability is copper will remain level for some time until the economics play out.
Expected weak economic growth has the market believing copper will probably pull back some more, as there is nothing in housing to signal a reason that will change.
Monday, September 20, 2010
Goldman (NYSE:GS) Likes Energy, Down on Agriculture
Goldman Sachs Group Inc. (NYSE:GS) said over the next 12 months they see energy as the top performer in the commodity sector, while they view agriculture as the weakest.
Energy is projected to rise at a 27 percent clip, followed by precious metals at 17 percent, and industrial metals at 15 percent. Agriculture on the other hand, is expected to plummet by 10 percent during the same time.
The analysts' report said, "For the more cyclical commodities, oil and copper, while continued indications of more supportive policy in the U.S. and China, better macro data in these key countries, and improving commodity data have pushed prices higher within their respective trading ranges, we continue to expect them to break out to the upside in coming months."
In the short term they do see some agriculture products doing well, as they raised their outlook on raw sugar, cotton, corn and arabica.
Energy is projected to rise at a 27 percent clip, followed by precious metals at 17 percent, and industrial metals at 15 percent. Agriculture on the other hand, is expected to plummet by 10 percent during the same time.
The analysts' report said, "For the more cyclical commodities, oil and copper, while continued indications of more supportive policy in the U.S. and China, better macro data in these key countries, and improving commodity data have pushed prices higher within their respective trading ranges, we continue to expect them to break out to the upside in coming months."
In the short term they do see some agriculture products doing well, as they raised their outlook on raw sugar, cotton, corn and arabica.
Wednesday, September 1, 2010
John Paulson's NovaGold (NYSE:NG) Stake at 9.1 Percent
John Paulson now owns 20,181,818 shares of NovaGold Resources Inc. (NYSE:NG), according to a 13D filing he just filed.
Total cost for the shares was listed at $113,003,059, which equals about $5.59 a share. That represents a 9.1 percent stake in the gold miner.
This isn't an increase in the number of shares, as it is the same as the holdings in the last two quarters, back to the period ending March 31, 2010.
Primarily a gold mining company, NovaGold also produces ancillary metals like silver, copper and zinc.
NovaGold's mining assets are located in North America.
Total cost for the shares was listed at $113,003,059, which equals about $5.59 a share. That represents a 9.1 percent stake in the gold miner.
This isn't an increase in the number of shares, as it is the same as the holdings in the last two quarters, back to the period ending March 31, 2010.
Primarily a gold mining company, NovaGold also produces ancillary metals like silver, copper and zinc.
NovaGold's mining assets are located in North America.
Thursday, July 29, 2010
Vale (NYSE:VALE) Acquiring Copper Company to Diversify Income Streams
In a move to diversify their income streams, Vale (NYSE:VALE) announced they're acquiring Brazil copper miner Paranapanema for $1.13 billion, a 20 percent premium for the company.
This is a timely move for the miner, as iron ore prices are high, and to acquire a company strategically in a time of strength is a wise move in my estimation.
Even though they did pay a premium for Paranapanema in a time of depressed copper prices, copper prices will inevitably move up again, and when that happens, Vale SA has positioned themselves strongly to take advantage of that.
Vale paid an actual premium of 22.4 percent, measured by the average share price of Paranapanema over the last 90 days. Vale will have a 100 percent stake at the close of the deal.
With 55 percent of revenue coming from iron ore, Vale has been wanting to expand beyond that to make other metals a larger part of their revenue. Copper was only 3 percent of revenue in the first quarter for Vale.
Vale also expanded into fertilizer earlier in the year, acquiring Bunge's (NYSE:BG) domestic fertilizer assets for close to $3.8 billion.
The earnings report for Vale is scheduled after close of the markets today.
This is a timely move for the miner, as iron ore prices are high, and to acquire a company strategically in a time of strength is a wise move in my estimation.
Even though they did pay a premium for Paranapanema in a time of depressed copper prices, copper prices will inevitably move up again, and when that happens, Vale SA has positioned themselves strongly to take advantage of that.
Vale paid an actual premium of 22.4 percent, measured by the average share price of Paranapanema over the last 90 days. Vale will have a 100 percent stake at the close of the deal.
With 55 percent of revenue coming from iron ore, Vale has been wanting to expand beyond that to make other metals a larger part of their revenue. Copper was only 3 percent of revenue in the first quarter for Vale.
Vale also expanded into fertilizer earlier in the year, acquiring Bunge's (NYSE:BG) domestic fertilizer assets for close to $3.8 billion.
The earnings report for Vale is scheduled after close of the markets today.
Thursday, July 22, 2010
UBS (NYSE:UBS) Lowers Freeport (NYSE:FCX) Price Target
Freeport-McMoRan (NYSE:FCX) had its price target lowered by UBS (NYSE:UBS) today, although they maintained their "Buy" rating on the mining company.
"We revised our EPS estimates for 2010/2011/2012 from $6.86/9.32/7.65 to $7.44/8.73/7.91 to reflect the updated production (Grasberg, North America), depreciation and tax rates," said a UBS analyst.
Freeport just came off a solid quarter, although questions remain for all miners if the recent lower prices of raw materials will cut into earnings going forward.
The miner produces copper, gold and molybdenum.
"We revised our EPS estimates for 2010/2011/2012 from $6.86/9.32/7.65 to $7.44/8.73/7.91 to reflect the updated production (Grasberg, North America), depreciation and tax rates," said a UBS analyst.
Freeport just came off a solid quarter, although questions remain for all miners if the recent lower prices of raw materials will cut into earnings going forward.
The miner produces copper, gold and molybdenum.
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.
Thursday, June 24, 2010
Copper Prices Rising, But Not Demand
Copper prices have risen again today, the third day in a row, even after the horrendous fall in new housing starts, which industry accounts for the majority of copper demand.
Housing starts in the United States plummeted by 33 percent, the largest decline ever.
So the fact that copper prices are going up while demand is going down, tells us that there is something else going on which is driving the price besides demand.
There is of course, and that something is low interest rates, which will continue to drive down the appeal of the U.S. dollar, while driving up the prices of commodities.
This isn't to say that demand for copper won't be relevant, as it's sure to keep a damper on how high copper prices will go. But it does mean copper prices have some room to move up as money looks for a place to grow.
The result of that will bring inflation, and inflation will of course push commodity prices higher overall, even when demand is low. As I said though, demand will affect how far those prices can rise, even in a low-interest rate environment.
Housing starts in the United States plummeted by 33 percent, the largest decline ever.
So the fact that copper prices are going up while demand is going down, tells us that there is something else going on which is driving the price besides demand.
There is of course, and that something is low interest rates, which will continue to drive down the appeal of the U.S. dollar, while driving up the prices of commodities.
This isn't to say that demand for copper won't be relevant, as it's sure to keep a damper on how high copper prices will go. But it does mean copper prices have some room to move up as money looks for a place to grow.
The result of that will bring inflation, and inflation will of course push commodity prices higher overall, even when demand is low. As I said though, demand will affect how far those prices can rise, even in a low-interest rate environment.
Monday, June 14, 2010
Afghanistan: New Commodity Capital of the World?
Almost $1 trillion in mineral deposits have been found in Afghanistan, generating the question of whether there is an industry the people of Afghanistan can give themselves to in order to take their mind off of war and give hope to the region.
For years many outsiders have noted the country has little to offer in natural resources, and so had small chance of laying a foundation for a more prosperous future.
This isn't something that can be developed overnight, as it usually takes 10 years to get a mine going once the project is discovered.
Still, Afghanistan's future isn't one that can be looked upon as anything that will be successful in the short term, so it does not only give hope, but should put in place plans which will hopefully being the process sometime soon.
Some of the larger veins of minerals discovered include copper, cobalt, iron, lithium and gold.
The potential is evidently so great that it is expected significant investment could be brought to the country even before the mines are deemed profitable, although that is somewhat standard in the mining industry in general, this seems to imply proven reserves before operations even begin, making the potential for early investment a real possibility.
For years many outsiders have noted the country has little to offer in natural resources, and so had small chance of laying a foundation for a more prosperous future.
This isn't something that can be developed overnight, as it usually takes 10 years to get a mine going once the project is discovered.
Still, Afghanistan's future isn't one that can be looked upon as anything that will be successful in the short term, so it does not only give hope, but should put in place plans which will hopefully being the process sometime soon.
Some of the larger veins of minerals discovered include copper, cobalt, iron, lithium and gold.
The potential is evidently so great that it is expected significant investment could be brought to the country even before the mines are deemed profitable, although that is somewhat standard in the mining industry in general, this seems to imply proven reserves before operations even begin, making the potential for early investment a real possibility.
Monday, June 7, 2010
Copper Falls on Renewed Recession Fears
Copper prices fell even further today, dropping by 5 cents to $2.7660 a pound, or 1.9 percent, as recession worries return as macro-economic data confirms what a number of economists and investors have thought, the we had never left the recession, or there was going to be a double-dip recession.
However you want to describe it, there is little positive happening economically to justify anyone saying we're in a recovery, even if they want to say it's a slow recovery. How about a "no" recovery, which is closer to the truth.
All that has happened is the Obama administration and Federal Reserve spent hundreds of billions with literally no effect.
What had been hoped of course was they would buy time so the economy would recover, but that has failed, and the idea of pumping hundreds of billions more into the economy hopefully won't even be considered, as we are already under water as a nation (referring to the U.S.) and further debt will bring up past the point of no return, if we're not already there.
The nail in the coffin was the jobs report, which finally revealed the faux job number being reported as a reason to justify saying we were in an economic recovery. Now that those that were unconvinced have to face the reality that the private sector isn't producing any jobs to speak up, and the props of hundreds of billions has left us in worse shape, and nothing to show for it except the assertion things would have been worst if the government hadn't taken those steps.
That's an unprovable theory, and in fact a small number of economists have stated from the beginning that it wouldn't work and the government and politicians needed to keep their hands off the economy and let it adjust and fix itself.
Of course they couldn't resist spending our children's and grandchildren's future away, and focused shortsightedly on the present, disregarding the consequences they were warned about.
Either way, we're going to experience difficult times ahead of us, and as copper prices show, there is already a cut in demand, and more to come.
This doesn't mean all commodity prices will fall, as iron ore prices were upped again today for Japanese steelmakers by Rio Tinto (NYSE:RTP) and BHP Billiton (NYSE:BHP); although it's questionable as to the sustainability of that move.
But other than gold, and to a lesser degree, possibly silver, most commodity prices will be under strong downward pressure in the near future, as the U.S., China and Europe are all slowing down, and there are really no places to go to make up for that.
However you want to describe it, there is little positive happening economically to justify anyone saying we're in a recovery, even if they want to say it's a slow recovery. How about a "no" recovery, which is closer to the truth.
All that has happened is the Obama administration and Federal Reserve spent hundreds of billions with literally no effect.
What had been hoped of course was they would buy time so the economy would recover, but that has failed, and the idea of pumping hundreds of billions more into the economy hopefully won't even be considered, as we are already under water as a nation (referring to the U.S.) and further debt will bring up past the point of no return, if we're not already there.
The nail in the coffin was the jobs report, which finally revealed the faux job number being reported as a reason to justify saying we were in an economic recovery. Now that those that were unconvinced have to face the reality that the private sector isn't producing any jobs to speak up, and the props of hundreds of billions has left us in worse shape, and nothing to show for it except the assertion things would have been worst if the government hadn't taken those steps.
That's an unprovable theory, and in fact a small number of economists have stated from the beginning that it wouldn't work and the government and politicians needed to keep their hands off the economy and let it adjust and fix itself.
Of course they couldn't resist spending our children's and grandchildren's future away, and focused shortsightedly on the present, disregarding the consequences they were warned about.
Either way, we're going to experience difficult times ahead of us, and as copper prices show, there is already a cut in demand, and more to come.
This doesn't mean all commodity prices will fall, as iron ore prices were upped again today for Japanese steelmakers by Rio Tinto (NYSE:RTP) and BHP Billiton (NYSE:BHP); although it's questionable as to the sustainability of that move.
But other than gold, and to a lesser degree, possibly silver, most commodity prices will be under strong downward pressure in the near future, as the U.S., China and Europe are all slowing down, and there are really no places to go to make up for that.
Friday, May 21, 2010
Freeport-McMoRan (NYSE:FCX), Lundin Mining (TSE:LUN) Tenke Project to Exceed Annual Estimates
The Tenke Fungurume Mining copper and cobalt project in the Democratic Republic of Congo will surpass its projected targets in 2010, according to Richard Robinson, Social Programs Manager of the mine, benefiting Freeport-McMoRan (NYSE:FCX) and Lundin Mining (TSE:LUN) more than expected, along with their other partner, Gecamines, the state mining firm.
Freeport-McMoRan has the largest stake in the project at 57.75 percent, Lundin in next with a share of 24.75 percent, and Gecamines has a 17.5 percent stake in the mine.
The mine has now reached production capacity, producing 2,300 tons of cobalt and 29,000 tons of copper in the first quarter. Projected out, that will go beyond the estimated 8,000 tons of cobalt and 115,000 tons of copper originally targeted for the year.
There are an estimated 119 million ton of reserves, having average ore grades of 0.4 percent cobalt and 2.6 percent copper.
Freeport-McMoRan has the largest stake in the project at 57.75 percent, Lundin in next with a share of 24.75 percent, and Gecamines has a 17.5 percent stake in the mine.
The mine has now reached production capacity, producing 2,300 tons of cobalt and 29,000 tons of copper in the first quarter. Projected out, that will go beyond the estimated 8,000 tons of cobalt and 115,000 tons of copper originally targeted for the year.
There are an estimated 119 million ton of reserves, having average ore grades of 0.4 percent cobalt and 2.6 percent copper.
Monday, May 17, 2010
Commodity Prices Plunge Today
Commodity prices today are down significantly, as industrial metals led the plunge, as concerns over demand from Europe and China hinder the market.
Fighting the debt in Europe and inflation in China has optimism in commodities shake for the first time in awhile, and some companies and countries are concerned over how much the possible drop in demand will have an effect upon them.
Metals like copper, tin, zinc, lead and aluminum are all down, as traders and investors look at the near-term for the metals, and whether or not the recently expected commodity demand is sustainable over the mid-term.
This also seems to have affected the price of oil and gas, as the question now is whether or not consumers will travel and spend as much with this weighing on their minds.
Fighting the debt in Europe and inflation in China has optimism in commodities shake for the first time in awhile, and some companies and countries are concerned over how much the possible drop in demand will have an effect upon them.
Metals like copper, tin, zinc, lead and aluminum are all down, as traders and investors look at the near-term for the metals, and whether or not the recently expected commodity demand is sustainable over the mid-term.
This also seems to have affected the price of oil and gas, as the question now is whether or not consumers will travel and spend as much with this weighing on their minds.
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