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.
Showing posts with label Freeport-McMoRan. Show all posts
Showing posts with label Freeport-McMoRan. Show all posts
Wednesday, March 6, 2013
Tuesday, February 5, 2013
Freeport (FCX) Could Soar on Copper Demand
Some analysts have questioned the sustainability of copper prices based upon the existing 82 mines that are scheduled to come online by 2020.
The problem with those assumptions is there are already significant delays of a number of those mines, and over a couple of decades there are sure to be many more. So even though there are in fact plans for 82 mines to be operating by 2020, there is no guarantee it'll come close to those numbers.
And of course that leaves 7 years of uncertainty and no guarantees as to how much copper will be available to the markets.
What also needs to be taken into consideration concerning copper supply is Escondida, the current largest producer of copper, has had production over the last five years plunge by 25 percent.
Together this produces a weak production outlook for copper in the near term, measured by a time period up to seven years, based upon projected copper mines coming online.
We must be careful not to make investment decisions based upon projections as to mine openings, which are very unstable and unreliable, rather we must look at probabilities and realities, which at this time favor growing demand and falling supply for several years.
How that plays in Freeport's favor is in recent history, 2009 - 2010, when copper prices took off, it soared from under $10 a share to almost $60 a share in that short period of time. It's likely to happen again, assuming the copper scenario plays out as expected; meaning supply is more constrained than believed by some analysts.
Another positive factor for Freeport is it is currently trading at only 7.5 times 2014 earnings. There is also the nice 3.5 percent dividend to consider.
There are those that could be rightly concerned over the recent acquisitions of Plain Exploration (PXP) and McMoRan Exploration (MMR), as the move towards diversification could water down the effect of copper prices on Freeport's bottom line. Over the long term that could be true (although the benefits of the assets coming with those acquisition are a positive for the company over time), in the short term it's unlikely to have any significant impact on the share price of Freeport, which should move in unison with the price of copper.
If the underlying assumptions are correct, that should be good news for Freeport investors.
The problem with those assumptions is there are already significant delays of a number of those mines, and over a couple of decades there are sure to be many more. So even though there are in fact plans for 82 mines to be operating by 2020, there is no guarantee it'll come close to those numbers.
And of course that leaves 7 years of uncertainty and no guarantees as to how much copper will be available to the markets.
What also needs to be taken into consideration concerning copper supply is Escondida, the current largest producer of copper, has had production over the last five years plunge by 25 percent.
Together this produces a weak production outlook for copper in the near term, measured by a time period up to seven years, based upon projected copper mines coming online.
We must be careful not to make investment decisions based upon projections as to mine openings, which are very unstable and unreliable, rather we must look at probabilities and realities, which at this time favor growing demand and falling supply for several years.
How that plays in Freeport's favor is in recent history, 2009 - 2010, when copper prices took off, it soared from under $10 a share to almost $60 a share in that short period of time. It's likely to happen again, assuming the copper scenario plays out as expected; meaning supply is more constrained than believed by some analysts.
Another positive factor for Freeport is it is currently trading at only 7.5 times 2014 earnings. There is also the nice 3.5 percent dividend to consider.
There are those that could be rightly concerned over the recent acquisitions of Plain Exploration (PXP) and McMoRan Exploration (MMR), as the move towards diversification could water down the effect of copper prices on Freeport's bottom line. Over the long term that could be true (although the benefits of the assets coming with those acquisition are a positive for the company over time), in the short term it's unlikely to have any significant impact on the share price of Freeport, which should move in unison with the price of copper.
If the underlying assumptions are correct, that should be good news for Freeport investors.
Monday, January 23, 2012
McMoRan (MMR) (ANR) (FST) (FCX) (CLR) (SLB) (MMR) Ratings, Price Targets
McMoRan Exploration (NYSE: MMR), Alpha Natural Resources (NYSE: ANR), Forest Oil Co. (NYSE: FST), Freeport McMoRan Copper and Gold (NYSE: FCX), Continental Resources (NYSE: CLR), Schlumberger (NYSE: SLB) and McMoRan Exploration (NYSE: MMR) ratings and price targets.
Alpha Natural Resources (ANR) had its price target lowered by Howard Weil from $44.00 to $39.00. They have an “Outperform” rating on the company.
Forest Oil (FST) was downgraded by Jefferies Group (NYSE:JEF) from a “Buy” rating to a “Hold” rating.
Freeport McMoRan Copper and Gold (FCX) had its price target raised by Citigroup (NYSE:C) to $43.00.
Continental Resources (CLR) was downgraded by Jefferies Group from a “Buy” rating to a “Hold” rating.
Schlumberger (SLB) had its price target lowered by Credit Suisse (NYSE:CS) to $92.00. They have an “Outperform” rating on the company.
McMoRan Exploration (MMR) was downgraded by JPMorgan Chase & Co. (NYSE:JPM) from a “Neutral” rating to an “Underweight” rating.
Alpha Natural Resources (ANR) had its price target lowered by Howard Weil from $44.00 to $39.00. They have an “Outperform” rating on the company.
Forest Oil (FST) was downgraded by Jefferies Group (NYSE:JEF) from a “Buy” rating to a “Hold” rating.
Freeport McMoRan Copper and Gold (FCX) had its price target raised by Citigroup (NYSE:C) to $43.00.
Continental Resources (CLR) was downgraded by Jefferies Group from a “Buy” rating to a “Hold” rating.
Schlumberger (SLB) had its price target lowered by Credit Suisse (NYSE:CS) to $92.00. They have an “Outperform” rating on the company.
McMoRan Exploration (MMR) was downgraded by JPMorgan Chase & Co. (NYSE:JPM) from a “Neutral” rating to an “Underweight” rating.
Friday, January 13, 2012
Freeport (FCX) (AG) (GSM) (ED) (CNH) (NE) Ratings, Price Targets
Freeport McMoRan Copper and Gold (NYSE: FCX), First Majestic Silver (NYSE: AG), Globe Specialty Metals, Inc. (NYSE: GSM), Consolidated Edison, Inc. (NYSE: ED), CNH Global (NYSE: CNH) and Noble (NYSE: NE) ratings and price targets.
Freeport McMoRan Copper and Gold (FCX) was downgraded by Standpoint Research from a “Buy” rating to a “Hold” rating. They have a price target of $48.00 on the company.
First Majestic Silver (AG) was downgraded by UBS AG (NYSE:UBS) from a “Buy” rating to a “Neutral” rating.
Globe Specialty Metals, Inc. (GSM) had its price target lowered by Auriga to $17.00. They have a “Buy” rating on the company.
Consolidated Edison, Inc. (ED) had its price target raised by Jefferies Group (NYSE:JEF) to $50.50. They have an “Underperform” rating on the company.
CNH Global (CNH) had its price target raised by Jefferies Group to $54.00. They have a “Hold” rating on the company.
Noble (NE) had its “Hold” rating reiterated by Canaccord Genuity.
Freeport McMoRan Copper and Gold (FCX) was downgraded by Standpoint Research from a “Buy” rating to a “Hold” rating. They have a price target of $48.00 on the company.
First Majestic Silver (AG) was downgraded by UBS AG (NYSE:UBS) from a “Buy” rating to a “Neutral” rating.
Globe Specialty Metals, Inc. (GSM) had its price target lowered by Auriga to $17.00. They have a “Buy” rating on the company.
Consolidated Edison, Inc. (ED) had its price target raised by Jefferies Group (NYSE:JEF) to $50.50. They have an “Underperform” rating on the company.
CNH Global (CNH) had its price target raised by Jefferies Group to $54.00. They have a “Hold” rating on the company.
Noble (NE) had its “Hold” rating reiterated by Canaccord Genuity.
Friday, January 21, 2011
Citigroup (NYSE:C) Downgrades Freeport (NYSE:FCX) on Copper Prices
Citigroup (NYSE:C) downgraded Freeport-McMoRan Copper & Gold (NYSE:FCX), citing high copper prices discounting otherwise attractive supply-demand fundamentals.
The giant bank said they are still confident in the strategies of the management and their deployment of cash flow, but in a sense, they're victims of their own success, and will probably be taking a breather.
Citigroup downgraded Freeport-McMoRan Copper & Gold "Buy" to "Hold." They also lowered their price target on Freeport from $124 to $118.
Freeport closed Friday at $108.40, down $2.50, or $2.25 percent.
The giant bank said they are still confident in the strategies of the management and their deployment of cash flow, but in a sense, they're victims of their own success, and will probably be taking a breather.
Citigroup downgraded Freeport-McMoRan Copper & Gold "Buy" to "Hold." They also lowered their price target on Freeport from $124 to $118.
Freeport closed Friday at $108.40, down $2.50, or $2.25 percent.
Tuesday, November 2, 2010
Freeport (NYSE:FCX), Alcoa (NYSE:AA), BHP (NYSE:BHP) Follow Commodity Prices Up
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), Alcoa Inc. (NYSE:AA), BHP Billiton (NYSE:BHP) are all trading higher today as the U.S. dollar plunged in value in anticipation of the decision by the Federal Reserve to inflate again, or in other words, implement more quantitative easing through buying more government debt.
Commodities were up and the miners mentioned above, as well as others followed.
Gold prices, while up moderately today, are taking a breather before the resumption of their upward climb, as the implementations of more printing of money will drive gold prices up on inflation concerns, as well as a plethora of other reasons.
Many gold miners are strongly positioned to take advantage of this, as well as other commodity-based corporations, which will be positively impacted by the increased prices of commodities.
Something to look for in any of the commodity companies will be those with strong cost-control measures in place, as their margins and earnings should soar during this time of inflating from the Federal Reserve, which most believe will be conducted incrementally over a period of time, keeping the price of commodities up for the duration, and probably longer, as demand is still a factor, even with the additional help of higher prices.
For BHP, shareholders and investors are awaiting the decision tomorrow by Canada on whether or not to allow the deal to go forward, which if is allowed, could dramatically push the share price of BHP up when also including the announced actions of the Federal Reserve.
Commodities were up and the miners mentioned above, as well as others followed.
Gold prices, while up moderately today, are taking a breather before the resumption of their upward climb, as the implementations of more printing of money will drive gold prices up on inflation concerns, as well as a plethora of other reasons.
Many gold miners are strongly positioned to take advantage of this, as well as other commodity-based corporations, which will be positively impacted by the increased prices of commodities.
Something to look for in any of the commodity companies will be those with strong cost-control measures in place, as their margins and earnings should soar during this time of inflating from the Federal Reserve, which most believe will be conducted incrementally over a period of time, keeping the price of commodities up for the duration, and probably longer, as demand is still a factor, even with the additional help of higher prices.
For BHP, shareholders and investors are awaiting the decision tomorrow by Canada on whether or not to allow the deal to go forward, which if is allowed, could dramatically push the share price of BHP up when also including the announced actions of the Federal Reserve.
Monday, October 25, 2010
Freeport (NYSE:FCX) Ready to Build Rail Lines to Transport Copper from Tenke Project
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) may be ready to build rail lines to transport ore from its Tenke project in Democratic Republic of Congo.
The possibility is being brought about after an agreement between the giant miner and the government of the African nation came after a 3-year battle over contract terms was resolved.
Freeport’s Chief Executive Officer Richard Adkerson said production will ultimately double at Tenke as they expand the operations there.
Tenke should produce up to 290 million pounds of copper and 18 million pounds of cobalt annually, according to Adkerson.
Revisions in the contract include the conversion of $50 million in debt into equity and pay up to $30 million in installments based on certain metrics being attained.
Concerning copper reserves, royalties of $1.2 million will be paid for each 100,000 metric tons of copper reserves above 2.5 million tons, and another $5 million for surface area fees.
The possibility is being brought about after an agreement between the giant miner and the government of the African nation came after a 3-year battle over contract terms was resolved.
Freeport’s Chief Executive Officer Richard Adkerson said production will ultimately double at Tenke as they expand the operations there.
Tenke should produce up to 290 million pounds of copper and 18 million pounds of cobalt annually, according to Adkerson.
Revisions in the contract include the conversion of $50 million in debt into equity and pay up to $30 million in installments based on certain metrics being attained.
Concerning copper reserves, royalties of $1.2 million will be paid for each 100,000 metric tons of copper reserves above 2.5 million tons, and another $5 million for surface area fees.
Freeport (NYSE:FCX), Lundin (TSE:LUN) Reach Agreement on Tenke
After a long period of negotiations with the Congolese government, Freeport-McMoRan Copper & Gold Inc (NYSE:FCX) and Lundin Mining (TSE:LUN) have come to an agreement with them on a Tenke contract.
While continuing to maintain majority interest in Tenke, Freeport did have to give up 1.75 of there 57.75 percent stake in Tenke, and drop it to 56 percent. Lundin Mining's stake dropped to $24.75 percent.
BMO Capital Markets said, "The impact from the lower equity in Tenke is estimated at less than 1 percent for Freeport-McMoRan and less than 2 percent for Lundin."
The value of the Tenke Fungurume copper and cobalt project is an estimated $2 billion.
Together the two companies had to pay over $70 million in fees to the Democratic Republic of Congo, who via their state-owned company Gecamines, raised their stake in Tenke to 20 percent.
While winning some important concessions, the process and resultant changes could backfire on Congo, as many watching the process are more concerned than ever about doing business in the country.
All the concessions don't even include the high income tax rate of 30 percent, a royalty rate of 2 percent, and an export fee of 1 percent.
While continuing to maintain majority interest in Tenke, Freeport did have to give up 1.75 of there 57.75 percent stake in Tenke, and drop it to 56 percent. Lundin Mining's stake dropped to $24.75 percent.
BMO Capital Markets said, "The impact from the lower equity in Tenke is estimated at less than 1 percent for Freeport-McMoRan and less than 2 percent for Lundin."
The value of the Tenke Fungurume copper and cobalt project is an estimated $2 billion.
Together the two companies had to pay over $70 million in fees to the Democratic Republic of Congo, who via their state-owned company Gecamines, raised their stake in Tenke to 20 percent.
While winning some important concessions, the process and resultant changes could backfire on Congo, as many watching the process are more concerned than ever about doing business in the country.
All the concessions don't even include the high income tax rate of 30 percent, a royalty rate of 2 percent, and an export fee of 1 percent.
Goldman Sachs (NYSE:GS) Likes Freeport-McMoRan (NYSE:FCX) on Tight Copper Supply
Goldman Sachs (NYSE:GS) said they're raising their price target on Freeport-McMoRan Copper & Gold (NYSE:FCX) while maintaining their "Buy" rating on them based on expected tight copper supply.
"We believe that FCX stock is in the midst of re-rating as the market gains more confidence in expected supply-driven tight market conditions for copper," Goldman said.
Earnings per share for the fourth quarter was cut was cut from $2.98 to $2.78, while their fully year 2010 earnings per share estimate was lowered from $8.70 to $8.67.
Freeport closed Friday at $94.05, dropping $2.38, or 2.47 percent. Goldman raised their price target from $98 to $111 on the mining giant.
"We believe that FCX stock is in the midst of re-rating as the market gains more confidence in expected supply-driven tight market conditions for copper," Goldman said.
Earnings per share for the fourth quarter was cut was cut from $2.98 to $2.78, while their fully year 2010 earnings per share estimate was lowered from $8.70 to $8.67.
Freeport closed Friday at $94.05, dropping $2.38, or 2.47 percent. Goldman raised their price target from $98 to $111 on the mining giant.
Tuesday, October 19, 2010
BHP (NYSE:BHP), Teck (NYSE:TCK), Freeport (NYSE:FCX) and Rio Tinto (NYSE:RIO) Will Soar on Quantitative Easing
With the Federal Reserve poised to inflate via quantitative easing, a number of commodities will surge in price, which will strongly benefit diversified miners like BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK), Freeport McMoran (NYSE:FCX) and Rio Tinto (NYSE:RIO).
According to UBS (NYSE:UBS), some of their top commodity picks include gold, copper, palladium, iron ore, thermal coal and zinc. They added they believe it's a "game changer" for commodities.
Talking on global capital flows, UBS said that should strengthen "credit creation in emerging markets." The giant bank concluded, "We believe that QE2 will prolong the bull market in commodities."
UBS' top pick in the commodity sector is palladium, which they see making significant gains through 2015.
In what could be troubling news for aluminum producers like Alcoa (NYSE:AA), UBS sees aluminum and nickel, among other commodities whose supply has little constraint upon them as being less desirable and affected by quantitative easing.
Gold of course will continue to perform strongly for some time to come. In that space, besides companies mentioned above, they like gold mining giant Barrick Gold (NYSE:ABX).
UBS said they like gold mining stocks over ownership of physical gold.
According to UBS (NYSE:UBS), some of their top commodity picks include gold, copper, palladium, iron ore, thermal coal and zinc. They added they believe it's a "game changer" for commodities.
Talking on global capital flows, UBS said that should strengthen "credit creation in emerging markets." The giant bank concluded, "We believe that QE2 will prolong the bull market in commodities."
UBS' top pick in the commodity sector is palladium, which they see making significant gains through 2015.
In what could be troubling news for aluminum producers like Alcoa (NYSE:AA), UBS sees aluminum and nickel, among other commodities whose supply has little constraint upon them as being less desirable and affected by quantitative easing.
Gold of course will continue to perform strongly for some time to come. In that space, besides companies mentioned above, they like gold mining giant Barrick Gold (NYSE:ABX).
UBS said they like gold mining stocks over ownership of physical gold.
Thursday, October 14, 2010
Freeport (NYSE:FCX), BHP (NYSE:BHP), Rio (NYSE:RIO), Vale (NYSE:VALE) Soar on Rising Copper Prices
Gold prices aren't the only metal soaring on the inevitable continuation of inflationary measures by the Federal Reserve, which they now call "quantitative easing" now, as copper is the also moving up in price, and major copper miners like Freeport-McMoRan (NYSE:FCX), BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO), Vale SA (NYSE:VALE) are moving up in unison with it.
Copper prices today (Wednesday) increased to $8,430 a ton, the highest levels it has reached since July 2008, or for 27 months. Two-year highs have been the norm for copper since the latter part of September.
Another reason for the higher copper prices is the tightening of stock, where LME stocks have fallen 475 tons to 371,275 tons since February, a 30 percent drop.
The fall in the value of the U.S. dollar is the consequence of the misguided Federal Reserve policies, and that is the major catalyst behind the booming metals prices and upward move of the metal miners.
Copper prices today (Wednesday) increased to $8,430 a ton, the highest levels it has reached since July 2008, or for 27 months. Two-year highs have been the norm for copper since the latter part of September.
Another reason for the higher copper prices is the tightening of stock, where LME stocks have fallen 475 tons to 371,275 tons since February, a 30 percent drop.
The fall in the value of the U.S. dollar is the consequence of the misguided Federal Reserve policies, and that is the major catalyst behind the booming metals prices and upward move of the metal miners.
Monday, October 11, 2010
FBR Maintains Freeport's (NYSE:FCX) "Overweight/Top Pick", Citing Copper Prices
Freeport-McMoRan (NYSE:FCX) had its "Overweight/Top Pick" rating maintained on them by FBR Capital, citing what they believe is the sustainability of higher copper prices.
They see Freeport far exceeding consensus in the third quarter.
FBR said, "Despite the macro uncertainty throughout the summer months, we have remained confident in our long-held bullish copper thesis. In our opinion, there remains too much skepticism regarding the sustainability of high copper prices. We believe FCX's current valuation is discounting copper prices below $3 per pound versus the current price of $3.69 per pound. We believe investors need to start thinking 'outside the box' and consider the possibility of copper prices above $5 per pound for an extended period of time."
Like with most commodities going forward, prices will be determined by key emerging market players building up their infrastructure. How they go will be how commodity prices go, including copper.
It looks like emerging market growth should do well in the years ahead, so it's possible copper prices will be sustainable, although at what levels is debatable.
They see Freeport far exceeding consensus in the third quarter.
FBR said, "Despite the macro uncertainty throughout the summer months, we have remained confident in our long-held bullish copper thesis. In our opinion, there remains too much skepticism regarding the sustainability of high copper prices. We believe FCX's current valuation is discounting copper prices below $3 per pound versus the current price of $3.69 per pound. We believe investors need to start thinking 'outside the box' and consider the possibility of copper prices above $5 per pound for an extended period of time."
Like with most commodities going forward, prices will be determined by key emerging market players building up their infrastructure. How they go will be how commodity prices go, including copper.
It looks like emerging market growth should do well in the years ahead, so it's possible copper prices will be sustainable, although at what levels is debatable.
Monday, September 27, 2010
UBS (NYSE:UBS) Raises Price Target on Freeport-McMoRan (NYSE:FCX)
Freeport-McMoRan (FCX) had their price target raised on them by UBS (NYSE:USB), while having a "Buy" rating from them reiterated.
UBS especially likes their exposure to molybdenum, and secondarily gold and copper.
"We have revised our 2011 EPS estimate slightly from $8.06 to $8.63 to reflect slightly higher moly production at Henderson and a slightly lower tax rate," said UBS.
Freeport closed Friday at $86.61, adding $2.38, or 2.83 percent.
UBS raised their price target from $84 to $97.
UBS especially likes their exposure to molybdenum, and secondarily gold and copper.
"We have revised our 2011 EPS estimate slightly from $8.06 to $8.63 to reflect slightly higher moly production at Henderson and a slightly lower tax rate," said UBS.
Freeport closed Friday at $86.61, adding $2.38, or 2.83 percent.
UBS raised their price target from $84 to $97.
Monday, September 20, 2010
Goldman (NYSE:GS) Upgrades Freeport (NYSE:FCX), Best Among Broader Metal Sector
Goldman Sachs' (NYSE:GS) analyst Sal Tharani upgraded Freeport McMoRan (NYSE:FCX) from "Neutral" to "Buy," citing it as the place to be in the broader metal sector.
Downplaying the weakness in the steel industry, Tharani said likes Freeport more because of its copper exposure. He said the balance of supply and demand in 2011 favors the copper segment.
Ongoing demand from China, which consumers over 20 percent of copper, wasn't a certainty too long ago, but appears to be more certain now, and that should benefit Freeport and other copper producers.
While it doesn't seem to be as certain as to supply not being able to meet demand, as Europe and the U.S. are doubtful as to any type of sustainable growth, it will be mostly on China for copper, and if they falter so will the copper industry.
But if copper does thrive in 2011, Tharani believes Freeport is the company best positioned to take advantage of it.
Downplaying the weakness in the steel industry, Tharani said likes Freeport more because of its copper exposure. He said the balance of supply and demand in 2011 favors the copper segment.
Ongoing demand from China, which consumers over 20 percent of copper, wasn't a certainty too long ago, but appears to be more certain now, and that should benefit Freeport and other copper producers.
While it doesn't seem to be as certain as to supply not being able to meet demand, as Europe and the U.S. are doubtful as to any type of sustainable growth, it will be mostly on China for copper, and if they falter so will the copper industry.
But if copper does thrive in 2011, Tharani believes Freeport is the company best positioned to take advantage of it.
Tuesday, September 14, 2010
Teck Resources (NYSE:TCK) Freeport (NYSE:FCX), Bucyrus (Nasdaq:BUCY) Up on China Production
Teck Resources (NYSE:TCK), Bucyrus International, Inc. (Nasdaq:BUCY) and Freeport-McMoRan Copper & Gold,(NYSE:FCX) all made nice upward moves Monday as China's production increased more than expected,
Industrial production grew 13.9 percent in August, beating average estimates of 13 percent from Bloomberg analysts.
China has been interesting because they seem to be sending different signals as time goes on, with a signal they're going to slow hammering the markets, and data showing growth, of course, doing the opposite.
There is no doubt China has been cutting back in urban infrastructure and property, but they've said they're looking at now expanding projects to rural areas, which they may have possibly already started to do.
Every time the underlying weakness of the global economy is exposed, data will be released which seems to contradict, or at minimum, confuse the situation.
It's dubious as to the growth in industrial production in China, but even if it's true, it does nothing to change the underlying weak fundamentals that haven't changed in any way.
Every time an alleged positive report or number comes out, the mainstream media pounces on it in order to give the appearance of a recovering economy in hopes of boosting the chances of the Democrats in the November elections in the U.S.
So we'll see this cat and mouse game go on until the elections, and whatever the outcome, the truth about the real weakness of the economy will continue to reveal itself.
For diverse mining companies like Teck, Freeport and Bucyrus, they'll continue to run the financial and economic data roller coaster until then.
Industrial production grew 13.9 percent in August, beating average estimates of 13 percent from Bloomberg analysts.
China has been interesting because they seem to be sending different signals as time goes on, with a signal they're going to slow hammering the markets, and data showing growth, of course, doing the opposite.
There is no doubt China has been cutting back in urban infrastructure and property, but they've said they're looking at now expanding projects to rural areas, which they may have possibly already started to do.
Every time the underlying weakness of the global economy is exposed, data will be released which seems to contradict, or at minimum, confuse the situation.
It's dubious as to the growth in industrial production in China, but even if it's true, it does nothing to change the underlying weak fundamentals that haven't changed in any way.
Every time an alleged positive report or number comes out, the mainstream media pounces on it in order to give the appearance of a recovering economy in hopes of boosting the chances of the Democrats in the November elections in the U.S.
So we'll see this cat and mouse game go on until the elections, and whatever the outcome, the truth about the real weakness of the economy will continue to reveal itself.
For diverse mining companies like Teck, Freeport and Bucyrus, they'll continue to run the financial and economic data roller coaster until then.
Friday, September 10, 2010
Freeport McMoRan (NYSE:FCX) CEO's Copper Outlook Justified?
Not too long ago Freeport McMoRan Copper & Gold Inc's (NYSE:FCX) Chief Executive Officer Richard Adkerson said he was bullish on the outlook for copper, and the increased imports of copper into the U.S. seem to justify his assertion. Is he right?
It all depends on your outlook. There is very little private sector demand for copper, and the idea that is what's driving copper imports would be wrong.
Copper imports are rising only because the Obama administration has hinted for some time on spending even more taxpayer's dollars in another round of stimulus. This time to the tune of $50 billion for infrastructure projects.
Just like the over trillion dollars spent in the past, all this does is hide the weak economy and give the impression it is recovering, while the recession lingers on. After all, the money isn't free, somebody eventually will have to pay for it.
It's like having a deadbeat son or daughter living at home and you give them thousands of dollars to live on, then announce to your friends and family they're productive because they have capital to spend.
The reality is they're producing nothing, and even in the case of infrastructure, the Chinese did that too, and brought themselves to the brink of disaster, which still could cost them.
As soon as the prior stimulus dollars and gimmicks ended, the American economy reverted back to what it had been all along: in a recession. Spending billions more isn't going to change that.
So in the case of copper, anticipation of another stimulus is what is driving that, and it isn't based on any real demand, but the creation of artificial jobs to give the illusion there is an economic recovery.
The rest of the country has to pay for this "job creation," and it would be better to cut taxes and remove the stifling regulations holding back the free market than the government to continue to throw money down the hole.
Some clueless economists are already jumping on the stimulus bandwagon saying these copper imports prove there isn't a double dip recession.
Hopefully the politicians will have the guts to vote this down and let the economy run its course.
As far as Richard Adkerson's bullish sentiment concerning U.S. copper imports, it's based only on stimulus spending and not real copper demand.
It all depends on your outlook. There is very little private sector demand for copper, and the idea that is what's driving copper imports would be wrong.
Copper imports are rising only because the Obama administration has hinted for some time on spending even more taxpayer's dollars in another round of stimulus. This time to the tune of $50 billion for infrastructure projects.
Just like the over trillion dollars spent in the past, all this does is hide the weak economy and give the impression it is recovering, while the recession lingers on. After all, the money isn't free, somebody eventually will have to pay for it.
It's like having a deadbeat son or daughter living at home and you give them thousands of dollars to live on, then announce to your friends and family they're productive because they have capital to spend.
The reality is they're producing nothing, and even in the case of infrastructure, the Chinese did that too, and brought themselves to the brink of disaster, which still could cost them.
As soon as the prior stimulus dollars and gimmicks ended, the American economy reverted back to what it had been all along: in a recession. Spending billions more isn't going to change that.
So in the case of copper, anticipation of another stimulus is what is driving that, and it isn't based on any real demand, but the creation of artificial jobs to give the illusion there is an economic recovery.
The rest of the country has to pay for this "job creation," and it would be better to cut taxes and remove the stifling regulations holding back the free market than the government to continue to throw money down the hole.
Some clueless economists are already jumping on the stimulus bandwagon saying these copper imports prove there isn't a double dip recession.
Hopefully the politicians will have the guts to vote this down and let the economy run its course.
As far as Richard Adkerson's bullish sentiment concerning U.S. copper imports, it's based only on stimulus spending and not real copper demand.
Tuesday, September 7, 2010
Teck (NYSE:TCK), BHP (NYSE:BHP), Freeport (NYSE:FCX) Slump on Stronger U.S. Dollar
The ongoing recession has metal producer like Teck Resources (NYSE:TCK), BHP Billiton (NYSE:BHP) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) down today, as the dollar strengthened, lowering the appeal of commodities.
Concerns over the continuing sovereign debt crisis in Europe is the major impetus behind this, as the focus goes back on the EU after being given a free ride in the press for some time.
Confirming what we and others commented on concerning the pathetic "stress tests" which made it appear the sovereign debt holdings were in better shape than they actually were for European banks, now they are again under pressure as the real story of their condition has yet to accurately be told, and we can almost be certain they'll be far weaker than thought.
Yield spreads for Germany and Greece were at their widest levels since May, and the gap between yields on 10-year German bonds and Portuguese and Irish debt are at the highest levels in history.
German bankers said Monday the ten largest lenders in the country may have to raise an additional $134 billion in new capital, underscoring their weakness.
Copper prices dropped on the news as demand issues were raised in light of the revelation things aren't as good as they were asserted in Europe.
Concerns over the continuing sovereign debt crisis in Europe is the major impetus behind this, as the focus goes back on the EU after being given a free ride in the press for some time.
Confirming what we and others commented on concerning the pathetic "stress tests" which made it appear the sovereign debt holdings were in better shape than they actually were for European banks, now they are again under pressure as the real story of their condition has yet to accurately be told, and we can almost be certain they'll be far weaker than thought.
Yield spreads for Germany and Greece were at their widest levels since May, and the gap between yields on 10-year German bonds and Portuguese and Irish debt are at the highest levels in history.
German bankers said Monday the ten largest lenders in the country may have to raise an additional $134 billion in new capital, underscoring their weakness.
Copper prices dropped on the news as demand issues were raised in light of the revelation things aren't as good as they were asserted in Europe.
Thursday, September 2, 2010
BHP (NYSE:BHP), Freeport (NYSE:FCX) May be Abandoning Cyclical Practices
The mining sector in general, including gold miners, seems to be moving away from cyclical business practices into more of a level approach, and majors like BHP Billiton (NYSE:BHP) and Freeport-McMoRan (NYSE:FCX) could draw a lot more investors if they continue on in that direction.
Mining and construction equipment makers like Joy Global (Nasdaq:JOYG), Bucyrus (Nasdaq:BUCY) and Caterpillar (NYSE:CAT) may also be moving more in that direction in response to the miners.
With commodities among the expected top market performers over the next decade, a number of mining companies have been also moving more toward operating as businesses that are easier to understand, and offering perks like increased dividends to their shareholders.
For miners and equipment providers, this deals with questions like managing orders in a way that could say no to some in order to extend the period of time the orders are received. That would lower the cyclical effects which have been part of the industry for so long, and provide shareholders with a more level and gradually growing share price, rather than the usual swings.
Commodity prices are of course a major factor in all this, and affect all businesses connected to the market. Extending orders over a period of time would also help in that regard, as it could offer an average price over a longer period of time that would also be level.
If all businesses involved with mining and mining equipment move in this direction, it would result in a much more stable and predictable environment, which would be attractive to investors and more easy to manage for the companies.
Mining and construction equipment makers like Joy Global (Nasdaq:JOYG), Bucyrus (Nasdaq:BUCY) and Caterpillar (NYSE:CAT) may also be moving more in that direction in response to the miners.
With commodities among the expected top market performers over the next decade, a number of mining companies have been also moving more toward operating as businesses that are easier to understand, and offering perks like increased dividends to their shareholders.
For miners and equipment providers, this deals with questions like managing orders in a way that could say no to some in order to extend the period of time the orders are received. That would lower the cyclical effects which have been part of the industry for so long, and provide shareholders with a more level and gradually growing share price, rather than the usual swings.
Commodity prices are of course a major factor in all this, and affect all businesses connected to the market. Extending orders over a period of time would also help in that regard, as it could offer an average price over a longer period of time that would also be level.
If all businesses involved with mining and mining equipment move in this direction, it would result in a much more stable and predictable environment, which would be attractive to investors and more easy to manage for the companies.
BHP (NYSE:BHP), Freeport (NYSE:FCX) and Alcoa (NYSE:AA) Advance on Weakening Dollar
While the U.S. manufacturing report posted better numbers than believed, the drop in the value of the U.S. dollar was the impetus behind mining companies surging Wednesday.
Oddly, the cut in jobs in the private sector for August was largely shrugged off by those desperate to grasp onto any positive economic news, which has been very little lately.
For BHP Billiton (NYSE:BHP), Freeport McMoRan (NYSE:FCX) and Alcoa (NYSE:AA), they enjoyed the weakening of the dollar which is always a boost to commodity prices.
The index from the Institute for Supply Management showed a reading of 56.3 in August, whereas analysts had been looking for it to drop to 52.9.
While the mining sector performed the best, manufacturers like Deere (NYSE:DE), General Electric (NYSE:GE) and Caterpillar (NYSE:CAT) were beneficiaries of the index number increase as well.
The Dow rose by over 250 point Wednesday in response to the news.
Oddly, the cut in jobs in the private sector for August was largely shrugged off by those desperate to grasp onto any positive economic news, which has been very little lately.
For BHP Billiton (NYSE:BHP), Freeport McMoRan (NYSE:FCX) and Alcoa (NYSE:AA), they enjoyed the weakening of the dollar which is always a boost to commodity prices.
The index from the Institute for Supply Management showed a reading of 56.3 in August, whereas analysts had been looking for it to drop to 52.9.
While the mining sector performed the best, manufacturers like Deere (NYSE:DE), General Electric (NYSE:GE) and Caterpillar (NYSE:CAT) were beneficiaries of the index number increase as well.
The Dow rose by over 250 point Wednesday in response to the news.
Friday, August 27, 2010
Freeport (NYSE:FCX) Ready to Take Off?
Some analysts have been getting very bullish on some metals company, with Freeport-McMoRan Copper & Gold (NYSE:FCX) being one of the top ones.
Their growth over the last 45 days or so is cited as a major factor, but I don't take that too seriously, as that seems to be a more arbitrary period picked, as you could start at the beginning of August and you would get a loss for the last month, while if you start at the July lows, you could say they gained about 15 percent.
No matter how one tries to spin it, in regard to the most important metals market as far as copper and aluminum, is China, and they've cut back on their consumption by 3 percent from last year, and even though they'll continue to grow, the rate is being cut down significantly from their concerns over the over-heated property market in urban areas.
So that will decrease demand for these metals in the short term, and there's nowhere else in the world that will make up for the slowdown in China.
With Freeport actually doing better than the underlying metals, even if prices increase in the second half, which is expected, they may have that already built into the price.
Commodities will continue to be strong, including metals, but it seems the companies like Freeport-McMoran which provide the commodities will continue to have a bumpy ride for the next couple of years at least, as economic data continue to confirm we're still in the midst of a lingering recession.
Their growth over the last 45 days or so is cited as a major factor, but I don't take that too seriously, as that seems to be a more arbitrary period picked, as you could start at the beginning of August and you would get a loss for the last month, while if you start at the July lows, you could say they gained about 15 percent.
No matter how one tries to spin it, in regard to the most important metals market as far as copper and aluminum, is China, and they've cut back on their consumption by 3 percent from last year, and even though they'll continue to grow, the rate is being cut down significantly from their concerns over the over-heated property market in urban areas.
So that will decrease demand for these metals in the short term, and there's nowhere else in the world that will make up for the slowdown in China.
With Freeport actually doing better than the underlying metals, even if prices increase in the second half, which is expected, they may have that already built into the price.
Commodities will continue to be strong, including metals, but it seems the companies like Freeport-McMoran which provide the commodities will continue to have a bumpy ride for the next couple of years at least, as economic data continue to confirm we're still in the midst of a lingering recession.
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