Isopatch... about cycles, in the mining industry...there's certainly more than gold to speculate on...the demand on both copper and nickel continue to rise especially in regards to developing nations. Earlier this week Reuters ran this story:
Copper use seen helped by Iraq reconstruction
Tue April 15, 2003 10:53 AM ET
By Karen Norton
LONDON, April 15 (Reuters) - Copper will be used from the outset in the reconstruction of Iraq and analysts expect the process to have a gradual if slight impact on consumption of other base metals, although the main boost to them from the end of the war may come from improved global consumer sentiment.
reuters.com
Here's long-term copper chart...note the 200 DMA:
stockcharts.com[h,a]wblaynay[d19950418,20030418][pb200!f][j7560468,y]
------------------------------------------------------------
The week before last, Northern Miner ran a story on Inco and how they perceive the strong future of nickel. Here's an excerpt from the article:
Speaking to an audience in Toronto in February, Peter Goudie, Inco's executive vice-president of marketing, spoke about the strong future he sees for nickel demand in the coming years.
"We are in interesting times and will soon be in exciting times," said Goudie. "This is a time of change that needs to be understood and closely watched [since] fundamental shifts in a market are often not recognized until they are well under way."
He outlined his five reasons for optimism:
- More than 3 million tonnes of new stainless steel-making capacity is being added worldwide in 2002 and 2003 (this sector soaks up half of all nickel production).
- Producer and LME nickel inventories are at low levels relative to prior cycles.
- Scrap nickel supply this year should be tighter than LME price levels suggest.
- Reported consumer and producer nickel inventories remain low, leaving substantial room for potential restocking.
- Chinese nickel demand has continued to grow strongly.
"China was a critical factor in the nickel market in 2002 and its importance will continue to grow throughout this decade," said Goudie. "My advice is to pack your bags, head off to China and see it for yourselves."
northernminer.com
------------------------------------------------------------
To quote Claude Cormier from his "The Ormetal Report" newsletter -- "China GDP is 50% the size of the USA and is growing at a rate more than 2 times higher near 8%. There is no end in sight to this well-established trend. The size of the chinese population below 18 years old is greater that the population of the USA and Great Britain combined.
Through a private email conversation, I managed to get permission from Mr. Cormier to post that issue of the newsletter. Well worth the read and that's from a satisfied subscriber:
ormetal.com
------------------------------------------------------------
But like everything else in life-- all things are cyclical and base-metals are no exception. ThomsonFN has this terrific seasonality tracker for equities that shows the big BM producers like Inco or FCX have a tendency to be stronger in the winter months and weaker towards summer.
insider.thomsonfn.com
But if the 200DMA on copper is any indication-- we're a long way from complete economic destruction.
Regards,
Frank P. |
