COPPER-Major market developments in December [A different article]
Reuters
Thursday, January 15, 2009
midasletter.com
LONDON - Copper prices may form a base near term as a continued lack of mine supply continues to rein back metal production and prevent big stock builds.
"Copper's fundamentals are not as bad as some of the other metals. Stocks haven't rebuilt to any great extent and we're seeing cuts in mine capacity," said independent consultant Angus MacMillan.
"This might put a floor on the market, but there is still some downside potential," he added.
Some analysts also believe that Chinese buying will pick up and boost sentiment.
"China might step up some purchases and give some support to the market," said Will Adams of Basemetals.com.
He said this, coupled with a bear market rally, inspired by fresh optimism as Barack Obama takes office as U.S. president, could push prices up to a $3,500/3,800 a tonne trading range near term.
At 1645 GMT the London Metal Exchange (LME) three-months copper price was indicated at $3,254/64 a tonne.
David Thurtell, a strategist at Citigroup, said he expected the market to be well supported for now around the high $2,000s to low $3,000s.
Further ahead it would depend how the recession panned out, he said, while pointing out that credit markets were freeing up gradually and governments were implementing stimulus packages.
Below are some of the more significant recent developments in production, stocks and prices that may influence the direction of the market in 2009.
PRODUCTION:
Dec 31 - Zijin Mining said it planned to team up with a major shareholder to build a copper refinery in Fujian province at a total investment of $381 million. Will have 200,000 tonnes per year (tpy) capacity.
Dec 31 - Jiangxi Copper Co Ltd said an equipment malfunction would reduce production capacity by 20 percent at its main Guixi smelter. Repairs to an oxygen generator at the plant expected to take more than six months to repair. Could cut an annual rate of 120,000 tonnes of blister.
Dec 30 - Chile's copper output fell 6.4 percent in November to 442,872 tonnes, the National Statistics Institute (INE) said. Output from January through November this year fell 3.7 percent compared with the same period last year to 4,879,828 tonnes.
Dec 30 - Yunnan Copper Co Ltd said it has shut a 200,000 tpy smelting facility after water leaked from a heating system on Dec. 24. The incident forced the firm to bring forward a maintenance programme.
Dec 30 - The launch of Zambia's Chinese-built Chambishi copper smelter, which is expected to process 150,000 tpy of copper, will be delayed until January. Industry analysts say two work stoppages by employees of the smelter during its construction had forced the rescheduling.
Dec 30 - Indonesian copper output fell 27 percent to an estimated 580,950 tonnes in 2008 from 797,400 tonnes in 2007, the country's energy and mines minister said after Luanshya Copper Mine (LCM) suspended operations.
Dec 29 - Zambia has asked foreign mining firms to use profits they made when copper prices were high to keep working in the downturn, its central bank chief said.
Dec 25 - Zambia's Konkola Copper Mines (KCM) was forced to suspend operations at its Nchanga smelter after a technical fault, officials said. KCM, a unit of Vedanta Resources Plc said the smelter had experienced disruption after a fault in its instrumentation system. The plant has been undergoing commissioning since October and has a 300,000 tpy capacity.
Dec 23 - The world refined copper market was in a 120,000 tonnes surplus in the first nine months of 2008, compared with a 72,000 tonnes surplus in the same period a year earlier.
Dec 22 - Zambia's government announced a near 25 percent cut in fuel prices, a move that followed pressure from copper producers, who have been hurt by the combination of falling metal prices and high energy costs.
Dec 22 - GDF Suez Energy Andino, a unit of utility Suez said it obtained $393 million in financing to build a thermoelectric plant to supply energy to Chile's Codelco. To supply energy to the firm's new Gaby copper mine and the Chuquicamata mine as of 2010.
Dec 19 - Zambian copper production for the first nine months of the year rose 9.3 percent from the same period in 2007, but will not hit a full-year target due to problems in the sector, the Reserve Bank said.
Dec 17 - Anglo American Plc said it will cut spending by more than half in 2009, but said it remained committed to its Michiquillay and Quellaveco projects in Peru.
Dec 16 - Congo has slashed copper output targets for the next three months by 30 to 40 percent as financing has dried up, forcing companies to delay development or suspend operations, the deputy mines minister said.
Dec 15 - China produced 3,409,100 tonnes of refined copper in the first 11 months of 2008, up 9.6 percent from a year earlier, figures from the National Bureau of Statistics showed. Output of mined copper rose by 14.6 percent to 868,500 tonnes over the same period.
Dec 11 - Japan's Pan Pacific Copper Co Ltd will cut runs 10 percent in January-March and may increase that to 20 percent. With the 10 percent cut, the firm's copper output in the six months to end of March will amount to 295,000 tonnes, compared with initial plans of 310,600 tonnes announced in October.
Dec 8 - Anvil Mining Ltd said it was suspending copper output and shutting its Dikulushi mine in the Democratic Republic of Congo (DRC). Mine was on track to yield annual production of about 11,000 tonnes of contained copper.
Dec 8 - Ivanhoe Mines said it has discovered a new high-grade gold and copper zone at its Oyu Tolgoi project in Mongolia. On Dec. 3 work development work at the mine said to have been cut to essential tasks and 40 percent of the workforce laid off because of falling metal prices.
Dec 8 - The Lumwana copper mine in Zambia has started preliminary copper concentrate production and plans to reach full output in the second half of 2009. Mine is wholly-owned by Australia's Equinox Minerals Ltd .
Dec 8 - Sumitomo Metal Mining Co Ltd <5713.T> said it would lower copper production in the first quarter of 2009. Company has the capacity to produce 450,000 tonnes of copper a year.
Dec 4 - Antofagasta Minerals said it completed construction of the $600 million Mauro tailings dam at its Los Pelambres copper mine, allowing it to extend the mine's life.
Dec 3 - Nippon Mining Holdings Inc <5016.T> said it thinking of curbing copper output by 10-20 percent, which it said would be its first deliberate cut in at least 10 years.
Dec 2 - Papua New Guinea's Ok Tedi copper mine has sold out all its production in 2008 and 2009, a company official said, adding the operation was running profitably despite sharp declines in metals prices.
Dec 1 - Norilsk Nickel said will cut 2009 copper output to 385,000-400,000 tonnes from a planned 420,000 tonnes in 2008.
PRICES
LME copper prices continued to fall in December, ending the month at $3,090 a tonne, down from $3,660 a month earlier and a far cry from $6,695 at the end of 2007.
Indeed, in early July three-months copper reached an all-time high of $8,940 a tonne.
The market recovered to $3,570 a tonne in early January, helped by the annual rejigging of commodity indices. The impact was short lived but it managed to recoup losses prompted by the news that China's State Reserve Bureau (SRB) was in no hurry to buy copper.
In July, the twice-yearly Reuters base metals price poll [MET/POLL] put the median average for the LME cash copper price at $8,047 a tonne in 2008 and $7,575 in 2009.
STOCKS
LME copper stocks continued to build at a relatively fast pace in December, reaching 340,550 tonnes, up from 291,200 tonnes a month earlier.
The uptrend has continued in early January and they remain at their highest since early 2004.
Total exchange stocks of copper were 389,682 tonnes at the end of last month, up from 322,751 tonnes at the end of November, amounting to almost eight days of consumption.
(3000 Xtra users can access Reuters Metal Production Database (MPD) by clicking on mpd.session.rservices.com. MPD details historical and predicted output and capacity for bauxite, copper, lead, zinc and gold mines, alumina refineries, aluminium, copper, lead and nickel smelters and copper, zinc, lead and nickel refineries between 1997 and 2012.)
(Karen Norton; edited by Peter Blackburn) |
