Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Archie Meeties who wrote (312)	5/24/2001 1:45:18 PM
From: Stephen O	Read Replies (1) \| Respond to of 2131

May 23 (Metal Bulletin) - After a week that began with a sharp rise in the LME copper price to $1,750 per tonne basis three months on May 21, the rally stopped "not unexpectedly", with the price drifting back to close at $1,741 on May 22. Traders attributed the earlier rise to fund buying of baskets of commodities, including copper, aluminium and gold. "Funds are generally having a more positive view of metals," said a trader, and support for metal markets is also coming from stockbrokers, with shares in mining companies tracking the rise in the gold price. Most of the activity at the start of this week was once again short covering by funds and traders. Another trader reported that: "The market is very much oversold. Everyone is very short at the moment." With genuine consumer interest still lacking, there were doubts whether the prices would be sustained at a high level. "The fundamentals haven't changed," said one trader, and prices are expected to remain either side of the $1,700 mark, in the range of $1660-1740. Recent announcements by the ICSG showing an increase in the monthly world copper surplus, and Phelps Dodge's decision not to cut production further have not helped confidence in the copper market. But the report of a strike at Palabora has not had much influence, with one trader saying: "Everyone probably breathed a sigh of relief upon hearing the news." European consumers of copper cathode are reported to be selling material back into the market as production schedules are scaled back. Gloomy economic conditions have reduced demand for copper products such as rod and wire, and consumers of scrap have suffered poor sales. Spot orders in the physical market have been virtually non- existent for some months, in what is usually the busiest time of the year. There is also a shortage of copper scrap and only the market for standard grade copper is showing any signs of good volumes. "Producers are very depressed - their first-quarter results are poor, and the cut in base interest rates is not going to help much," said one trader. The low demand for copper in Asia may also mean material being diverted into Europe. Several traders have said that Japan and South Korea are simply "not buying" at the moment, and demand from China, though good, is not as promising as was hoped. Premiums are low at the moment and are set to remain that way, according to trade sources. They said that premiums for grade A copper in Rotterdam are currently just under $30 per tonne over LME, while premiums in Liverpool are in the mid-$30 per tonne range. Premiums for Italy are reported to be around $40. With summer shutdowns looming, the market is unlikely to pick up until the autumn. "We are basically finished for this year," lamented one trader, echoing the feelings of others in the market. The world copper supply-demand surplus for the first two months of 2001 was 107,000 tonnes compared to a deficit of 9,000 tonnes for the same period last year, according to the latest figures from the International Copper Study Group (ICSG). Growth in refined production exceeded the growth in mine production - primary refined output for January and February 2001 was up 4.7% compared with the same period of 2000, whereas mine production was up 3.5% in the same analysis. Secondary refined production rose by 2.1%. Total refined production and world usage have both fallen since January. February's total refined production was down from 1.30m tonnes in January to 1.19m tonnes, and total world usage dropped from 1.22m tonnes to 1.18m tonnes over the same period. Stocks of refined copper on the LME, Comex and SHME totalled 641,033 tonnes at the end of April 2001, up 9% over March 2001. Metal Bulletin newsroom, London Tel +44 207 827 9977 Fax +44 207 928 6892 New York Tel +1 212 213 6202 Fax +1 212 213 6273