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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (63)	6/3/2001 4:02:10 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

>> How does the current trend in oil and nat gas prices fit with your bull market for commodities thesis? << i think higher energy prices will drive up the cost of other commodities. it takes energy to mine, smelt, refine, and transport commodities etc. like was mentioned by canuck dave, some companies are cutting back production because power costs are so expensive it's not profitable to mine, smelt, or refine. some companies are selling power because it's more profitable than their core business. as more and more raw materials start rising in price the more corporate profit margins will be squeezed. that will hurt corporate earnings and more investment will flow out of these new economy stocks and into the raw materials industries which will be showing nice profits from the rising prices. not only that, but miners/farm workers have had a tough time of it the last decade, so if they see skyrocketing prices they will demand higher wages because they will want their piece of the pie. if they don't get their share of the profits they will go on strike causing more cuts in production which will exacerbate the rising prices. this is the kind of stuff that happens when people wake up one day and realize there are serious shortages. all of a sudden there aren't very many producers out there and everyone wants what they have. you begin to develop a virtuous cycle where money leaves paper assets and flows into hard assets as people scramble to get their hands on stuff before it goes hgher in price. of course the ever rising prices and shortages will take a while to rectify, (you can print money but you can't print natural resources), and speculators will be drawn in. this will of course push prices higher and it will feed on itself until we have another bubble. also, people will see how much hardship it causes when there isn't enough to go around, so they will buy and hoard too much of everything because they don't want to go through another shortage for a long time. at first this will fuel even more demand, but eventually that will cause over-stocking of inventories and will lead to the next bust in commodities. but that's a long ways off. examples. Wednesday March 28, 4:15 pm Eastern Time Cominco to reduce zinc production Cominco Ltd. announced today that, in order to provide additional power for sale, it will reduce zinc production at its refinery in Trail, B.C., by 25 percent for the months of April, May and June, 2001. Sufficient power has been sold to ensure the same level of profitability for Trail as if full production of zinc had been maintained during these three months. Friday June 1, 9:33 am Eastern Time Alcoa cuts production at Brazil smelter by 25 pct PITTSBURGH, June 1 (Reuters) - Aluminum giant Alcoa Inc. (NYSE:AA - news) said on Friday it cut aluminum production at its smelter in Pocos de Caldas, Brazil by 25 percent, or 22,500 metric tons per year, to reduce electricity usage. The Brazilian government requested that electricity consumption at that plant be reduced by 25 percent, starting in June, the aluminum manufacturer said.

To: Moominoid who wrote (63)	6/3/2001 4:16:02 PM
From: craig crawford	Respond to of 1643

Tuesday May 29, 9:01 am Eastern Time Phelps Dodge Extends WARN Notices at Tyrone and Portions of Chino Facility; Company to Lay Off 80 Tyrone Employees biz.yahoo.com PHOENIX, May 29 /PRNewswire/ -- Phelps Dodge Corporation (NYSE: PD - news) today announced it will lay off approximately 80 employees at its Tyrone, New Mexico operation for an indefinite period. The company also will extend the Worker Adjustment and Retraining Notification (WARN) Act notices initially given in late January to the remaining Tyrone employees and to employees in the mining and leaching operations of its Chino facility. The company will not extend the WARN Act notices for employees working in the Chino smelter and at its Sierrita operation. Phelps Dodge initially issued the WARN notices on Jan. 25 to 2,350 employees at three operations in Arizona and New Mexico, attributing the decision primarily to high energy-related costs. Due to continuing economic uncertainties, including the ongoing volatility of the electrical power, copper and molybdenum markets, Phelps Dodge extended the WARN notices on March 26 for an additional period of less than 60 days. At that time, the company also curtailed portions of production at its Chino facility at least through the end of 2001, impacting 130 Chino workers. J. Steven Whisler, Phelps Dodge Corporation chairman, president and chief executive officer, said: ``In the last several months we have worked very hard to identify cost reduction plans that would minimize our exposure to high energy-related costs while limiting the need for associated job reductions. To date, we have been successful in preserving the jobs of 2,140 production employees in Arizona and New Mexico, but that has not made any easier our decision to lay off 80 Tyrone employees, or to extend the WARN notices for some of our other employees. We believe our decisions are prudent and responsible ones in light of continuing economic uncertainties, which include high energy-related costs and low copper prices.'' The Tyrone layoffs are effective immediately, and will reduce the workforce from 560 to 480 employees. Tyrone will maintain total copper leach production through the processing of previously mined material. The WARN Act notices for Tyrone employees and portions of the Chino workforce will be extended for an additional period of less than 60 days. In addition to the action at Tyrone, previously announced alternating production curtailments at several of the company's other facilities will be implemented this summer through a combination of modified work or shift schedules and generally through the use of paid vacation time to which employees are entitled. Changes in economic conditions, including copper and molybdenum prices, could alter the current operating plans as well as the number of affected employees. Phelps Dodge Corporation is the world's second largest producer of copper. The company also is the world's largest producer of continuous-cast copper rod and molybdenum, and is among the largest producers of carbon black and magnet wire. Phelps Dodge has operations and investments in mines and manufacturing facilities in 27 countries and employs approximately 15,000 people worldwide. This news release contains forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this news release, there are certain factors that could cause results to differ materially from those anticipated by some of the statements made. These factors are listed in Management's Discussion and Analysis in the company's most recently filed annual report on Form 10-K for the fiscal year ended December 31, 2000, and in the company's most recently filed quarterly report on Form 10-Q for the quarter ended March 31, 2001. SOURCE: Phelps Dodge Corporation