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: Stephen O who wrote (382)	8/19/2002 3:31:06 PM
From: Stephen O	Respond to of 2131

(MBR) - Copper market outlook 2002-08-16 17:02 (New York) August 16(Metal Bulletin Research) -- Copper Copper makes further gains in Q2 Along with nickel and tin, copper was one of the LME constituents that registered further gains in the second quarter, compared with Q1. Average cash prices for the quarter were $1,609/tonne compared with $1,555/tonne in the first quarter. In fact the quarterly average cash price in Q2 is now back in the same region as that seen in the second quarter of 2001, when they stood at $1,651/tonne. Copper prices have been one of the main recipients of the focus that the funds and speculators have placed on the LME over the last six months. However, unlike aluminium, for example, which has seen that interest wane and prices begin to soften copper has continued to make gains. China leads the way again To a large extent Chinese buying has also helped to prevent prices from slipping to far, as the previously noted strength in demand from the country continues unabated. In the period from January to May net imports have amounted to 433,000 tonnes, compared with just 199,400 tonnes in the same period in 2001. On a monthly basis, net-imports are running at a rate of some 85-87,000 tpm compared with just 39-40,000 tpm registered in the first five months of last year. The outlook for Chinese demand remains strong. Although government backed projects are beginning to be completed, the surging demand from private consumers for copper intensive products looks set to be a strong growth area. Surging domestic demand is outstripping supply and this is feeding the staggering increases in imports, a trend that is almost certain to continue throughout the remainder of this year and on into 2003. Strong June averages, but. In June, prices averaged $1,648/tonne cash basis, recording their highest monthly level since May 2001. The problem for the market as with the majority of the LME metals, is that further moves are increasingly tied to the health of the US economy. This can be seen by tracking the daily movement in prices with `bullish' economic releases pushing prices higher and `bearish' releases sending them tumbling. Despite this choppy trading environment, cash prices have traded in a restricted $75/tonne range throughout June. Stocks also end June on a positive note At the same time copper stocks have ended the second quarter on a slightly more positive note. June month-end LME on-warrant stocks totalled 891,850 tonnes, compared with the 950,650 tonnes seen at the end of the first quarter. This goes some way to explaining the reasonable firmness in quotes during the second quarter, as the market has taken this as a sign that demand is beginning to recover. Of more consequence, though, is the high level of Chinese imports - as mentioned above - that has helped to whittle down LME stock levels during the first six months of the year. Supply continues to decline One of the major supporting factors that we have seen in the copper market has been the restraint that producers have shown. MBR has documented the numerous capacity shutdowns and cutbacks seen so far this year in both Base Metals Monthly and the Base Metals Weekly Review. According to the latest WBMS data, Western World refined supply in the first four months of the year totalled 3.95m tonnes, a year-on-year decline of 0.5%, or 20,500 tonnes. Although at first glance this does not seem that significant it should be noted that on a quarterly basis primary refined production, as shown in our supply-demand balance has been growing year-on-year by some 3-4% over the last two years. A particularly strong growth rate has been seen in 2001 when the quarterly year-on-year rate was running at around 6%. On top of this Norilsk Nickel has announced that it will cut copper production by 6% to some 455-460,000 tonnes in 2002 as the copper content of the secondary material that it processes declines. Metal Bulletin Research, London. Tel: +44 (0)20 7827 9977 Fax: +44 (0)20 7928 6539 -0- (BN ) Aug/16/2002 21:01 GMT