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

To: RagTimeBand who wrote (30)	4/4/1998 1:02:00 PM
From: Gunnar	Respond to of 2131

Where can I get the figures about the average p/e-ratio for the majors in the copper mining industry. I trying to get some perspective on the Tenke Mining copper-cobolt operation in the DR Congo. Regards, Marten

To: RagTimeBand who wrote (30)	4/7/1998 10:38:00 AM
From: RagTimeBand	Respond to of 2131

FOCUS-US copper scrap trade rips usual theories By Derek J. Caney biz.yahoo.com Monday April 6, 8:49 am Eastern Time TUCSON, Ariz., April 6 (Reuters) - The theory that lower COMEX copper prices yield tighter scrap markets is often repeated with fugue-like regularity, but according to attendees of the American Copper Council's Copper College, that theory doesn't tell the whole story. Spot merchant premiums in the refined copper market have nearly doubled in the last six weeks, partially as a result of increased buying of refined copper as the scrap market tightens. U.S. scrap merchants price their products at a differential to the COMEX price, which has fallen more than 40 percent since June 1997. As the COMEX price drops, the conventional wisdom is that scrap dealers withhold sales from the market, because the value of the copper in their inventory has dropped. Consumers of copper scrap, namely brass mills and tube mills, are then forced to substitute refined copper for scrap, which in turn provides support for the copper market. The tightness in scrap plays a integral part of Asarco Inc's (AR - news) bullish outlook for the copper market. ''With copper prices well under the $1.00 a lb level that seems to keep the scrap flowing freely, scrap in the west is now very tight,'' said Frank McAllister, Asarco's president and chief operating officer in his keynote address last Thursday. ''Five refineries in Europe are now curtailed or shut down and scrap deliveries from the principal supplier to our Amarillo refinery are off 20 percent in the last three months,'' he said. He predicted that scrap availability would decline by nearly 130,000 short tons in 1998 from 2.6 million tons in 1997. ''If current trends continue, however, an additional shortfall of 100,000 to 150,000 tons of scrap could develop.'' Bernard Schilberg, executive vice president of Schilberg Integrated Metals, a Willimantic, Conn., scrap merchant, tried to debunk the conventional wisdom noting that wire mills, the main generators of scrap have become much more efficient in their production processes in the last 10 years and don't generate as much scrap. ''You also have brass mills that consume more scrap now than they ever have,'' he said. ''They are trying to reduce their dependence on the more expensive cathode (refined copper). Scrap now accounts for 80 to 90 percent of what brass mills cast into sheet and strip.'' He also noted that many scrap dealers don't have the space in their lots to carry inventory. Another hole in the theory, traders said, is that many scrap processors aren't highly capitalized companies. ''We're not talking about giant companies here,'' explained Frederick Demler, minerals economist with ED&F Man International Inc's metals division. ''We're talking about companies that need cash flow,'' he said. ''They can't just sit on this scrap until prices hit $1.00 a lb. Eventually that material that will have to come to market.'' The conventional wisdom is that scrap supplies start to dry up under $1.00 a lb. The last time spot copper was a $1.00 a lb was last summer. Prices are currently hovering around 75 cents a lb and are poised to test a four-and-a-half-year low. Demler added that scrap dealers are unlikely to remain tolerant as prices continue to fall. ''The pain threshold keeps dropping,'' he said. ''When the price was at 90 cents, scrap dealers might say, 'I'm not selling until the price hits $1.00.' Likewise, if the price moves to 70 cents, that threshold moves lower. So you might see scrap start coming back into the market at 80-85 cents.'' Nevertheless, scrap is expected to remain tight for the next three months, he said. Other scrap dealers noted that weak COMEX price has provided little incentive for manufacturers to recycle their metal. ''It takes time to strip insulated wire or sort scrap or find scrap in autos,'' said one scrap processor. ''It's not worth it even ship that stuff to the scrap yards if prices are only 70 cents a lb.'' Scrap differentials have been holding steady, traders said. Barebright scrap is trading at around 1.00 to 2.00 cents under COMEX May. Burnt scrap is trading at 2.00 to 3.00 cents under May. And No. 2 refinery scrap is at 12 to 14 cents under COMEX May.

To: RagTimeBand who wrote (30)	4/7/1998 10:39:00 AM
From: RagTimeBand	Read Replies (1) \| Respond to of 2131

FOCUS-Copper meeting finds no consensus on market By Derek J. Caney biz.yahoo.com Monday April 6, 12:14 pm Eastern Time TUCSON, Ariz., April 6 (Reuters) - The American Copper Council's Copper College ended this year with no clear consensus of the next move for copper. The logistical problems stemming from the logjams along the Union Pacific Corp (UMP - news) rail lines in the South, plus a tight scrap market, plus what one consumer called ''good old fashioned strong demand,'' kept most people satisfied with the short term picture. But with copper prices languishing near four-and-a-half year lows betrayed and underlying pessimism driven by uncertainty in Asian economic outlook and looming increases in production in the coming years. Asarco Inc (AR - news) kept to its time-honored tradition of adhering to the best case scenario. ''As we examined current supply and consumption, they appeared to us to in balance despite the falling Asian demand,'' said Asarco's president and chief operating officer Frank McAllister, the meeting's keynote speaker. Before the Asian currency crisis, Asarco anticipated 1998 demand growth from Asia excluding Japan to be 6.2 percent over 1997, McAllister said. The company has since revised its estimate to 2.3 percent. ''Although the percentage change in GDP growth is significant, the absolute tons of copper consumption is not that large as this part of the Asian market only represents 13.5 percent of western world consumption,'' McAllister said. The best case scenario for Asia, according to Alison Reese, an analyst with NationsBank, would be ''a difficult time for their economy over the next 12 months,'' while the worst case scenario would be political rebellion, recessions, currency devaluations and stock market declines. She added that she was more inclined to believe the best case scenario. She said that the Japanese economy would be ''limping along'' with GDP growth at slightly more than 1 percent. Reese told attendees that China would maintain its currency valuation, although growth in the country would be expected to be slower amid lower imports and higher exports. Martin Armstrong, chairman of Princeton Economics International, said that copper prices looked like they were reaching the bottom of the market. ''It looks like 70 cents will be the low of this market,'' he said. ''Prices should recover from there. Certainly we wouldn't expect to see prices fall below 60 cents a lb.'' Frederick Demler, minerals economist with ED&F Man International Inc's metals division said he expected the markets in general to turn lower in 1998 as a result of the currency crisis but would turnaround in 1999. ''We would expect crisis in the Far East remain contained within that region,'' Demler said. ''The U.S. and Canada economies should see some slowdown, but still positive growth and a rebound in 1999.'' Copper prices would not be able to take advantage of the turnaround, however, because of the large production builds that are expected next year, he added. Mine production is expected to increase 5.3 percent in 1998 to 9.9 million tonnes and 8.6 percent in 1999 to 10.8 million tonnes. He predicted copper prices to average 80 cents this year and 75 cents a lb next year. BHP Copper also sees storm clouds on the horizon. ''We're not real optimistic about the copper market these days,'' said Harry Smith, group general manager for BHP Copper-North America, a unit of Broken Hill Proprietary Ltd (BHP.AX), in an interview with Reuters. ''I don't know how long prices are going to remain this low, but I don't think things are going to improve any time soon.'' Also addressed at the meeting in an impromptu panel was the rising spot merchant premiums, despite the market's low price and apparent oversupply. Spot premiums have nearly doubled in most locations around the country as a result of the scrap tightness and the Union Pacific problems. While conventional wisdom states that scrap supplies dry up as COMEX falls because the scrap dealers' inventories are devalued, Bernie Schilberg, executive vice president of Schilberg Integrated Metals tried to debunk the theory, noting that manufacturers have been becoming more efficient and generating less scrap. Meanwhile in the Midwest, consumers are seeking alternatives to shipping metal via the Union Pacific rail lines. Since August, Union Pacific shipments have slowed as a result of the company's lack of infrastructure to support the 1996 merger between Union Pacific and Southern Pacific. In some instances, some merchants have taken to the highways shipping copper via truck at an additional cost of approximately 0.50 cent to 1.00 cent a lb. In other instances, some merchants are bringing in metal from South America. One vessel is reportedly on its way to the London Metal Exchange warehouse in New Haven from Chile and another is believed to be coming into New Orleans from Peru. ''Any way you look at it, rail-free material is getting more expensive,'' said one producer. ''And it's going to stay that way until Union Pacific gets its act together or until the summer comes and the consumers take their maintenance shutdowns.''