Is Copper Turning Around..?
Copper rises 40% and raises hopes of turnaround
April 14, 2009
COPPER producers have been cushioned from the recession by a surge in the base metal's price of more than 40 per cent this year.
Copper's central role in such heavy industrial activity as power and construction has led some economists to view the surge as a sign of a commodities revival.
Although the price of about $US4400 a tonne is half what it fetched a year ago, recent rises have lifted the struggling stock prices of Australian producers.
Shares in the Queensland miner PanAust have risen 50 per cent since mid-March, closing at 30c last week, while the smaller West Australian Aditya Birla Minerals has more than doubled from 12c in mid-March to 27.5c, prompting a price query from the stock exchange on Thursday.
Aditya said it had no specific reasons for the surge but referred to the meteoric rise in the price on the London Metal Exchange, where copper has outperformed aluminium and zinc.
The bounce is thought to be a result of Chinese stockpiling. But some see it as cause for hope since it defies predictions of world growth contracting 1 per cent next year - the sharpest downturn since 1946.
A Westpac economist, Justin Smirk, said the rise in copper and a 20 per cent rise in oil prices since mid-February could be "early green shoots" in commodity markets but did not signal an imminent jump in prices.
With base metal inventory stocks on the London exchange at their highest levels since the early '90s, the rise in copper prices seemed premature, he said.
Mr Smirk said demand from China would not offset a 3.3 per cent decline in OECD economies this year. "China remains a support for prices, but there is not enough to drive them higher this year," he said.
More optimistic watchers say the increase could be sustainable. An analyst at Credit Suisse, Paul McTaggart, said it was well supported by a shortage in supply and cuts to capital expenditure from several copper miners.
Any rise is significant for Australia because commodities are the largest component of the economy's exports. Export revenue could fall by more than $30 billion this year because of a plunge in bulk commodity prices.
Source: The Sydney Morning Herald
I hope you are right, but I think CU has hit its head on a ceiling for now. Great rally, but extremely bubbly at current levels...mainly due to inventories & global economic contraction. China has seen healthy numbers come out with an 8% jump in Industrial growth but that is due to their own economic insulation. Chinese exports will be rather weak.
Yep, it will take a bit more time..
I'm very bullish on copper, will have to keep a close on it for now..:wink:
its been turning for the last month.
i think it will consolidate between 2 and 2.10 for a couple of weeks before the next break up.
Copper Erases Decline on Outlook for Increased Demand in China
By Claudia Carpenter
April 15 (Bloomberg) -- Copper erased a decline in London as falling inventories signaled demand is picking up.
Inventories in warehouses monitored by the London Metal Exchange dropped 11,600 metric tons, or 2.4 percent, to 480,400 tons, the biggest drop since Oct. 21. Futures for May delivery in Shanghai are $485 a ton more expensive than London, encouraging Chinese consumers to import more metal, said Herwig Schmidt, head of sales at Triland Metals Ltd. in London.
This price differential works like a big vacuum cleaner, Schmidt said. As long as this goes on, people say, lets go with it.
Copper for delivery in three months rose $2 to $4,701 a ton at 10:17 a.m. in London after earlier today dropping $76, or 1.6 percent.
Copper gained 10 percent the previous four sessions, and yesterday traded at $4,925 a metric ton, the highest since Oct. 20, on increased imports from China, the worlds largest buyer. Metal scheduled to be taken out of warehouses, known as canceled warrants, fell the most since March 17, according to London Metal Exchange figures, signaling eroding demand.
Chinas demand tends to drop at these sort of prices, said David Thurtell, an analyst at Citigroup Inc. in London. They had their fill. The drop in inventories was attributable to stuff bought in March when prices were in the low to mid-$3,000 a ton, he said.
Demand outside of China may be hurt the most by the high prices.
The question is how many people will be there outside of China to rush in and buy because theyre just sitting there and looking at it, Schmidt said. Demand has not been very good outside of China, he said.
Canceled copper warrants dropped 14 percent to 57,525 tons.
London-based Rio Tinto Group produced 9 percent more mined copper in the first quarter because of a recovery in output at Kennecott Utah and Grasberg mines in Indonesia. Output in Chile at Escondida, the worlds largest copper mine, fell 34 percent.
Some speculators are probably reversing bets prices will fall, Zug, Switzerland-based Tiberius Asset Management AG said yesterday. Copper open interest, or the total number of options and futures outstanding, dropped 1.8 percent over three days last week as copper prices climbed 6.8 percent.
The S&P GSCI Index of 24 raw materials has gained 8.9 percent this year. Copper is up 53 percent.
Aluminum declined $14, or 0.9 percent, to $1,499 a ton. Inventories of aluminum jumped 0.4 percent to a record 3.67 million tons. Aluminum was the only LME metal to have an inventory gain.
Zinc rose $12, or 0.8 percent, to $1,452 a ton, nickel added $190, or 1.6 percent, to $12,040 a ton, and lead fell $5, or 0.3 percent, to $1,480 a ton.
To contact the reporter on this story: Claudia Carpenter in London at firstname.lastname@example.org
Last Updated: April 15, 2009 06:15 EDT
I think that we will continue to see a genuine increase in demand from China..
HUGE Stimulus = HUGE infrastructure spending.. :-)
I'll post it for ya TG, no charge. lol
does anyone else think the 1 year cu chart looks like a rounding bottom has formed???
Great work mate, thanks for the article.. :D
heheheheeh nice one genesis...... just imagine what PNA would be worth it ? LMFAO !
3 digits ? heheheheeh
Be very careful about what this all means.
Copper, or any commodity, being preferred to cash, may be just an excuse for hoarding and market control. China in the past has also simply stopped buying for months after cornering the market - at others expense.
If they do a switch you are likely to be the last to know - not a problem of course with tight stops.
Copper Rises, Heads for Longest Rally in a Year, on Equity Gain
By Millie Munshi
April 17 (Bloomberg) -- Copper rose, capping a fifth straight weekly gain and the longest rally in a year, as a rebound in equity markets revived prospects for economic growth and metal demand.
The Standard & Poors 500 Index rose as much as 1 percent, erasing an earlier decline. The gauge has climbed for three straight days and is up 1.7 percent this week. Copper is up 6.1 percent since April 9, the fifth straight week and the longest weekly rally since April last year, when the price was headed to a record.
Metals will continue to be driven by the trend in U.S. equity markets, which are an indicator of economic growth, Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said in a report.
Copper futures for July delivery rose 1.85 cents, or 0.8 percent, to $2.1975 a pound on the New York Mercantile Exchanges Comex division.
The metal will continue to increase as Chinese demand remains firm, said Michael Gross, a trader at OptionSellers.com in Tampa.
China has pledged 4 trillion yuan ($585 billion) in spending to prop up the economy and is considering additional stimulus measures. The country will continue to buy copper as part of its stockpiling program, Gross said.
The market seems to be fairly jubilant over the expectations for China, Gross said. I wouldnt be surprised to see the uptrend continue in the longer term.
Earlier, the metal lost as much as 1.9 percent on signs that the global economy remains sluggish, damping speculation that the worst of the recession was over.
The copper price has jumped 56 percent in 2009 and this week touched $2.2415, the highest price for a most-active contract since Oct. 20.
Copper has significantly exceeded expectations, UBS AG analysts led by Daniel Brebner in London said yesterday in a report e-mailed today. We believe that prices have likely overshot fair value given the extent to which global demand deteriorated.
The metal will average $1.65 a pound this year, UBS forecasts. Thats 25 percent below todays closing price.
On the London Metal Exchange, copper for delivery in three months gained $76, or 1.6 percent, to $4,805 a ton ($2.18 a pound). The price reached a record $8,940 on July 2.
To contact the reporter on this story: Millie Munshi in New York at email@example.com.
Last Updated: April 17, 2009 14:13 EDT
were seeing the consolidation between 2 and 2.10 i was eluding to in my earlier post above. If it can keep its head above 2 and consolidate for another week or so that is a very bullish sign. I rather this play out then it going ballistic and fall back hard.