Copper Investing News

By Leia Michele Toovey - Exclusive to Copper Investing News

A refreshed demand picture combined with shrinking supply caused the copper market to show the most positive activity in the past four months. The metal for delivery in three months rose as much as $145, or 1.8 percent, to $8,175 per tonne on the London Metal Exchange on Wednesday. On the Shanghai Futures Exchange, copper posted its biggest gain for October delivery, adding 1.7 percent to hit $9,051 per tonne. On Thursday, India’s copper futures continued to build on gains from Wednesday. August copper was at 343.20 rupees per kg, up 0.25 percent from the previous day. U.S. copper futures edged higher in early dealings on Thursday, buoyed by dollar weakness and strength in surrounding commodity markets. However, the advance was tempered due to economic growth concerns after data showed the American economy grew less than expected in the second quarter. Copper for September delivery was trading up 1.50 cents at $3.6610 a lb by 10:16 a.m. on the the New York Mercantile Exchange’s COMEX division. The morning range spanned $3.6390 to $3.7035.

The price of copper has risen steadily this year, gaining 22 percent. However, the rise has been suppressed by fears of shrinking global demand. The tumultuous economic past in America has left many analysts murmuring “Global Recession” and the fear that copper consuming giant China would go through a slow down has put a damper on copper’s ascent. Positive support has been extended by supply disruptions shrinking stockpiles. Given coppers overall positive trend, it would seem that the supply disruptions are winning over the rumours of a Chinese slowdown. This week’s copper price climb was fueled by Grupo Mexico SAB’s claim that they have yet to set a date to resume production at Cananea, the largest copper mine in Mexico. Cananea hasn’t been open since April because of a labour dispute. Average annual output at Cannea was 130,000 tonnes, and Grupo Mexico was the world’s seventh-largest copper producer by 2007 output. Further labour unrest in Latin America early this year also decreased the metal’s stockpiles.

Copper’s price is causing mining companies to step up production in an effort to capitalize. Pan Australian Resources Ltd (ASX:PNA) is looking to increase copper output from its Phu Kham mine in Laos beyond a targeted 75,000 tonnes in 2010 by a further 25,000 tonnes to meet a growing shortfall in copper imports from nearby locations in southeast Asia. Pan Australian Resources is doing this in effort to meet what they call “growing Chinese demand”. Chilean Antofagasta Plc increased their second-quarter output by extracting more metal from ore. Output was 119,000 metric tons, compared with 106,100 tons a year earlier.

Many companies are reporting record earnings due to the high price of copper. Barrick Gold Corporation (TSX:ABX, NYSE:ABX) the world’s largest gold producer, said second-quarter profit increased 22 percent amid soaring prices for bullion and copper. Barrick’s shares are also on an upward trend. Today, when I did a spot check on prices, they were up 2 percent to $42.42 in New York Stock Exchange trading. Today’s high was $43.98. Anglo American Plc (JSE:ANGLO) the world’s fourth-biggest diversified mining company, said first-half profit rose 27 percent as platinum, copper and iron ore prices climbed to records. Anglo is selling assets to focus operations on metals such as copper and iron-ore needed by the booming economies of China and India. The company is benefiting from higher aggregate metal prices across the board, and they expect to see some good numbers still going forward. Anglo’s shares have not performed that great this year, dropping 5.2 percent. The company’s current market value is an estimated $76.5 billion.