Copper Investing News

By Leia Michele Toovey- Exclusive to Copper Investing News

This week on the London Metal Exchange, the industrial metals rallied. Copper for delivery in three months jumped $525, or 13 per cent, to $4,655 a metric ton. Aluminum advanced 2.7 per cent, nickel 7.8 per cent and zinc 7 per cent. This was a welcome relief, as the LME index of six metals has retreated for six consecutive weeks as copper and aluminum slumped to their lowest in three years.

US copper futures held strong gains into the close on Wednesday after the Federal Reserve cut another half point from key US interest rates, lowering them to 1 per cent. Copper for December delivery finished 12.35 per cent, higher at $2.0880 a lb on the New York Mercantile Exchange’s COMEX division; the range spanned from $1.8495 to $2.1150, its highest level since Oct. 21.The interest rate reduction was on order to address slower economic activity, however, according to analysts the rate cut was seen as a means to loosen the credit crunch, which in turn will help restore production and demand for copper and other base metals.

On Thursday, copper lost some footing, retreating almost 5 per cent in early trading as rising London Metal Exchange stocks halted this week’s short-covering rally. London Metal Exchange copper warehouse stocks increased by 1,750 tonnes to 217,300 tonnes on Wednesday. COMEX copper stocks stood even at 9,892 short tons as of Tuesday. In early trade sentiment was supported by dollar weakness, with the US currency posting its biggest one-day fall in 23 years against a basket of currencies after the Fed and Chinese central bank rate cut. Direction may change later in Thursday as sentiment will likely reflect the US third quarter GDP data.

Company news

The recent rebound in copper will be welcomed by miners, who have seen there 2008 profits go out the window on the back of the red metal’s ubiquitous price drop. Newmont Mining Corp. on Wednesday posted a 51 per cent drop in third-quarter profit, the result of lower gold prices and a steep drop in copper sales. Net income for the three months ended Sept. 30 fell to $196 million, or 43 cents a share, from $397 million, or 88 cents, a year earlier.

Earnings from ongoing operations were $177 million, or 39 cents a share, down from $331 million, or 73 cents, a year ago. Third-quarter revenue fell to $1.39 billion from $1.62 billion, topping the $1.37 billion analysts were looking for. Newmont sold 1.28 million ounces of gold at an average cost of $480 an ounce and a realized price of $865 an ounce, boosting revenue by 22 per cent to $1.3 billion from a year ago. Copper sales fell 84 per cent to $90 million, with most of the decline seen at its Indonesian mining operations. Demand for copper, used extensively for electrical wiring and pipe, has tapered off as a result of the US-led decline in homebuilding.

Chile, the world’s largest copper producer

Copper output tumbled 10.3 per cent in Chile in September from a year earlier, falling for a third consecutive month year-on-year amid less concentrate production from the nation’s largest mines. Copper output for September was 429,309 tonnes, compared to 425,524 tonnes in August when output was down 1.2 per cent versus the year ago period, and to 477,828 tonnes in September 2007. Output from January through September this year fell 3.1 per cent compared to the same period last year to 3,984,965 tonnes.

China, the world’s largest copper consumer

China’s largest copper producer, liangxi Copper is anticipating flat domestic demand over the coming years. The global financial turmoil and a weak domestic property market will be the culprits in eroding demand. Participants at a copper conference in China on Tuesday expected demand growth in the country to be 5-7 per cent next year, with the most bearish anticipating a contraction. “Domestic consumption won’t rise next year. It may be flat from this year,” a senior executive from Jiangxi told press. “Only infrastructure projects would be invested in next year. The auto and property sector are not doing well,” he said.