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U.S. copper futures finished lower on Tuesday, as investors exercised caution ahead of the Federal Reserve’s monetary policy meeting. Copper has backed off its recent multi-year high, as a result of concerns over the recovery it the world’s second largest copper consumer- the United States of America.
By Leia Michele Toovey- Exclusive to Copper Investing News
The market will hold on to some stability, supported by Chinese demand. Copper stockpiles monitored by the Shanghai Futures Exchange fell to the lowest level in 11 months. Copper’s 26 percent price hike over the past year can be largely attributed to growth of manufacturing demand in China. While the Chinese will provide long- term support for the market absent new economic stimulus, sentiment over U.S. copper consumption may very well be the root cause of periodical downward corrections.
Copper futures for December delivery fell 1.4 cents, or 0.4 percent, to $3.4905 a pound at 11:16 a.m. on the Comex in New York. On the London Metal Exchange, copper for delivery in three months fell $37, or 0.5 percent, to $7,678 a metric tonne.
Investment powerhouse Goldman Sachs (NYSE:GS) issued a note to clients today regarding their expectations for the near-term copper market. Metals and mining analyst Sal Tharani stated that he predicts copper will be in short supply over the next year. As a result of that expectation, he upgraded shares of Freeport McMoRan Copper & Gold (NYSE: FCX) to “Buy” from “Neutral,” with a target price of $94, up from $79. Mr. Tharani predicts that the price of copper is likely to run to $3.20 this year, up from a prior estimate of $3.16, rising to $3.50 and $3.75 per lb. in 2011 and 2012, respectively.
Japan’s copper wire and cable shipments climbed 5.5 percent in August from a year earlier, gaining for the eighth-straight month, an industry group said. Shipments, including exports and domestic business, increased to 53,300 metric tonnes last month, from 50,531 tonnes a year earlier, the Japanese Electric Wire and Cable Makers’ Association said today in an e-mailed statement. The association raised its shipment estimates in the year ending March 2011 to 666,000 tonnes from the March projection of 661,000 tonnes.
Company News
Australian miner Avanco Resources (ASX: AVB) is pleased to announce is has obtained high copper grades from its drilling program at the Rio Verde project in Brazil. Avanco also said it could bring the high-grade zone into production soon to capture the rising copper price. The junior explorer said results from drilling at the Antas South deposit confirmed the existence of “an exceptionally high-grade copper zone within the greater resource area.” Included was a spectacular intercept of nine meters wide at 50.49 percent copper from 18 meters deep. The company is reported grades ranging from 2.08 percent copper to 14.79 percent copper from other parts of the deposit. Avanco said that it will now evaluate “the concept of using the high-grade zone as a springboard to become a very near-term copper producer with full exposure to an improving copper price.” Avanco shares rose a whopping 2.4 cents, or 92.31 percent, to touch 5 cents shortly after the announcement of these exceptional drill results.
USD Energy Corp. (PINK:UEGY) has signed a letter of intent with Santa Teresa Minerales of Chile to acquire 100 percent of their outstanding shares in an all-stock transaction. The closing of this transaction is subject to the completion of a definitive agreement, and satisfaction of the agreement’s conditions, and is expected to occur in late September or in early October. Santa Teresa Minerales engages in the acquisition, exploration, development, and operation of precious metal properties in South America. The company’s gold and copper mining operations are based in Santiago, Chile. Santa Teresa currently owns mining rights in four exploration projects: Casuto, Los Azules, Tauro Cinco and Los Chipi. Mineral exploration in these four projects include gold, copper and copper sulfate.
