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Copper surprised analysts Tuesday, recovering from Monday’s losses. Copper prices dropped on Monday, over concerns regarding China’s demand for the base metal.
By Leia Michele Toovey- Exclusive toCopper Investing News
These fears permeated the entire market, and sent the metals on a downward spiral. Both gold and silver futures shed 0.9 percent. Copper, however, led losses among metals, down 4 cents, or 1.5 percent, to $3 a pound. Analysts were expecting that copper would extend Monday’s losses on Tuesday, however, the red metal recovered, in sympathy with rallies in the euro and equities. Concerns over china’s demand still affected the market, keeping a lid on the metal’s gains. Copper for September delivery rose 0.85 percent to settle at $3.0175 per lb on the COMEX. The range extended down from $3.0350 to $2.9720, its lowest level since July 7.
The stockpile situation remains positive for copper. London Metal Exchange metal stocks shed another 2,700 tonnes to 432,550 tonnes, down more than 100,000 tonnes since mid-February. Copper canceled warrants, material earmarked for delivery, are at 27,175, up from below 15,000 in mid-April. LME copper for three-month delivery ended at $6,685 per tonne, up $55 from Monday’s close.
Copper futures have dropped 10 percent this year on concern that Europe’s sovereign-debt crisis may hamper economies, crimping usage of metals. Portugal’s credit rating today was cut two levels to A1 at Moody’s Investors Service, citing a growing debt burden and weak economic growth prospects. German investor confidence declined for a third month in July.
The copper concentrate market remains very tight, and as a result, Japanese smelters are bracing for their toughest negotiations in at least a decade over mid-year copper processing fees. The fees, known as the treatment charge and the refining charge (TC/RC), represent the profit margin for smelters. When copper concentrate supply is low, firms are forced to offer low fees to attract sufficient raw material to keep their smelters running.” The mid-year contract should settle at $40 (a tonne) and 4 (cents/lb), maybe $39 and 3.9 (cents). That’s the lowest since at least 2001. There is a structural problem in the copper market — too few concentrates and too many smelters,” said Grace Qu, copper specialist at CRU Consulting in Beijing.
Company News
Ivanhoe Mines Ltd. (NYSE: IVN) plans to scrap an accord limiting its ability to bring new investors into the $4.6 billion Oyu Tolgoi mining project in Mongolia, intensifying a dispute with Rio Tinto Group (NYSE: RIO) its largest shareholder. Ivanhoe issued Rio with a 60-day notice of intention to dissolve the so-called strategic investor covenant, which governs Rio’s investment in the company. By terminating the agreement, Ivanhoe would be free to issue more than 5 percent of its stock to one or more investors. Rio, which owns 30 percent of Ivanhoe, said last week it was taking Ivanhoe to arbitration over a shareholders plan implemented by the Canadian company. At stake is the ownership of Ivanhoe and Oyu Tolgoi, which has been described by Rio as the world’s largest untapped copper and gold resource. Ivanhoe’s shares reacted positively to the news.
Copper production and Africa’s largest producer, Equinox Minerals‘ (ASE: EQN) Lumwana mine in Zambia, rose 59 percent in the first half of 2010. The company credits improved efficiency to its increase in production. Production rose to 74,306 tonnes in the first half of 2010 from 46,676 tonnes in the same period of 2009. Copper production in the second quarter of 2010 was 80 percent higher than the corresponding quarter of 2009 and 44 percent higher than the first quarter of this year, the company said. The company, which produced 109,413 tonnes of copper in 2009, said it was maintaining the production estimate of 135,000 tonnes of copper at the Lumwana mine in 2010
With help from Assistant Editor Vivien Diniz