Copper Scales a New Peak

By Leia Michele Toovey- Exclusive to Copper Investing News

Copper prices hit a 19-month peak as increased risk appetite drove investors to the red metal. The biggest fear permeating the market in recent weeks has been the potential for fall-out from an economic collapse in Greece. These fears were pacified this week; on Tuesday, Greece  followed up Monday’s seven-year syndicated bond deal with an announcement that it will re-open the 5.9 percent October 2022 government bond at an auction, to raise up to US$1.35 billion.

Extra impetus for copper came by way of a weak greenback, and collapsing inventories. Stockpiles of copper in warehouses monitored by the London Metal Exchange fell for a 19th straight time, the longest slump since July.  A falling dollar makes commodities priced in the currency cheaper for overseas buyers.

The markets are anticipating important data out of the US.  On Friday, non-farm payroll jobs data from the world’s largest economy will be issued.  However, the markets will be closed and the effects of the data will take until the following week to be felt.

So far this year, the metal has climbed 5.6 percent and is on track for a fifth straight quarterly gain. Prices are being driven by increasing demand and a reduction in inventories as overall the global economic outlook trots down the path to recovery.  Coupled with the lack of new copper projects coming on-line, the evidence is accumulating that the red metal is poised to hit the next platform en route to recovery.

Data out of Chile highlighted that the earthquake did little to affect copper output.  In fact, February copper output rose 3.8 percent compared to last year, touching 394,742 tonnes. The National Statistics Institute said the quake resulted in only minor damage to some mines and had marginal impact over output after some deposits halted operations briefly due to power disruptions. Daily production in February was 14,097 tonnes. In January, the South American country produced 13,678 tonnes a day.

Company News

Freeport-McMoRan Copper & Gold Inc. will pay dividends to holders of both common and preferred stock.  The company said Thursday it would pay a dividend of 15 cents per share for common stock, and $1.6875 per share for 6 percent mandatory convertible preferred stock. The preferred stock will automatically convert May 1 to between 39 million and 47 million shares of common stock depending on the average closing price of the common stock from March 31 through April 28.

Vancouver based Catalyst Copper Corp. is undertaking a non-brokered private placement of up to 20,000,000 units at a price of $0.15 per unit for gross proceeds of C$3,000,000. Each unit will consist of one common share and one half of a common share purchase warrant. Each whole warrant will entitle its holder to purchase one additional common share of the Company for five years from the closing date at a price of $0.30 per common share. The Company will use the proceeds of the offering to pay the remaining US$2 million of bridge financing to Endeavor Financial International Limited, as well as for the purpose of funding their 2010 exploration plans.

Jiangxi Copper Co., China’s biggest producer of the metal, said profit rose 2.81 percent last year. Net income rose to US $344 million or US$ 0.12 Yuan a share, the Guixi, Jiangxi province-based company said today in a statement to the Hong Kong stock exchange.  Jiangxi will spend at least US$117 million to gain a controlling stake in Yantai Penghui Copper Industry Co Ltd. Jiangxi will hold 42 percent stake in the target firm that is expected to have an annual output of 200,000 tonnes. Its sales revenue for last year exceeded US $732 million.