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Copper prices started Tuesday’s session flat- after a welcome rally on Monday. Monday marked the sixth straight day that the red metal rallied; the longest ascent the metal has experienced in more than five months.
By Leia Michele Toovey- Exclusive to Copper Investing News
On Tuesday copper floated around $3.00 per pound. LME copper rose 3.2 percent last week, the most since April, as the dollar index retreated for the first time in three weeks. Stockpiles of copper tracked by the LME fell for a 20th day to 461,525 tonnes, the lowest level since Dec. 9. Bookings to remove metal from warehouses increased 4.9 percent to 30,600 tonnes.
Copper has slid 9.6 percent this year in London on concern about the solvency of European nations Greece, Spain and Portugal. Concerns that Chinese demand may be waning also contributed to the red metal’s decline. The recent reversal in the trend came in as fresh data eased concerns that a double dip recession was on its way.
According to RBS, China’s economy will expand by 11 percent this year and 9.5 percent in 2011. Concerns over the euro-zone economy eased as a report showed that industrial production in the 16 countries that make up the euro-zone grew more than forecast this past April. Stocks and most commodities rose after the news got out. The euro jumped back above $1.22 for the first time since June 4, rising to $1.2228. The currency has been considered a strong indicator of confidence in Europe’s economy and has often driven stocks and other risky assets like commodities lower in recent weeks.
Chile’s copper export revenue rose 30 percent in May compared with a year earlier as increasing demand for the metal in China helped boost prices. Revenue was $2.76 billion last month, compared with $2.11 billion in the prior period, according to a statement posted today on the central bank’s website. Rising demand from the Asian nation, coupled with production constraints, will leave the metal in short supply through 2014, Societe Generale said in a June 11 report. Chile’s copper revenue dropped 12.6 percent in May compared with the previous month after prices slid 11.2 percent between April and May.
Company News
After receiving the final environmental approval, Rio Tinto (NYSE:RTP) is ready to go ahead with their $469 million investment in the construction of the Kennecott Eagle nickel and copper mine in Michigan’s Upper Peninsula. Construction of the mine and mill will begin this year, and first production is expected in late 2013. Eagle will be the only primary nickel mine in the US. The mine will produce separate nickel and copper concentrates containing an average of 17,300 and 13,200 tonnes per year of nickel and copper metal respectively over six years.
A general strike against US owned, Peru based Doe Run Peru smelter has paralyzed the city. Employees at Doe Run’s smelter in La Oroya were in force to shut down the main road linking the region with capital city of Lima. Police were able to clear the highway; however motorists opted to avoid the area due to the presence of pickets. Many of the region’s schools and businesses remained closed in solidarity with the strike. Doe Run suspended operations a year ago amid severe financial problems, and the firms inability to comply with the government mandated clean-up program. Doe Run has completed about half of the clean-up work, but says in order to complete the job they will need another $160 million. The minister of energy and mines will mandate the closure of the smelter come July 24, unless Doe Run is able to complete the necessary environmental remediation. Doe Run has operated the La Oroya smelter since 1997. The smelter produces lead, zinc, copper, silver, and gold.
