Base Metals

Copper’s wining streak came to an end due to profit taking as investors continue to worry about Europe’s debt crisis and the longer-term US economic outlook.

Profit taking put a damper on a three-day winning streak for copper, which gained this week following the release of strong US economic data. Analysts expect the red metal to remain range-bound at the end of the second quarter and before the conclusion of the latest European Union summit meeting on Friday.

With new single-family home sales in the US rising 7.6 percent in May to a two-year high of 369,000 units, the broader stock market – as well as commodities including copper – gained, and hopes for a steady recovery in the housing market rose. In addition, the National Association of Realtors reported that home purchases rose 5.9 percent in May, the highest rate since last October.

Durable goods demand beat analysts’ expectations, rising 1.1 percent in May as demand for transportation equipment in particular increased. Still, durable goods orders for the first five months of 2012 are down 5.7 percent from the same period a year ago, which is raising concerns about just how strong the US economy is and whether it can offset weakness elsewhere.

For now, worries about Europe are keeping investors from shoring up copper. European leaders will be concluding their two-day meeting in Brussels on Friday, but most analysts are not expecting any significant breakthrough in the Eurozone’s debt crisis as a result of the talks.

In early afternoon trading Thursday, COMEX copper for July delivery was 0.8 percent lower at $3.33 a pound.

Company news

Barrick Gold (NYSE:ABX,TSX:ABX) was unsuccessful in blocking Goldcorp (NYSE:GG,TSX:G) from acquiring a majority stake in the El Morro copper and gold project. Goldcorp made a bid for the Chilean mine in 2010, and an Ontario court dismissed Barrick’s allegations that the deal was unlawful and ineffective.

Also in Chile, Anglo American (LSE:AAL) and Codelco agreed to extend the deadline for resolving their dispute over Anglo American Sur to July 17. The British mining group stated that “both parties have requested the continued suspension of their legal proceedings … to allow talks to continue.” Codelco maintains that it has the option to acquire a 49 percent stake in Anglo American’s Chilean unit despite the fact that Anglo American sold a 24.5 percent share in the company to Japan’s Mitsubishi (TSE:8058).

Mongolian voters will decide on their future leader this weekend. Election results are expected to influence how the country will distribute its natural resource wealth, which is estimated at over $1.3 trillion. With its investment in the Oyu Tolgoi copper mine, Rio Tinto (LSE:RIO,NYSE:RIO,ASX:RIO) is heavily invested in Mongolia, which may elect to increase taxes on foreign companies tapping into the country’s mineral wealth. Polls suggest that Democratic Party leader Norovyn Altankhuyag will beat Prime Minister Sukhbaatar Batbold and the Mongolian People’s Party.

BHP Billiton (ASX:BHP) reached an agreement with two Japanese smelters and one South Korean smelter for its Escondida mine on mid-term copper concentrate treatment charges of $63.50 a ton and 6.35 cents a pound, according to Reuters.

Junior company news

Vancouver-based Sunridge Gold (TSXV:SGC,OTCQX:SGCNF) drilled 58 meters of 1.44 percent copper at its Adi Rassi copper and gold project in Eritrea.

“With four deposits now in the final feasibility stage we have added the possibility of a fifth deposit. Given the proximity of Adi Rassi to the other deposits this could add significant value to the economics of the overall project. Although much of Sunridge’s recent efforts have been on advancing the four established deposits towards production with the ongoing engineering studies, it is important to remember that numerous high priority new exploration targets remain on the property,” stated president and CEO Michael Hopley.

IBC Advanced Alloys (TSXV:IB,OTCQX:IAALF) signed an exclusive supply contract to supply a proprietary alloy to an unidentified major aerospace industry group. President Mark Wolma stated, “[t]his exclusive supply agreement validates IBC’s steadily improving track record of high quality and on time deliveries and demonstrates our commitment to providing materials solutions to our global customers.”


Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.


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