US Jobs and Housing Lift Copper

Copper made gains Thursday as jobless claims in the United States fell unexpectedly and as the country’s housing market showed signs of improvement. Earlier in the week, prices dropped amid uncertainty regarding how China’s measures to tighten its control of its real estate market may impact copper demand.

“As far as the U.S. is concerned there are clearly a lot of things that are positive,” Nic Brown, head of commodity research at Natixis, told Reuters. Still, he cautioned that base metals are unlikely to show significant gains until the market sees clear signs of strong demand from China, which accounts for over 40 percent of global copper consumption.

Meanwhile, Steven Lewis, a senior copper analyst at Wood MacKenzie, warned that copper prices will come under “downward pressure” this year as supply growth starts to come through and demand slows, Bloomberg reported.

On the London Metal Exchange, copper for three-month delivery closed up 1 percent, to $7,765 per metric ton (MT), after slipping 1 percent on Wednesday. COMEX copper for May delivery was up 0.6 percent, at $3.5155 per pound, in mid-afternoon trade in New York.

Company news

Freeport-McMoRan Copper & Gold (NYSE:FCX) may double sales of copper concentrate to China in the next three years as mined production expands, Bloomberg reported, citing Javier Targhetta, senior vice president of marketing and sales at Freeport.

Codelco, the world’s largest copper producer, has raised the estimated investment amount for its Chuquicamata underground project to $4.16 billion from $3.83 billion, BNamericas reported, as per information revealed by Sergio Fuentes, the company’s vice president of projects. He added that for 2013, capital expenditure will exceed $5 billion, a new record.

Separately, Codelco’s corporate sales vice president said the company is scaling back sales to China “in order to allocate more in Europe and the U.S.,” according to Reuters. He said that copper demand is still rising in China, but that the country is dipping more into its own stocks.

China’s largest copper producer, Jiangxi Copper Company (SSE:600362), said that copper consumption in the country is poised to expand, meaning that copper prices may rise this year to trade between $8,000 and $8,300 per MT, Bloomberg reported, quoting the company’s chairman, Li Baomin.

In its preliminary results for 2012, Glencore International (LSE:GLEN) announced that the deadline for its merger with Xstrata (LSE:XTA) has been extended to April 16. The company also said that its revenue rose 15 percent in 2012, mostly due to higher volumes caused by weaker prices for commodities. It noted that rising costs, ongoing production disruptions, project delays and declining grades will “remain a feature of the copper industry for the foreseeable future despite the material scheduled expansions in global mined production.”

Xstrata said its revenue fell 7 percent in 2012, while its earnings per share dropped 37 percent on higher costs and weaker commodities prices.

Rio Tinto (LSE:RIO,ASX:RIO,NYSE:RIO) is on track to start producing at the Oyu Tolgoi copper and gold project in Mongolia in June despite the fact that it has failed to resolve cost disputes with the government, Reuters reported. The two entities will continue talks through March.

KGHM Polska Miedz (PINK:KGHPF) said its copper production rose 18 percent in 2012 from the year before, noting that on average, copper prices were down 10 percent during the year. Its production costs rose 42 percent, mainly due to a new tax on minerals.

Sandfire Resources (ASX:SFR) made its first after-tax profit of of AU$79.1 million after beginning commissioning at its DeGrussa copper-gold project in Western Australia.

Junior company news

Teck Resources (NYSE:TCK,TSX:TCK.B) granted Catalyst Copper (TSXV:CCY) the option to acquire its stake in the La Verde copper project in Mexico for up to $25 million. Catalyst meanwhile closed the first tranche of a private placement, raising $244,000. The company decided not to complete the placement.

Avrupa Minerals (TSXV:AVU) started phase-three drilling at its Alvalade project in Portugal. The project is fully funded by Antofagasta Minerals.

Taseko Mines (TSX:TKO,AMEX:TGB) submitted additional information to support its original environmental impact statement for the New Prosperity copper-gold project.

South American Silver (TSX:SAC,OTCQX:SOHAF) resumed drilling at its Chile-based Escalones copper-gold project after a severe storm on February 8 disrupted the process by damaging the access road leading to the site. All three rigs are currently operating.

Excelsior Mining (TSXV:MIN) said 34 percent of the metal that was previously defined as indicated resources at its Gunnison copper project in Arizona has been upgraded to the measured resources category. The measured resource now includes 1.1 billion pounds of copper, while indicated reserves sit at 2.11 billion pounds of copper.

Kombat Copper (TSXV:KBT) started drilling at its licenses in the Otavi Mountainland of Northern Namibia. “Historical information and existing mineralisation on both ours and neighbouring [exclusive prospecting licenses] lead us to believe we have some very significant targets which have yet to be adequately tested,” said President Alexander Helmel.

Securities Disclosure: I, Ragnhild Kjetland, hold no investment interest in any company mentioned in this article.