US Markets Begin Comeback as Canadian Indexes Waver

Morning Market Breakdown, March 28: After a tough Tuesday across the board, American indexes spent Wednesday morning trying to rally.

Tuesday (March 27) brought a sudden plunge for the S&P/TSX Composite Index (INDEXTSI:OSPTX), which lost 82.38 points to close at 15,216.18.

Wednesday (March 28) morning it saw further losses when it dropped 8.26 points to reach 15,207.92.

The S&P/TSX Venture Composite Index (INDEXTSI:JX) continued downward to close at 802.83 on Tuesday, a 13.71-point drop. The TSXV kept falling on Wednesday morning, losing 10.78 points to hit 792.05.

Despite gains in the telecom sector, tech and healthcare stocks took heavy hits that outweighed positivity. Aphria (TSX:APH) fell 2.1 percent and Crescita Therapeutics (TSX:CTX) dropped 8 percent, while in tech BlackBerry (TSX:BB) slipped 5.1 percent and Constellation Software (TSX:CSU) lost 2.6 percent.

While the Dow Jones Industrial Average (INDEXDJX:.DJI) started the week on a strong note, it lost its footing on Tuesday when it fell 344.89 points to close at 23,857.71. Wednesday morning it saw some growth, picking up 78.19 points to reach 23,935.9.

The S&P 500 (INDEXSP:.INX) fumbled 45.73 points on Tuesday to close in the red at 2,612.62. The index managed to regroup on Wednesday morning when it picked up 5.68 points to reach 2,618.3.

Tech sector losses dragged down the major indexes, as Facebook (NASDAQ:FB) shares dropped 4.9 percent after Bank of America Merrill Lynch lowered its price target on the stock. Nvidia (NASDAQ:NVDA) also lost 7.8 percent after Reuters reported that it would be suspending self-driving tests.

Note: All numbers shown above were accurate as of 10:00 a.m. EST.

Daily metals

Gold managed some growth when it closed at US$1,344.73 per ounce on Tuesday. It lost its grip on Wednesday morning as it fell to US$1,331.25. Silver plateaued on Tuesday when it closed at US$16.53 per ounce. It skidded downwards on Wednesday morning as it hit US$16.34.

Copper made small progress on Tuesday when it closed at US$3 per pound. It regressed slightly on Wednesday morning when it fell back to US$2.99.

Major miner news

  • IAMGOLD (TSX:IMG,NYSE:IAG): IAMGOLD has released the first mineral resource estimate for its Monster Lake project, a joint venture with TomaGold (TSXV:LOT) and Quinto Resources (TSXV:QIT) in Quebec. The project has an inferred resource of over 1.1 million tonnes averaging 12.14 grams of gold per tonne for 433,300 ounces of contained gold.
  • Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO): Rio Tinto has sold an 80-percent interest in its Kestrel coal mine, located in Queensland, for US$2.25 billion. The transaction was made with private equity firm EMR Capital and PT Adaro Energy, an Indonesian coal company, with the funds said to be going towards “general corporate purposes.”

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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Recycled copper scrap contributes significantly to copper supply and plays a behind-the-scenes role in balancing the copper market.

Copper is one of the most important materials in our everyday life, and copper scrap material represents a strategic source of the crucial base metal.

Copper is widely used in building construction, electrical grids, electronic products, transportation equipment and home appliances. Rising demand for renewable energy, electric vehicles and high-tech products bodes well for copper, as it has the highest conductivity of any metal apart from silver, making it an ideal material for the emerging green economy.


Recycled copper scrap contributes significantly to copper supply and plays a behind-the-scenes role in balancing the copper market. "Copper's recycling value is so great that premium-grade scrap normally has at least 95 (percent) of the value of the primary metal from newly mined ore," states a report from the Copper Development Association.

What's more, scrap has been referred to as "the world's largest copper mine," and perhaps the most responsive as well, given producers' ability to source more or less depending on prices. Read on to learn about this material and its impact on the global copper market.

What is copper scrap?

As with many metals, copper is 100 percent recyclable and for the most part retains its wide variety of beneficial properties when it is reused. Copper scrap material — also known as secondary copper — can be divided into two main categories: new scrap and old scrap.

New scrap is copper metal discarded in fabrication and manufacturing processes, and is typically considered higher-grade material than old scrap. Old scrap refers to copper wire, copper tubing, roofing copper or copper pipe from post-consumer products that can be converted to refined metal and alloys.

During the recycling process, these secondary copper materials are smelted in furnaces and then further processed and refined. Electrical applications require high-grade copper, and while newly mined copper is often preferred for this purpose, premium-quality new scrap material can be used as well. Recycled copper for use in non-electrical applications, such as plumbing tubes or roofing sheets, is often old scrap.

Scrap metal recycling benefits the environment in many ways, such as by reducing energy use, greenhouse gas emissions and landfill waste. Putting this into perspective, the International Copper Study Group notes that one computer contains around 1.5 kilograms (3.3 pounds) of copper, while a typical home can contain as much as 100 kilograms (220 pounds).

According to the group, recycling copper requires 85 percent less energy than primary copper production at the mine level. On a global level, copper recycling reduces electrical energy use by 100 million MWh and keeps 40 million tonnes of carbon dioxide out of the atmosphere on an annual basis.

The copper scrap market's key players

Copper scrap meets about 30 percent of total global copper demand, as per the International Copper Association. Percentages vary — in the US, copper scrap contributes about 35 percent of the nation's copper supply (USGS data), while in Europe recycled copper accounts for about 50 percent of all copper use (International Copper Study Group data).

China, which makes up around half of global demand for copper, is also the world's largest refiner of copper from scrap material. Secondary copper production in China has averaged more than 1.5 million tonnes per year for the last decade, equal to about 30 percent of the nation's total copper consumption.

Much of that secondary copper comes from imports, largely from the US. In 2020, China reportedly imported 944,000 tonnes of high-purity copper scrap material from the United States.

This figure represents a steep drop from the 1.5 million tonnes imported in 2019 and the 2.4 million tonnes imported in 2018. The dramatic slide in copper imports is reflective of China's recently instituted restrictions on scrap metal imports, including copper, as part of its fight against environmental pollution.

The restrictions were introduced as a prelude to a planned outright ban on imports of what China calls "foreign garbage" that was intended to go into effect in 2020. But the COVID-19 pandemic and a lack of clarity from the country's government created confusion about the path forward.

Explaining the situation at the time, Bloomberg stated that China's restrictions on copper scrap imports "forced the country's highly lucrative processing industry to move overseas." Unfortunately, that happened alongside renewed demand for copper in China and the coronavirus outbreak, which disrupted both primary and secondary copper supply lines at a global level.

"Copper scrap trading was particularly affected by the COVID-19 crisis, which has led to a shortage of scrap metal," Research and Markets reported. Jonathan Barnes, senior copper analyst at Roskill, estimates that the global trading in copper scrap fell by around 30 percent in the first half of 2020.

The COVID-19-induced supply gap, along with intense pressure from the nation's copper scrap recyclers, led China to exempt high-grade copper scrap imports from the waste ban, reclassifying them as "resources" rather than "waste." The Chinese government also suspended its 25 percent tax on US copper scrap import, reported Reuters.

As of mid 2021, copper scrap supplies remain tight in China, with US imports of higher grade copper scrap metal still in high demand.

Outlook for the copper scrap market

Copper is a key material in many industries, and undersupply issues in the global copper market are nothing new — in fact, calls for peak copper have been made for more than a decade.

Where there's demand and a lack of supply, there's a need for scrap copper. This material will continue to play an important role in the overall copper market, especially in times when primary copper mines experience disruption or when they are simply not producing enough of the metal to feed demand.

This is an updated version of an article first published by the Investing News Network in 2011.

Don't forget to follow us @INN_Resource for real-time updates!

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

For some investors natural gas remains an exciting frontier. Read on for an in-depth look at why natural gas investing can be compelling.

The US Energy Information Administration says natural gas is the most widely used fuel for space heating in the US, and it has also started to beat out coal as the top fuel for power generation. Even so, demand for natural gas around the world can be volatile as it is very much dependent on the weather.

Natural gas is a hydrocarbon gas mixture primarily composed of methane. It should not to be confused with ethane, which is another type of odorless gas. It can be found by itself or in association with oil, and is one of the safest and most useful forms of clean energy. Natural gas is often cooled to produce liquefied natural gas (LNG in order to reduce transport risk and allow for easier storage.


For some investors, natural gas investment remains an exciting frontier and a potentially lucrative portfolio addition. Read on for a more in-depth look at why natural gas investing can be compelling and for a brief overview of how to start investing in this sector.

Natural gas investing: Market outlook

As mentioned, volatility in natural gas demand often leads to big spikes and declines in natural gas prices. At the end of 2017, analysts thought a decrease in natural gas production could reduce inventories and drive up demand; other experts expected prices to remain low over the next few years.

2020 seemed to prove the latter camp correct — natural gas prices remained at historic lows, with the coronavirus pandemic wreaking havoc on energy commodities across the board.

However, 2021 has gone to the bulls and 2022 looks set for higher natural gas prices as well. In its Q4 2021 Gas Market Report, the International Energy Association (IEA) noted that the winter of 2021/2022 opened October 1 with record-high gas prices for the season. The report's analysts attribute the increase in prices to "strong recovery in demand, extreme weather events and unplanned supply outages," all of which have lead to tighter markets.

Record-high spot gas prices have had the most impact in Europe and Asia amidst lower-than-average storage inventory levels. The IEA is forecasting that the global gas demand will finish 2021 up by around 3.2 percent year-over-year.

"This recovery in gas demand has been driven mainly by fast-growing markets — primarily in Asia and, to a lesser extent, the Middle East — and subject to uncertainties regarding industrial rebound or fuel price competitiveness," researchers said.

As one of the largest and best-known oil- and gas-producing regions, the Middle East is crucial to watch and plays a significant role in the Organization of the Petroleum Producing Countries (OPEC), which helps dictate the cost of oil and gas in the energy sector.

Of course, any number of factors could cause the natural gas sector's outlook to change. A key part of the picture that investors will want to be aware of is US President Joe Biden's pledge to make cutting methane emissions a central part of his agenda, as evidenced by the EPA's recently proposed regulations on the nation's many oil and gas wells, including plugging methane gas leaks at gas and oil wells in the US.

It's also important for market participants to keep an eye on issues related to hydraulic fracturing. The process, commonly known as fracking, is used to extract shale gas deposits from the ground. It has come under fire in recent years for its environmental impact.

All of that uncertainty may be daunting, but an investor interested in the potential of natural gas investment should not necessarily be discouraged — after all, while prices for the fuel can reach incredible lows, they can also climb to incredible highs, which no doubt affects companies in the sector.

Natural gas investing: ETFs, futures and stocks

Investors who make the decision to invest in natural gas as a commodity have plenty of ways to gain exposure to the fuel. Exchange-traded funds (ETFs) are one possibility, as is buying a futures contract or investing in natural gas stocks on an exchange.

According to ETF Database, there are five natural gas ETFs including the United States Natural Gas Fund (ARCA:UNG) and the ProShares Ultra Bloomberg Natural Gas ETF (ARCA:BOIL). It is worth noting that some ETF investments offer exposure to both the oil and gas markets simultaneously.

Investors considering investing in natural gas futures should be aware that these contracts are very liquid and extremely active throughout the week. Trading in natural gas futures is generally heaviest on Thursdays, when the US Department of Energy releases its weekly natural gas storage report.

Some of the top natural gas futures contracts include NG Henry Hub Natural Gas Futures, QG E-mini Natural Gas Futures and Delivered Natural Gas Futures.

Lastly, investors can opt to invest in gas companies involved in the natural gas market. As with ETFs, many companies that are exploring for or producing natural gas are also focused on oil. It is difficult to find companies that are aimed purely at natural gas.

That said, some large companies that are heavily involved in natural gas include Suncor Energy (NYSE:SU,TSX:SU) and Devon Energy (NYSE:DVN). If you are interested in other stocks, you can check out our list of the top oil and gas stocks on the TSX and TSXV here.

Don't forget to follow us @INN_Resource for real-time news updates!

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

MARKETS

Markets
TSX21398.99-21.78
TSXV958.18-8.18
DOW35685.56+66.31
S&P 5004664.27-18.67
NASD15627.54-227.22
ASX7353.10-43.40

COMMODITIES

Commodities
Gold1786.34-22.51
Silver23.46-0.76
Copper4.43+0.03
Palladium1862.50-99.50
Platinum967.00-47.50
Oil78.62+1.87
Heating Oil2.38+0.06
Natural Gas5.00+0.21

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