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High Hopes For Metals – US-FOREX.US

Forex-Publisher — Thu, 20 Aug 2009 03:14:24 +0000

While recent pullbacks across raw materials may stoke fears of the bubble bursting, commodities bulls are undeterred. Inventories, after all, are extremely low and will have to be replenished once demand improves. Until then, volatility is just part of the game.Fears that China’s inventory build is over and that the economic recovery won’t be as robust may pressure prices of industrial metals in the near-term, but the sector’s long-term growth prospects remain promising. Thus far, China has been a main driver behind metals price growth but, according to Barclays Capital analyst Kevin Norrish, “the potential still exists for a significant boost to global metals consumption over the coming months as the industrialized work manufacturing sector recovers from double-digit declines registered in the first half of 2009.”The firm hiked its price forecasts for the metals on Wednesday, citing expectations for demand among developed countries that will be swifter than the market is anticipating. “We expect metal inventories to be rundown through the second half of 2009 with the recovery in OECD demand likely to be sharp and strong,” said analyst Gayle Berry. On Wednesday, the Materials SPDR
exchange-traded fund closed ahead by 35 cents, or 1.2%, at 29.44; and the SPDR S&P Metals and Mining
ETF closed up by 22 cents, or 0.6%, at 40.17. Year-to-date, the funds have gained nearly 30% and 45%, respectively.

Barricks Precious Production – US-FOREX.US

Forex-Publisher — Wed, 29 Jul 2009 20:45:58 +0000

Investors dig Barrick Gold’s vigorous project lineup, and progress updates will be the focus of Thursday’s second-quarter release as the market gauges whether the world’s largest gold producer remains on track to meet the year’s production targets.In May, the Toronto-based gold producer poured first gold at Buzwagi, its Tanzanian mine, where production this year is expected to total 200,000 ounces. Other projects in the works appeared to be on track when the company last released quarterly results in April, and investors are expecting a complete update on Thursday morning. UBS analyst Brian MacArthur expects higher gold and copper prices to benefit Barrick’s second-quarter results, and analysts polled by Thomson Reuters are projecting earnings of 38 cents a share on sales of 1.9 billion. MacArthur is also awaiting project progress updates for the company’s big three: Cortez Hills in Nevada, Pueblo Viejo in the Dominican Republic, and Pascua Lama, which is located in the Andes Mountains on the border between Chile and Argentina. In April, Barrick Gold
said it made substantial progress securing remaining permits and approvals and was working to resolve cross-border taxation arrangements with the two bordering countries. So far, the Pueblo Viejo project has remained within its preproduction capital budget of 2.7 billion, with production slated to begin in 2011′s fourth quarter. Meanwhile, Cortez Hills is expected to start production in 2010′s first quarter and is slated to significantly boost next year’s gold production levels.After reporting first-quarter gold production of 1.76 million ounces at total cash costs of 484 an ounce in April, Barrick said it’s on track to achieve gold production of 7.2 million to 7.6 million ounces of gold in 2009 at total cash costs between 450 and 475 an ounce. Production is expected to pick up in the later half of the year and into 2010, when Barrick anticipates gold production is really expected to pick up with the Cortez Hills mine up and running. The company’s 2010 production target is for 7.7 million to 8.1 million ounces of gold. Copper production was also on track at the end of the first quarter to produce 375-400 million pounds of the metal in 2009.
Barrick shares were trading down by 88 cents, or 2.6%, at 32.62 during Wednesday’s afternoon trading session.The Associated Press contributed to this article.

BHP Dampens The Party – US-FOREX.US

Forex-Publisher — Wed, 22 Jul 2009 15:46:17 +0000

Top mining companies are set for a rough ride in the next few months, if the latest assessment of titan BHP Billiton is any indication.Updating the market on its iron ore production in the past quarter , the firm warned it expects the recent restocking in China, which has spurred a rise in metal demand and prices, to soon conclude. The firm says it’s expecting restocking to commence elsewhere including in North America and Europe, but many don’t share that optimism. “I am more cautious and don’t anticipate that there will be much restocking globally at least until 2010,” said Evolution Securities analyst Charles Kernot. Gabor Vogel, an analyst at DZ Bank in Frankfurt, doesn’t believe that this new demand will be able to offset the lost demand from China. “What we may see at the most is a stabilization of demand so it’s a question of when imports from China will restart again.”Shares of BHP Billiton
were down 2.2% in mid-afternoon trading in London, while rival Rio Tinto
- BHP’s iron ore joint-venture-partner-in-waiting – ticked up 0.1%.The consequences of no more stocking by China could be even more severe for rival Rio Tinto, says Vogel. That’s because it’s more dependent on supplying China with copper than BHP is, and copper will be more affected by an end to stock piling.
Copper prices have been on the ascent since the start of the year, and are currently up 73.9% on the London Metal Exchange. “It’s important to know [from BHP] that China was the main driving force in the last three months, pushing up the market,” said Vogel. On Wednesday, BHP also said that during the past quarter, copper production slipped 21%, which it attributed to lower-grade ore and troubles at its Escondida mine in Chile.

Freeport Cleans Up On Copper – US-FOREX.US

Forex-Publisher — Mon, 20 Jul 2009 21:46:02 +0000

Climbing copper prices mean good things for Phoenix-based Freeport-McMoRan Copper & Gold. As the world’s largest publicly traded copper and molybdenum producer, the company is highly leveraged to the price of copper, which has soared more than 50% since the beginning of the year.Shares of Freeport-McMoRan Copper & Gold
have more than doubled since the start of 2009 as China imported large amounts of the industrial metal while prices were low, spurring analysts to warn against getting overly bullish on base metals given continued weakness seen across industries-especially housing. Furthermore, copper prices could collapse if Chinese buying declined on higher prices. On Monday, however, copper, helped by a weaker U.S. dollar, touched a nine-month high, and the September contract settled up by 4.6 cents at 2.47 a pound. Barclays Capital analyst Gayle Berry said declining Chinese importing activity during the second half of 2009 wouldn’t be as bad as first feared, improving the outlook for base metals on Monday. Stronger pricing across base metals is expected to help the mining industry report better earnings than in the last quarter, and a recent production update from Rio Tinto seems to bode well for Freeport’s operations. On July 15, Rio Tinto
reported a second-quarter production surge at its Grasberg joint venture, which is operated by Freeport-McMoRan. Rio said that on its part, copper production increased 2.4% from the last quarter and gold production jumped 43.1% quarter-over-quarter. FBR Capital Markets analyst Luther Lu said he expects Freeport to release “similarly strong numbers” when it reports second-quarter earnings on Tuesday. Following Rio’s report, Lu raised his profit estimate to 76 cents a share, from 67 cents previously. Analysts polled by Thomson Reuters have been forecasting second-quarter earnings of 69 cents a share on sales of 3.4 billion. Some analysts, however, expect continued weakness in the housing market to weigh on Freeport’s sales.
Freeport’s stock closed Monday’s trading session ahead by 1.50, or 2.7%, at 57 while shares of Rio Tinto listed on the New York Stock Exchange gained 6.50, or 4.5%, at 151.71. Newport Mining
added 1, to close at 42.14, Southern Copper
ended 95 cents higher at 23.84 while Ivanhoe Mines
lost 28 cents, to close at 7.86.
The Associated Press contributed to this article.

Optimism Makes Copper Shine – US-FOREX.US

Forex-Publisher — Thu, 25 Jun 2009 21:46:06 +0000

If economic optimism had a hue, it would be copper. The industrious metal that’s used in everything from water pipes to electrical wires is one of the first commodities to recover following a downturn, making it a favorite among investors eagerly awaiting a turnaround. That was the case on Thursday when U.S. data showed that the economy contraction in the first quarter was revised to less than previously thought. Copper for September delivery climbed to its highest level in recent weeks before settling up by 3.5 cents, or 1.5%, at 2.316 a pound.Lately it seems that all copper has been building is wariness as analysts warn that China’s robust inventory stockpiling isn’t supported by the demand for the metal. Furthermore, strong copper prices, which have more than doubled since the beginning of the year, are likely to dampen interest in the metal. “The recovery in prices means that producer margins have been improving, and fast,” said Barclays analyst Gayle Berry. “As a result, production cuts have screeched to a halt and production is instead being brought back on line.” Berry doesn’t see that hurting copper prices too much since oversupply was never an issue but for aluminum, zinc and nickel, increased supply could make for rough conditions through to the end of the year.”If the current strength in base metals prices is continued we will see more production come back on line and this could dampen the second-half 2009 price outlook,” Berry said, adding, “In our view, a summer softening in metals prices would actually be beneficial for future fundamental outlook for many metals.”On Thursday, Citi analyst Brian Yu initiated Freeport McMoran Copper & Gold
at “hold.” Freeport shares closed Thursday’s trading session up by 1.90, or 3.9%, at 50.70 after the company announced quarterly cash dividends on preferred shares.
On Wednesday, FBR Capital Markets analyst Luther Lu upgraded the company to “outperform” from “market perform,” highlighting the strong correlation between Freeport shares and the price of copper.”While we are cognizant about the near-term weakness, we continue to believe that longer term, copper and its largest consumer China do have structural supply issues,” Lu said. Metal and mining companies closed Thursday’s session broadly higher. Southern Copper
was up by 87 cents, or 4.3%, at 21.01 while Newmont Mining
, Rio Tinto
and Ivanhoe Mines
gained 2.5%, 1.8% and 9.9%, respectively.