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From the FN arena boys:
Copper: Improving Fundamentals
This might come as a surprise to many, but the average annual growth in copper consumption over the past decade is only 2.5%. Note this is including Super Cycle China's emergence post 2003. Incredible, but true, average demand growth for aluminium over that same period has been twice as high.
One would not think such is the case when looking at the price performances for both major metals. So what's been driving the price of copper if not insatiable demand from China?
In two words: disappointing supply.
And copper producers in early 2015 are back at doing what they do best; missing production targets and reporting delays, closures and interruptions.
Here's a brief overview from a recent sector update by Citi:
"Rio cutting Kennecott’s expected output by 100,000 tonnes, BHP cutting 150,000 tonnes from Escondida’s 2015 outlook, while Glencore has cut guidance at Minera Alumbrera by 50,000 tonnes. BHP Billiton announced a 6-month care and maintenance outage at the Svedala mill, the largest of three mills on site at the Olympic Dam facility in Australia. This operational disruption is likely to cost the mine c65,000 tonnes of copper concentrate.
"Closures have occurred at Mineral Park, Boseto, Aranzazu, Wolverine, Troy and Dikulushi. Barrick has placed it 135,000 tpy Lumwana mine on care and maintenance due to introduction of a 20% royalty rate on open pit mine operations in Zambia, up from 6% previously. This royalty rate move has prompted a freezing of mine investment in Zambia, and we believe will prompt further production losses through the year if the policy is not reversed".
So far, it appears the market hasn't paid much attention to all of this, instead taking lead from macro-issues, including Chinese New Year. At some point, however, this is likely going to change.
Citi analysts, for their part, expect increasing supply problems to be "highly supportive" of copper prices, probably in the second half of the year. On Citi's projections, copper should revisit US$7,000/t before year-end.
hotcopper.com.au/threads/tgs.2468717/...=14859913#.VPa2kuFo_s0
Copper: Improving Fundamentals
This might come as a surprise to many, but the average annual growth in copper consumption over the past decade is only 2.5%. Note this is including Super Cycle China's emergence post 2003. Incredible, but true, average demand growth for aluminium over that same period has been twice as high.
One would not think such is the case when looking at the price performances for both major metals. So what's been driving the price of copper if not insatiable demand from China?
In two words: disappointing supply.
And copper producers in early 2015 are back at doing what they do best; missing production targets and reporting delays, closures and interruptions.
Here's a brief overview from a recent sector update by Citi:
"Rio cutting Kennecott’s expected output by 100,000 tonnes, BHP cutting 150,000 tonnes from Escondida’s 2015 outlook, while Glencore has cut guidance at Minera Alumbrera by 50,000 tonnes. BHP Billiton announced a 6-month care and maintenance outage at the Svedala mill, the largest of three mills on site at the Olympic Dam facility in Australia. This operational disruption is likely to cost the mine c65,000 tonnes of copper concentrate.
"Closures have occurred at Mineral Park, Boseto, Aranzazu, Wolverine, Troy and Dikulushi. Barrick has placed it 135,000 tpy Lumwana mine on care and maintenance due to introduction of a 20% royalty rate on open pit mine operations in Zambia, up from 6% previously. This royalty rate move has prompted a freezing of mine investment in Zambia, and we believe will prompt further production losses through the year if the policy is not reversed".
So far, it appears the market hasn't paid much attention to all of this, instead taking lead from macro-issues, including Chinese New Year. At some point, however, this is likely going to change.
Citi analysts, for their part, expect increasing supply problems to be "highly supportive" of copper prices, probably in the second half of the year. On Citi's projections, copper should revisit US$7,000/t before year-end.
hotcopper.com.au/threads/tgs.2468717/...=14859913#.VPa2kuFo_s0
"Prognosen sind schwierig, besonders wenn sie die Zukunft betreffen."
Greeny
Greeny
