Copper Bulls Moving On London Metal Exchange

The London Metal Exchange, the World’s largest metals exchange, reports that Copper stockpiles from the US to China are at 2.5 yr lows and set to decline further.

The news has awakened the Copper Bulls to move speculation, sentiment and pricing North.

The Overall Technicals:

May NY Copper closed up 725 pts to 377.25 cents Thursday. Prices closed near the session high, and saw more Short covering and bargain hunting. The Key outside markets were in a Bullish posture for Copper as the USD Index was weaker and Crude Oil prices were firmer.  The Copper Bulls gained some new Northside technical momentum Thursday and are now on a level near-term technical playing field with the Copper Bears. 

The Copper Bulls’ next Northside breakout objective is pushing and closing prices above Key technical resistance at 380.00 cents.

The next Southside price breakout objective for the Copper Bears is closing prices below the Key technical support at the April lows of 356.90 cents. 1st resistance is at Thursday’s high of 377.45 cents and then at 380.00 cents.

1st support is seen at 375.00 cents and then at 372.50 cents.

Back to the Fundamentals

Coupled with China’s 18 February cut in reserve requirements (RRR) for banks, which went into effect immediately, and there is plenty of cash out there for industry to buy the Copper they need for everything from construction to power cords.

The prime issue is that the tight Copper supply looks to be moving into its 3rd consecutive annual shortfall.

Between China and the United States, roughly 55% of the World’s Copper is spoken for. China alone consumes nearly 40% of Global mine output, which created a 119,000-ton shortfall in November 2011.

Analysts estimate a Copper shortage of 376,000 tons in Y 2012, and continued undersupply through Y 2013.

Any up-tick in demand should benefit Copper miners and refiners.

In a Keynote address at Byron Capital Markets’ 3rd annual conference on electric metals in Toronto last week, Jack Lifton warned that the prospect of Copper shortages should be of far greater concern than rare earths, graphite and lithium.
“The Copper crisis will make the current Rare Earth crisis look minor by comparison,” says Mining Weekly.com’s Jack Lifton. Mr. Lifton describes Copper as the “nerves of civilization.” .

According to Mr. Lifton, the global Copper industry is not increasing output as fast as demand for the Red metal is growing.

In has Keynote speech Mr. Lifton admonished the World of essentially ignoring it and quoted statistics from the International Copper Association (ICA) that showed that the growth of Copper production last year was in the order of 4% of the gross, and the gross was about 17-M tonnes.

“Since Chinese demand is increasing, guess what happens unless you can continue producing copper at just a 4% increase,” he queried. “At some point in time we run into another crisis that will make the rare earth crisis minor by comparison.”
China is now building a new grid for 500-M people. That is like doing North America over again, from scratch plus.

Virtually everything now depends on moving electrons around on Copper wire. And we are approaching the point where there’s not enough Copper to make the necessary wire.

The head of materials technology for the General Motor’s (NYSE:GM) Chevrolet Volt reports that the car contains miles and miles of Copper wire, and that GM engineers had to design the car so that it would be difficult for thieves to strip the Copper wire from the power train.

We are now in an era of expensive Crude oil and rising commodity prices, thieves will not just siphon gasoline from the fuel tank. They may also try to strip the wiring from electric cars.

Community Talk

Re: Copper Bulls Moving On London Metal Exchange

Xstrata posts drop in Q1 copper production

The miner said quarterly copper output dropped more than 18 percent year-on-year, after a number of their mines reached the end of their respective lives

Posted:  Tuesday , 01 May 2012

LONDON (Reuters) - Miner Xstrata, which is moving into the final stages of  a record tie-up with commodities trader Glencore, posted a drop in first-quarter copper production as it prepares for the ramp up of key projects in the second half of the year. Xstrata, which said all its major projects were making good progress and remained on schedule, said quarterly copper output dropped more than 18 percent year-on-year, after it reached the end of life of mines including the Ernest Henry open pit in Australia, while newer projects were still ramping up. It produced 171,121 tonnes of copper in the quarter. While iron ore has become the focus of operations at several of the largest diversified miners, copper and coal account for more than 70 percent of Xstrata's profits and both are key planks of its growth strategy. Xstrata agreed in February to a long-awaited $37 billion all-share takeover by Glencore, its largest investor. The trader is offering 2.8 Glencore shares for every Xstrata share held.   Meanwhile....

Southern Copper Q1 net income jumps 30%

The copper miner said a 13% jump in sales amid lower operating costs during the period helped offset weaker metals prices ...Posted:  Tuesday , 01 May 2012

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LIMA (Reuters) - Southern Copper Corp reported on Monday a net income of $621.4 million for the first quarter of 2012, up 30 percent from a year ago, as higher sales volumes and lower operating costs offset weaker copper, molybdenum and zinc prices.

The company, a major global copper producer with mines in Peru and Mexico, said sales rose 13 percent to $1.8 billion from the same period a year earlier. Copper production increased 23 percent to 152,906 tonnes in the quarter due mostly to increased output at the Buenavista mine in Mexico and higher ore grades in Peru, the Grupo Mexico affiliate said.

© Thomson Reuters 2012 All rights reserved

 

Sharing ideas, being frank with crticism, seeing another's pt. of view, and researching for an edge in a co. and its sector are key to success and don't ignore Mngt's Credentials good or bad play a big part in a successful outcome. Pull the pin  o

Re: Copper Bulls Moving On London Metal Exchange

Thanks Stargazer. I really like what Pinnacledigest put us onto with Redhawk Resources though . I want a pick where I can see a big lift potentially coming from simply issuing a 43-101 update after 3 yrs of drilling etc. their guidance in recent news releases makes me think that they could be the one. glad to know that Pinnacle and a lot of people smarter than me seem to be thinking along the same lines. the 43-101 is iminent so I guess we'll know in the next month or two.

Sharing ideas, being frank with crticism, seeing another's pt. of view, and researching for an edge in a co. and its sector are key to success and don't ignore Mngt's Credentials good or bad play a big part in a successful outcome. Pull the pin  o

Re: Copper Bulls Moving On London Metal Exchange

If you are interested in buying a copper stock, I suggest you check into Amerigo Res. Ltd ARG on the TSX currently trading at 80 cents, paying a semi-annual dividend, at it's current price per share the yield is 5% annually.

Good yield and growth prospects.

http://www.amerigoresources.com/