Major copper market developments in March

Reuters reported that copper prices lost some ground and momentum in March and may have further to fall on near term worries about China demand prospects. Mr Will Adams analyst of Fastmarkets said that “A lot of the good news is already in the price. There’s room for some pull back in prices, mainly because China is not coming back to the table. The market could fall to around USD 8,800 per tonne.Ms Gayle Berry analyst of Barclays Capital said that concern about China could keep prices to USD 9,000 per tonne to USD 10,000 per tonne range in the short term. But she still expected them to strengthen further ahead.

Mr Harry Colvin of Longview Economics was worried about plentiful stocks of the metal, particularly in China. He said that I wouldn’t expect prices to run away on the upside, probably for the rest of this year.

Below are some of the more significant recent developments in production that may continue to influence the direction of the market in 2011.

Production

March 31 – Japan’s copper output will likely tumble in the financial year starting April 1 as two out of three big smelters have suspended part of their operations since the earthquake. Sumitomo Metal Mining said the company’s copper output in the coming financial year could fall 10% to around 360,000 tonnes due to plant maintenance at its Toyo smelter in western Japan. Some companies have since released their output plans for the April to September period.

March 31 – A Chilean court suspended an order to halt world No 1 copper producer Codelco’s Ventanas smelter following an environmental incident, and the state miner said it would normalize operations as soon as possible. Codelco had said the previous day it was preparing to halt the smelter which produced nearly 385,000 tonnes of copper in 2009.

March 30 – BHP Billiton approved USD 554 million investments at the world’s No 1 copper mine, Chile’s Escondida one of the biggest projects there in seven years as it seeks to boost dwindling output at a deposit many fear is past its heyday. The project will relocate crushing and conveying facilities in Escondida’s main pit to improve access to higher grade ore and help boost production from 2013.

March 30 – BHP Billiton has started a study to greatly expand the Olympic Dam copper uranium mine in Australia. The move is seen as one of the surest signs to date that the company will proceed with the expansion. If the expansion gets the go ahead, it would nearly quadruple the mine’s copper production to 750,000 tonnes over 30 years.

March 30 – The National Statistics Institute said that Chile’s copper output CLCOPP ECI fell 6.6% in February compared with a year earlier to 368,243 tonnes.

March 30 – Jiangxi Copper Company Limited plans to expand production capacity to 1.5 million tonnes by 2015, 60% above its annual capacity in 2011. It is both building and acquiring capacity though a company official did not identify any acquisition targets.

March 29 – Chile’s Collahuasi moved closer to ending its three month force majeure on concentrate sales as repairs to its port could be finished by late April. The force majeure was lifted on April 1.

March 29 – Freeport McMoran Copper & Gold Inc’s Indonesia unit which runs the giant Grasberg mine expects its copper output to fall 17% this year to about 1 billion pounds by weight. The primary drivers for the dip are differences in ore grades as the company works through different sections of the open pit mine.

March 28 – Ivanhoe Mines Limited said that key parts of its Oyu Tolgoi copper, gold and silver project in Mongolia are currently ahead of schedule. The deputy director of Erdenes MGL which partners with Ivanhoe Mines and Rio Tinto in developing the site, said that it expected to begin production in August 2012.

March 26 – Production resumed at Zambia’s Chambishi copper smelter after over 600 workers who downed tools over wages called off their strike, the union said. Chambishi, a joint venture of China Nonferrous Metals Corporation and Yunnan Copper Industry processes 150,000 tonnes of blister copper per annum.

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