By Leia Michele Toovey-Exclusive to Copper Investing News

Tweet

Copper was on track for a weekly gain as of Friday, after new data alluded to an improvement in the global economy. Last week, the red metal lost value on the back of a strengthening greenback. Copper, often referred to as the barometer of economic health due to its prolific use in construction, is extremely sensitive to economic movement.

Copper’s ascent was initiated from the release of the Organization for Economic Cooperation and Development’s raised forecast for the economies of its 30 member nations.  This week was the first in two years that the OECD increased its forecast.  Adding further impetus was an unexpected jump in orders for U.S. durable goods in May, and shrinking inventories in China, coppers largest consuming nation. The metal shrugged off softer-than-expected housing numbers. Sales of single-family homes in May decreased by 0.6 per cent to a seasonally adjusted annual rate of 342,000 compared to April.

Copper for September delivery advanced 0.7 per cent to $2.3325 a pound on the New York Mercantile Exchange’s COMEX early in the morning. The contract has added 3.2 per cent this week. Copper for three-month delivery eased $10.00, or 0.2 per cent, to $5,120 a metric tonne on the London Metal Exchange. On Wednesday, Copper for September delivery at COMEX settled 6.90 cents, or 3.1 per cent, higher at $2.2810 per lb. The contract had pared its gains to $2.2710 in trading after the close. Benchmark copper on the London Metal Exchange closed at $4,855 per tonne, up from Tuesday’s close of $4,805. Inventories of copper stored in London Metal Exchange warehouses fell 1,225 metric tons Wednesday, leaving them at 275,050. The most recent COMEX inventory data, released late Tuesday, were down 165 short tonnes at 60,060 short tonnes.

Company News

BHP Billiton Ltd., the world’s biggest mining company, may win a reduction in copper processing fees from Japanese smelters in mid-year supply contracts. BHP and Pan Pacific Copper Co., Japan’s largest smelter, this week failed to agree on processing fees for contracts starting July 1. Talks may continue well into July, and smelters may be forced to accept a cut in fees. Processing fees for immediate delivery have dropped this year, helping boost mining company profits and curbing smelter revenues. A deal with Pan Pacific would set a benchmark for Japanese smelters. The so-called treatment and refining charges, or TC/RCs, usually drop when there is a shortage of raw material and smelters have to compete for deliveries. The Japanese smelters may be forced to accept lower TC/RCs at the last minute over concern of securing enough concentrate during this time of tight supply.

Teck Resources Ltd., Canada’s largest diversified mining company, cut its 2010 copper production forecast 13 per cent because of “geotechnical issues” at its Highland Valley mine in British Columbia. These geotechnical issues have forced the company to halt mining in the affected area. Total copper output may be 755 million pounds next year, down from a previous forecast of 870 million pounds. Teck also cuts its 2009 production forecast for the Highland Valley mine in Canada by 12 per cent to 258 million pounds and its 2010 estimate by 38 per cent to 187 million pounds. Geotechnical consultants are studying the extent of the problems at Highland Valley and this is expected be completed by the end of the year, Teck said.

Comment

Tweet