By Leia Michele Toovey – Exclusive to Copper Investing News

On Monday, copper futures extended their losses across all markets. On the MCX-copper futures fell 3.22 percent.  On the New York Mercantile Exchange COMEX, US copper futures tumbled to a five month low with copper for September delivery HGU8 slipping 3.3 percent to $3.4595 per lb. Trading range in the morning was $3.5870 to $3.445 per lb- the contracts lowest point since Feb 7^th.  Shanghai’s October copper contract fell 0.7 percent to 61,010 Yuan at Monday market close-plunging even further than last weeks six week low of 60,560 Yuan.  London metal exchange copper was flat at $7,900 per tonne.

Price drops across the market were fueled by a few key occurrences. The primary explanatory factor is the growing LME stocks, as copper stored in London Metal Exchange warehouses rose 1,550 metric tons Monday, leaving them at 146,200. Stocks are growing due to seasonal weakness- (typical in the summer as many traders are on vacation), and this year the summer lull has been enhanced by the Beijing Olympics, set to start this Friday, the Olympics have caused consuming giant China to calm down their demand- as building and other pollution causing activities are being put on hiatus by the government.

Last week’s US manufacturing data was flat, with weak non farm payrolls and poor auto sales confirming the US recession. European data pointed to tough economic times ahead, while   economic data released last week by China showed that the Chinese manufacturing data is contracting for the first time since data collection began in 2005.  These news releases battered the commodities.

Markets are also waiting for interest rate decisions from a number of central banks, including the US Federal Reserve and the European Central bank.  Money markets are pricing in an 86% chance that the Federal Reserve will keep Benchmark rates on hold at 86%. However, the result of the European Central Bank meeting is still questionable at this point.

Worries about demand for all industrial metals has sparked a sell off, with technical selling intensifying on the LME by September’s break below its moving average.

Company News

Freeport McMoRan (NYSE:FCX) is just another one of the big mines posting a quarterly profit drop. Last week we heard from others, such as Norilsk nickel. Freeport’s second-quarter profit slipped to $947 million from $1.1 billion in the first quarter. The copper, gold and molybdenum miner said net income for the April-June period totaled $2.25 a share compared with $2.62 a share in the year-ago period. Revenue totaled $5.4 billion, essentially unchanged from the second quarter of 2007. Freeport-McMoRan says its results were impacted by a 13-cent drop in average copper prices during the quarter.  

Rio Tinto announced today that they will invest $652 million dollars into more pre-feasibility studies at a copper deposit at the Resolution Copper Mining operation in Arizona that it owns together with BHP Billiton. Rio Tinto will contribute $341 million to the studies, which should be completed by 2012.Production at the new mine is expected to start by 2020, eventually producing 500,000 tonnes of copper a year. Resolution Copper Mining is located at Superior, Arizona. It is 55 percent owned by Rio Tinto through its unit Resolution Copper Company, and 45 percent by BHP Billiton’s unit BHP Copper. Rio Tinto is currently the object of a hostile takeover bid by BHP Billiton.     

The world’s largest copper and zinc mine may hold more recoverable metal than previously thought.  Cia. Minera Antamina SA, announced today that the results of a study indicate that 1.52 billion tonnes of minerals, with 0.93 percent copper, still exist at the site.  Combined with increases in zinc and silver, Antamina expects that 28 percent more metal will be extracted than previously thought. A pre-feasibility study for mine expansion will be completed later this year.

Anglo American is undertaking a new copper and gold mining project in cooperation with locals.  A $500 million investment into a mine in the Philippines will fund exploration activities.  If exploration discovers sufficient reserves then in cooperation with local companies Philex and Manila mining, mining of the reserve will commence immediately.

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