By Leia Michele Toovey- Exclusive to Copper Investing News

Data released Thursday showing a further deterioration in the manufacturing sector snapped copper’s positive trend.

Copper for March delivery shed 3.10 cents to close at $1.50 a lb on the New York Mercantile Exchange’s COMEX division. COMEX copper had gained nearly 7 per cent during the course of the week, hitting a one-week high on Wednesday at $1.5695. Reports that the world’s largest copper consumer, China, was buying the metal to gradually triple its state reserves to about 1 million tonnes supported the red metal’s weekly rally. South Korea also plans to boost base metal reserves ahead of an expected economic recovery later this year.

Copper prices began falling drastically last July, but their slow upward climb since December suggests a turnaround.  Encouraging signs in the housing market are an indication the economy may be moving slowly back on track. Earlier this week, the National Association of Realtors announced that pending home sales increased in December as the prices for homes became more affordable. Production cuts over the last six months at large copper producers such as Freeport-McMoRan and the Chilean state-owned Codelco have started to benefit prices. For 2009, more production cuts are likely in store and this may led to further stability in copper prices.

Company news

Capstone Mining Corp’s (TSX: CS) two high grade copper mines both successfully completed their expansions by the end of 2008, increasing combined throughput by 140 per cent since the Cozamin and Minto mines were originally commissioned in mid-2006 and mid-2007.The mines produced 74.1 million pounds of copper in concentrates in 2008. “With the expansions complete, we are now focused on fully optimizing the output and production costs of both operations, with the objective of maximizing profitability. Cash flow from our operations is further enhanced by a robust forward sales program, where we have 104 million pounds of copper forward sold at an average price of US$2.50 per pound” said Darren Pylot, Vice Chairman and Chief Executive Officer of Capstone. Capstone is now focused on fully realizing the benefits of the expanded production levels at its mines for the full year, and is forecasting production of 95 million to 105 million pounds of copper contained in concentrates in 2009 at a total cash cost of approximately US$1.00 per pound.

Southern Copper Corp. rose the most in two weeks after Citigroup Inc. boosted its 2009 and 2010 profit forecasts for the world’s seventh-largest copper producer, citing the company’s efforts in cutting costs. Southern Copper climbed 4.6 percent to $14.93 in New York trading for the biggest gain since Jan. 21. Grupo Mexico SAB, which owns 75 percent of Southern Copper, jumped 9.6 percent to 8.71 pesos in Mexico City trading.  Southern Copper on Jan. 30 posted its first quarterly loss in at least a decade and halted spending on mine expansion as metal prices plunged. The net loss of $124.7 million, or 14 cents a share, compares with a profit of $310.9 million, or 35 cents, a year earlier.

FNX mining Co, the Canadian miner that sells nickel and copper ore to Cia. Vale do Rio Doce, said it cancelled a $100 million line of credit because the borrowing cost has risen too much. Cash reserves of C$129.6 million ($104.2 million) will be used to finance mines still in operation, Toronto-based FNX said in a statement. “Market conditions beyond FNX’s control indicate that there would be significant costs to renew the credit line”, the company said. FNX said that with its “strong balance sheet and the budgeted expenditure level for the year,” it would not need to use the credit line to carry out its operating plan. The company earlier suspended nickel ore output and instead put its resources into continued operations at two mines that produce copper, gold,  platinum and palladium.

Comment

Tweet