By Leia Michele Toovey- Exclusive to Copper Investing News

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U.S. copper futures closed with moderate losses on Wednesday but pushed into positive territory in after hours trading following the U.S. Federal Reserve’s announcement to purchase long-term Treasury debt. Copper for May delivery finished $0.75 lower at $1.7165 a lb on the New York Mercantile Exchange’s COMEX division. After the Fed’s policy setting statement, copper surged in unison with equity markets.

The Fed said it would buy $300 billion of long-term U.S. Treasuries in its push to revive the recession-hit economy. In after hours trade, May copper charged up to $1.7505, following two days at lower levels.  “The Fed’s Treasury purchases will help copper on the demand side by helping to make money cheaper,” said Edward Meir, commodity analyst at MF Global. Adding extra impetus, The Fed’s plan also weakened the greenback, making dollar-denominated commodities cheaper for those holding other currencies.

Thursday morning on the LME, copper for three-month delivery rose 4.4 per cent, to $3,930 a tonne.  The contract earlier reached $3,961, its highest in over four months. The metal has risen 28 per cent this year, after plunging 54 per cent last year.  Copper’s rally in 2009 came when some players were not adequately positioned for bigger-than-expected Chinese imports.  China’s imports of unwrought copper, including anode, refined metal and copper alloy for the first two months of the year surged 53.5 per cent from a year earlier.

China’s State Reserve Bureau (SRB) purchases are the main reason copper has been so resilient this year. Now, rumour has it that China will purchase even more of the industrial metal for its stockpiles. The SRB may raise purchases to 1 million tonnes from 600,000 tonnes; this volume would easily turn the projected global surplus of 350,000- 400,000 tonnes this year, into a deficit.  Out of all the metals, copper is positioned to benefit most from China’s stimulus plans.

Earlier this year, experts projected that the copper market would be in a surplus in 2009. GFMS Metals Consulting forecast that the global copper surplus would reach 622,000 tonnes this year. Goldman Sachs said in February that it expected “all of the base metals to record surpluses in 2009.”  This was before China’s stimulus plans were enacted; resulting in changing copper market fundamentals.

China, the world’s third-largest economy, has pledged $585 billion in stimulus spending to combat slowing economic growth and has “adequate ammunition” to add to that package at any time, Premier Wen Jiabao said on March 13. Building work in China accelerates from March amid warmer weather. The reserve’s purchases have just started.  If copper prices stay low, China may very well take advantage by purchasing the metal essential for infrastructure development.

Since late February, London copper stockpiles have fallen over 50,000 tonnes. Canceled warrants, materials earmarked for delivery, increased to 23,475 tonnes from 22,475 tonnes on Tuesday, suggesting more metal will be leaving warehouses. Copper gained ground on the London Metal Exchange with the three-months delivery contract up to $3,855 in after hours business. On Thursday, copper topped $4,000 per tonne for the first time since November.

Company News

An expression of interest has been received by Zhongai Mining Plc of China to takeover the Luanshya copper mine in northern Zambia.  Zhongai is the fifth mining company to show interest in the mine that produced 2,000 metric tonnes of copper and 100 tonnes of cobalt a month before output was suspended in December, as the global financial crisis curbed demand for industrial metals.  Luanshya is currently owned by Enya Holdings BV.

Invecture Group has effectively acquired all outstanding common shares of Frontera Copper Corp (TSX: FCC).  Upon completion of the transaction, Invecture and its affiliates will hold 61,162,125 Common Shares, representing 94.8 per cent of the total outstanding common shares. The next step is for Invecture to pursue a compulsory acquisition pursuant to its statutory rights under the Canada Business Corporations Act to acquire the remaining outstanding common shares of Frontera. Upon completion, Frontera will apply to de-list the common shares of Frontera from the Toronto Stock Exchange.

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