While most traders and investment banking firms have repeatedly shrugged off weaknesses in the copper market as purely sentiment, without fundamental support, Societe Generale has bucked the trend and as in now saying that they are not very optimistic about near-term copper prices.
Copper’s push towards record-highs was stymied Wednesday, as traders took a strengthening greenback as a signal that it was time to take profits.
The copper market has been rattled by an increase in worker uprisings, as employees are, once again, asking for increased wages and job stability as they see their companies raking in profits on the back of relatively high copper prices.
With copper supplies already in a deficit, and the near-term supplies are dwindling due to a reliance on aging mines, and rising copper prices, there is extra incentive to search for new copper reserves.
Bloomberg reports that BHP Billiton Ltd. (NYSE:BHP), Minmetals Resources Ltd. (HKG:1208) and First Quantum Minerals Ltd. (TSE:FM) are increasing copper exploration in Zambia.
Indonesia is fortunate to be endowed with vast mineral wealth. The country is the world’s second largest producer of tin and nickel and, in 2009, according to the USGS, was the world’s fourth largest copper producer.
Peru ranks third in world copper production. The country is also the top producer of silver, the second largest producer of zinc, fourth for lead and sixth for gold. As of 2009, mineral exports accounted for 61 percent of total export revenue in Peru, which produced 1,260,000 metric tonnes of copper that same year, according to the USGS.
Growing stockpiles of copper held by China to back investments has copper market participants concerned that the country may flood the market with copper and send the price on a steep correction.
Arguably, copper skarns are the world’s most abundant skarn type. The largest copper skarns are associated with mineralized porphyry copper plutons. These deposits can exceed 1 billion tonnes of combined porphyry and skarn ore, with more than 5 million tonnes of recoverable copper.
Despite copper's slide in price, the metal is holding ground compared to other commodities. Japan's reconstruction efforts are apt to boost metal demand in the medium term.
Thursday, August 4, 2011