Copper fell to six-week lows earlier in the week on a rise in the US dollar and poor data from the Eurozone, including weaker German business sentiment. Still, by Thursday, the US Federal Reserve said it will stand by its plan to buy $40 billion in mortgage-backed debt each month to help the economic recovery. There were also signs of recovery in the US housing market and indications that conditions are improving for Chinese manufacturers.
“We think the U.S. housing market will be one of the real bright spots in the U.S. economy over the coming year and that could lead to a more sustained recovery in the economy and that will certainly be good for copper,” Nic Brown, head of commodity research at Natixis, told Reuters.
Following metals industry meetings at LME Week last week, Barclays Capital said there is a “lack of conviction based on uncertainty about the economic outlook,” but added that there is little indication from producers and traders that China and the copper market are set for a dramatic pullback.
Indeed, Europe’s largest copper producer, Aurubis (FWB:NDA), expects copper demand to pick up as infrastructure projects in China are realized. Codelco’s CEO, Thomas Keller, also said “there is still significant [copper demand] growth [to come] from the urbanization trend in China,” according to The Wall Street Journal.
Meanwhile, HSBC predicts weakness in copper prices towards the end of the year and into 2013, Seeking Alpha reported. It expects prices to average $7,500 per metric ton next year, and about $8,000 per metric tonne in 2014.
On the London Metal Exchange, copper for three-month delivery ended at $7,815 per tonne on Thursday compared to $7,817 the day before. COMEX copper for December delivery settled down 0.43 percent at $3.55 per pound in New York.
Teck Resources (NYSE:TCK,TSX:TCK.B) is deferring $1.5 billion in capital spending for this and next year in light of lower commodity prices and sales volumes and a fall of over 50 percent in third-quarter gross profit. It is reducing spending at its Quebrada Blanca Phase 2 and Relincho copper projects, among others.
Southern Copper’s (NYSE:SCCO) third-quarter net profit fell 67 percent, mainly on legal fees related to a Delaware court ruling that favored minority shareholders’ claim that Grupo Mexico made Southern pay too much for Minera Mexico. It also said average copper prices were 13 to 14 percent less than they were a year ago. Still, Chairman German Larrea expects emerging economies to grow, and said global copper inventories fell 34.4 percent in the past twelve months, “which we believe demonstrates solid market fundamentals.”
Anglo American’s (LSE:AAL) copper production increased by 12 percent in the third quarter. Also, the company reached an agreement with unions at the Los Bronces copper mine in Chile after five months of difficult negotiations, Reuters reported.
Glencore International’s (LSE:GLEN) share reclassification and voting plans for its proposed takeover of Xstrata (LSE:XTA) have received court approval in the UK, Bloomberg reported. Also, South Africa’s Competition Commission recommended overall approval of the merger. Glencore and Xstrata will hold shareholder meetings on November 20 to vote on the merger.
Freeport-McMoRan (NYSE:FCX) said its lower copper production and sales in the third quarter are a reflection of lower ore grades in Indonesia. It said it expects “meaningful increases” in copper production at the Grasberg mine and that it is “positive about the long-term fundamentals.”
Junior company news
Hana Mining (TSXV:HMG) agreed to be acquired by Cupric Canyon Capital for C$0.82 per share, which places the company’s value at about $82 million, 81 percent above the company’s $45.27 million market capitalization at the close of trading on October 24.
The AU$824 bid for Discovery Metals (ASX:DML) made by Cathay Fortune and the China-Africa Development Fund became hostile after the copper miner rejected the bid earlier this month, saying it is “inadequate.” Cathay Fortune already owns 13.7 percent of Discovery.
The White River First Nation (WRFN) filed judicial review proceedings in an attempt to overturn the Yukon government’s approval of Tarsis Resources’ (TSXV:TCC) plan for mineral exploration in the WRFN’s territory.
Southern Silver Exploration (TSXV:SSV,FWB:SEG) granted Freeport-McMoRan the right to acquire a 70 percent interest in its Cerro Las Minitas project in Mexico for about $25 million in payments and funding of exploration and development costs over up to 10 years.
VMS Ventures (TSXV:VMS) said it has formed a joint venture with Hudbay Minerals (TSX:HBM,NYSE:HBM) on four blocks surrounding the Reed copper project in Manitoba. Hudbay will make an immediate payment of $610,000 to VMS.
Securities Disclosure: I, Ragnhild Kjetland, hold no investment interest in any company mentioned in this article.