copper concentrate producers looking good

Courtesy of Vegemite on ShareScene and Ben Sharples;

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Copper concentrate supply to remain tight: Numis

Wednesday, July 05, 2006
Ben Sharples

IT LOOKS like it is the right time to be a copper concentrate producer, with the concentrate market showing a significant shortfall as smelter concentrate stocks fall and smelters risk running at lower capacity as a result, according to Numis Securities.

According to analyst John Meyer, treatment and refining charges are reported to have fallen to $US28 per tonne and 2.8c per pound as a result of smelter competition for concentrate supply.

"This should raise margins for copper concentrate producers like Antofagasta," Meyer said.

"Smelters will continue to compete for copper concentrate stocks in the current market and will also need to restock before treatment and refining charges rise to more normal levels and before consumers can feel more confident of reliability of supply.

"Estimates of the supply demand deficit may therefore significantly underestimate this year's demand. The supply of copper from state strategic stockpiles, which will also need to be restocked, may also mislead some in the market into misplace confidence.

"We see the market tightness continuing through this year and into next and this is likely to lead to further increases in copper equity earnings forecasts and valuation increases."


Cheers,
IHS