copper rules the market

Who said Maroochydore was more than promising?

COPPER RULES THE METAL MARKETS (22/08/07)
Long seen as a proxy for global economic activity, is doing all right, along with copper stocks, as Chinese consumption continues to increase.

The dollar price of copper - levels of which are used by some investors as a proxy for global economic activity - has outperformed many other metals and commodities during recent bouts of profit taking in equity markets, triggered by uncertainties in credit markets, which stemmed, in turn, from rising failures in the US subprime mortgage bond market.

Measured in dollar terms, copper is about 10% up on the start of the calendar year, but 15% off its May highs. The price has shown a strong correlation with moves in the Standard & Poor's 500, and has supported relatively smaller losses of listed copper stocks, when measured against other groups of mining stocks. The copper grouping has performed almost as well as the major diversifieds grouping, where several individual members rank, as such, as major copper producers.

Selected copper stocks

Stock price From 12-m high

Anvil Mining C$16.01 -21.2%
Aur Resources* C$40.67 -4.1%
Antofagasta £6.94 -9.2%
Equinox C$3.38 -27.2%
Freeport McMoRan $84.51 -15.6%
First Quantum C$80.73 -29.3%
Inmet Mining C$83.95 -17.0%
Ivanhoe Minerals C$11.04 -38.7%
Katanga Mining C$19.95 -28.9%
Oxiana C$3.29 -18.8%
Frontera Copper C$5.49 -27.2%
Quadra Mining C$15.55 -16.8%
Vedanta £16.69 -9.5%
Southern Copper $98.50 -15.1%

Arithmetic average -19.9%

OTHER EQUITY GROUPS
Nickel -28.5%
Zinc -28.4%
Uranium -52.9%
Platinum -36.9%
Gold -30.3%
Major diversifieds -19.3%

Copper is currently trading around $3.25 a pound, after its $3.75/pound records earlier this year. The price last year fell more than a dollar a pound, to levels around $2.50/pound, before again resuming a strong bull market trend. Aluminium has fallen from around $1.30/pound to some $1.10/pound, while nickel has roughly halved in the past few months, to current levels around $12.60/pound. Lead has declined from recent records above $1.50/pound to $1.40/pound, while zinc has fallen from about $2/pound late last year to current levels around $1.40/pound.

On Wednesday BHP Billiton (BLT.L, £13.57 a share) posted record annual results, on record sales of copper, iron ore, coal and petroleum products. In widely watched statements, the group stressed that it did not expect recent market turmoil to cut the use of industrial metals. It said that "recent discussions with our customers have indicated that they do not expect the volatility in the US and European credit markets to have a material impact on raw material demand".

In recent analysis, the Bank Credit Analyst said that while commodities linked to US housing such as lumber and copper may meet downward, the overall climate for commodities remains healthy. Robust investment trends in emerging economies are seen as commodity-intensive, and "a huge tailwind for commodities". Global supply bottlenecks as seen as remaining stubborn, while exploration costs continue to mushroom.

Meanwhile, traders in the metal pits noted data showing world number one copper consumer China continuing to buy huge amounts of the metal. China's refined copper imports in July were up almost 70% on the same month a year ago.

MAJOR DIVERSIFIEDS
Stock price From high
Rio Tinto £32.42 -20.9%
Anglo American £27.59 -18.0%
BHP Billiton £13.57 -13.6%
Xstrata £28.79 -17.6%
CVRD $42.80 -19.5%
Norilsk $200.25 -26.2%
Simple average -19.3%

By Barry Sergeant, Johannesburg
http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=25815&sn=Detail