Copper in short supply and the price contines to rise
Just a few snipets from the press :
BHP Billiton Copper Exploration Widens to `Higher Risk' Nations
May 4 (Bloomberg) -- BHP Billiton, the world's largest mining company, said rising demand for copper is spurring it to search for deposits in nations perceived as more risky than the countries that host its existing mines.
Prices have soared to a record as production fails to keep pace with demand. Earlier periods of lower metal prices discouraged exploration spending and the market may have more shortfalls in supply, said Diego Hernandez, president of Melbourne-based BHP's base metals unit.
There isn't a ``big, single, big project that can take care'' of demand, Hernandez, 57, said today in an interview in London. ``You have to go to geographies with higher country- risk.''
BHP is looking for copper across more than 9,000 square kilometers of the Democratic Republic of Congo, where a civil war that ended four years ago left 4 million dead. The company is seeking to add mines to a portfolio which includes projects in Australia and Chile.
The company is the world's second-biggest copper producer. It controls Chile's Escondida, the world's No. 1 copper mine, and is spending $130 million to study the expansion of the Olympic Dam mine in Australia. If approved, the extra production at the mine may start in 2013, BHP said today in a presentation to investors in London.
``It's very important in our portfolio,'' Hernandez said. ``The contribution from Olympic Dam should not be too different from the one we have from Escondida.''
Copper for delivery in three months on the London Metal Exchange traded today at a record $7,655 a metric ton. It has risen 74 percent this year.
Demand this year will rise 6 percent to 17.8 million tons, beating production by 200,000 tons, UBS AG said last week.
Copper, not peaking yet
Mumbai , May 4
With the copper market rising relentlessly having breached the psychological level of $7,000 a tonne recently, concerns about an imminent correction are beginning to be voiced.
Concerns like whether there will be demand compression or demand destruction at high prices, and hedge-fund players would continue to see value in copper have by now become matters of debate. What everybody wants to know is whether copper prices are topping out.
According to analysts, the extant conditions do not warrant any bearish conclusions. There are reasons why prices may not decline anytime soon; and the most critical one is falling inventory.
Currently, LME is reported to be holding only 116,000 tonnes (after another relatively sizeable draw down recently), while on the other exchanges too — Comex and SHFE — stocks are falling from already low levels. At the Comex, stocks are estimated at 15,000 tonnes and at Shanghai 31,000 tonnes.
"This is hardly a buffer for a market where consumption is expanding by almost 5 per cent a year to 17.3 million tonnes in 2006 as per the latest estimates from the International Copper Study Group," said an analyst with Barclays Capital.
Of course, there are additional factors such as risks to production — weighing heavily towards the downside due to full capacity utilisation rates, ongoing and upcoming labour negotiations and so on. Copper output is not showing signs of accelerating despite high prices. The market is unlikely to face a serious downturn because of both demand and supply factors, it is believed.
SMO need to lift their production rates quickly to 1300tpd asap and the share price should fly
Cheers
kawartha
SMO
smc gold limited
