Source: www.miningnews.netRed metal in the green Kate...

Source: www.miningnews.net

Red metal in the green

Kate Hayc*ock
Thursday, 12 April 2007


COPPER prices were boosted again last night with the spot price of the metal closing at $US7970 per tonne, up 1.8% from the night before, after a "volatile" session on the London Metal Exchange, with a possible strike in Chile providing even more impetus to the red metal's gains.

Analysts at a major bank reported that the flagship mine of the world's largest copper producer, Codelco, was blocked by protesting workers who claim the company failed to meet labour contract obligations. There was no word on how much supply could be affected by the action.

The copper price has been driven upwards by strong demand from China, analysts agreed, with demand from the ever-growing economic powerhouse expected to continue to remain strong.

Forbes.com reported that the most active copper contract reached $3.58 per pound on the New York Mercantile Exchange.

And while market sentiment was strong, some thought the metal still has room to reach even higher.

The Commonwealth Bank told Dow Jones Newswires that current price levels embodied relatively favourable demand expectations and continuing tightness in supply.

However, other traders thought the run would soon come to an end, as the metal's lower prices over the past few months have seen China importing large quantities of copper and purchasers could well have enough stocks to see them through to a lowering in the metal's price.

The Standard Bank told Dow Jones Newswires that copper fundamentals will get a "quick check" when the price really falters.

"In the ongoing frenzy of over-extending the momentum, copper consumers have remained as silent observers, mostly staying away from the market," the bank said.

The Commonwealth Bank also said "looking at the longer run, we remain of the view that copper prices will fall back over the course of 2007".

The price of the red metal still has some way to go before reaching the highs of early 2006, where it reached a spot price of $8800/t.

Copper stocks in Australia have ridden out copper's volatile price history over the past year with mixed results, with the biggest Australian copper play, Oxiana, down from $A3.75 on the same day copper hit $US8800/t in 2006 to its current price of $A3.09, and Equinox Mining regaining to $2.55 over the past quarter, just under the $2.59 it was trading at in May 2006.

One of the winners on the Australian copper front has been the ever-colourful CuDeco, which has seen its share price grow 991% over the past year to hit around $4.04. Its stocks were trading at 33c last May.

Copper stockpiles on the LME are currently at 175,500t, with copper consumption worldwide at roughly 40,000t per day.


End.

Cheers, Pie