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Commodity News Blog 
Wednesday, 18 August 2010

The latest news from around the world on the markets, sectors and companies Casey Research specializes in. Click any headline to read the full article.

Rare Earths Are Becoming a Lot More Rare   August 17, 2010
Interest in rare earths is starting to heat up in a dramatic fashion and it is something you should keep on your radar. So named because they were hard to get in the 18th and 19th century, these once obscure elements have become the focus of several converging trends in the global economy, as they are the key ingredient of magnets. There are 17 in all, divided into light (cerium, Ce; lanthanum, La, and neodymium, Nd) and heavy (dysprosium, Dy; terbium, Tb, and europium, Eu).

Driving the gold price ever higher   August 17, 2010
Six key demand factors which will come together and help drive the gold price upwards over the next couple of years.

SA Mines minister launches "major overhaul" of law   August 17, 2010
Susan Shabangu, announced a major overhaul of South Africa's mining legislation, Tuesday and added ICT and Lonmin matter to be taken to the cabinet.

China Becomes Largest Global Energy Consumer   August 17, 2010
Since the early 1900’s the U.S. has been the world’s largest energy consumer and the world’s largest auto manufacturer. It took a century to accomplish, but last year China knocked the U.S. from its perch as the world's largest auto market. Last month the International Energy Agency claimed China’s total energy usage exceeded the U.S. for the first time last year – making China the world’s largest energy consumer.

Potash Rejects $39 Billion Bid From BHP Billiton   August 17, 2010
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, rejected an unsolicited $39 billion takeover proposal from BHP Billiton Ltd. as too low, prompting speculation of a higher bid.

BlueScope: demand weak, even as profits jump   August 16, 2010
Australia's biggest steel maker said while it has short-term concerns about demand and a stronger Australian dollar, it is planning for significantly improved market conditions in the medium to long term.

China CB announcement boost for metals prices   August 16, 2010
News that China's Central Bank will maintain a relatively loose monetary policy suggests metals demand there will continue and support metals prices.

Explorers to face more public scrutiny in Colorado   August 16, 2010
Proposed in-situ uranium projects may find the regulatory approval process far tougher in Colorado, while all mining explorationists will face more public scrutiny.

President Obama's Nightmare U.S. Economy   August 16, 2010
Sometimes it pays to keep flogging a dead horse. In this instance the horse is Obama's destructive economic policies.

The Expendables? Beware the Sequel    August 16, 2010
China overtook Japan for the title of "world’s No. 2 economy." Following thirty years of relentless hard work and unwavering determination, the country can now boast that it is, in fact, on course to capture the top global economic spot as well – in about another two decades – and wrest it away from the United States...

Gold and Goldman Sachs   August 13, 2010
Is Goldman Sachs suggesting $1,300 gold within six months a cue for further growth in price or a contrarian indicator that the top may have been reached?

Bolivian govt trying to defuse silver mine protest   August 13, 2010
The strikes, which have been going on for more than two weeks in the mineral-rich Potosi region, have disrupted production at three mines including two of the world's biggest silver deposits.

Canada's north adds mining production, exploration   August 13, 2010
The Conference Board of Canada has found a turnaround in the U.S. and global economic growth has reignited interest in diamonds, precious metals and other hardrock mining in Canada's three territories.

Chinese spending on gold sextupled in the 00's   August 13, 2010
The annual rate of growth of gold spending in China has been 23% this decade and the nation's gold purchases could see an additional 200 tonnes of consumption in the next decade.

Gold stocks HUI bull market seasonal analysis   August 13, 2010
Precious-metals stocks really haven’t had a great summer by any means. After rallying initially in June, they started relentlessly drifting lower in July. The net result of this lackluster summer trading is a lethargic drift sideways. Naturally this listlessness has weighed on sentiment among this sector’s traders.

South African gold production down 5.3% in June   August 12, 2010
Gold output in the country fell 5.3 percent in volume terms and total mineral production fell 4.9 percent in June compared with the same month last year, data showed on Thursday.

Rain may cut Indonesian tin output 20%   August 12, 2010
The new government forecast would take output towards levels already expected by analysts because of declining reserves and a crackdown on illegal mining.

Gold miners face transitions   August 12, 2010
Numbers from seven of the world's biggest gold diggers show that Gold miners are in the money, but face headwinds in rising costs, and scarce "pure gold" opportunities.

Fear of not flying   August 12, 2010
For the first time in six years, Japanese authorities drew one step closer to halting the seemingly endless gains in the yen via Finance Minister Noda’s cryptic message that his government will take "appropriate" action with regard to the currency. Japanese exports have come under threat from the gains the yen achieved following the Fed’s steps to boost US economic recovery on Tuesday. The currency rose beyond 85 against the US dollar; a fifteen-year high.

Rio Tinto eyeing stake in Russia's Uralkali   August 12, 2010
Global majors Rio Tinto and Potash Corp may buy into Russian potash miner Uralkali, sources said on Thursday, as the government seeks a full overhaul of the fertilisers industry.

Connexion Connexion AT 04:40 pm   |  Permalink   |  Email
Wednesday, 11 August 2010
Copper demand may outstrip supply in 2011 for the first time in four years as China, the world’s biggest consumer, sustains purchases and as ore grades decline, Japan’s largest smelter said.

“Supplies won’t catch up with demand next year and we expect there to be a deficit of 200,000 metric tons,” Hidenori Kamoo, general manager of the marketing department at Pan Pacific Copper Co., said in an interview yesterday.

Copper, used in pipes, tubes and wires, faces a “deepening supply crunch” and record prices are highly likely in the next two years, Barclays Capital said in a report on July 27. Prices for immediate delivery will average $7,763 a ton next year as a market shortage widens, the bank said. The spot price in London has averaged $7,088 this year.

“With few new large-scale mines on the horizon and stagnation at existing facilities, in our view, price direction will be upwards given the approach of multiyear deficits,” Barclays said. Demand will exceed supply this year by 132,000 tons and by 386,000 tons next year, the bank said.

Pan Pacific expects the market to be balanced this year because of China’s higher-than-expected first-half demand, Kamoo said. The company had forecast a 300,000-ton surplus, he said.

China imported 1.6 million tons of refined copper in the first half, down from a record 1.8 million tons in the year-ago period, according to data from the Beijing-based Customs General Administration. The country imported 1.5 million tons in 2008.

Smelter Cuts

“Even though global demand for cathode may a bit slow later this year following Europe’s sovereign-debt problems and China’s tightening monetary policy, supplies will remain very tight, especially in East Asia,” he said. Pan Pacific predicted global demand will increase 6.9 percent in 2010 and 3.8 percent in 2011, he said.

Should smelters continue to see lower grades of ore, falling processing fees and tight supplies of scrap, some may reduce production of refined metal later this year, Kamoo said.

Pan Pacific plans to produce 7 percent less than its annual capacity in the April to September period, while Sumitomo Metal Mining Co., the country’s second-largest producer, expects a 10 percent output cut in the year started April 1.

“We cannot rule out the possibility smelters may cut output further from October if unfavorable market conditions continue,” he said. “The end of subsidies for eco-friendly vehicles in Japan may also drive metal producers at home to consider output cuts,” he said.

Increased Premiums

Japan’s subsidy program, which exempts purchases of electric, hybrid, natural gas and some diesel vehicles from taxes, will expire at the end of September.

Demand from the auto and semiconductor sectors in Japan, South Korea and Southeast Asian nations has pushed physical premiums higher, he said. Copper premiums for China may be more than $100 a ton in 2011, from $85 a ton this year, he said.

Spot premiums for Shanghai on a cost, insurance and freight basis stood at $100-$120 a ton, up from $70-$100 a ton last year, Kamoo said.

Copper for three-month delivery dropped 0.9 percent to $7,361 a ton on the London Metal Exchange at 12:18 p.m. Tokyo time. Stockpiles tracked by the LME fell 0.5 percent to 410,475 tons yesterday, the lowest level since Nov. 17.

--Editors: Jarrett Banks, Matthew Oakley

To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net.

Source: Bloomberg Businessweek

Connexion Connexion AT 09:31 am   |  Permalink   |  0 Comments  |  Email
Tuesday, 10 August 2010

According to a spokesman at the world's largest copper producer, "the growth in demand in China is practically unstoppable".

SHANGHAI (Reuters) -

China's copper demand is expected to grow at 8 percent this year from last year, and at a similar pace next year, a senior executive of Chile's Codelco, the world's largest copper producer, said on Thursday.

"The growth of demand in China is practically unstoppable," Rodrigo Toro, corporate senior sales vice president of Codelco, told reporters on the sidelines of a meeting with clients.

Toro said Beijing's tighter monetary policy was a healthy dose to control the country's breakneck growth.

"We are happy to see the demand in China will continue at very healthy rate, not as big as would be at 12 percent GDP growth, because producers would not be able to respond to that additional demand."

He said the global copper demand growth would be 4 percent this year, but added it might improve next year if the economy picked up pace.

Codelco produced 1.782 million tonnes of copper in 2009, up 16 percent from a year earlier, after years of dwindling output.

The company expected to maintain the same level of output this year as well as in the next two years, its chief executive Diego Hernandez, told clients earlier.

The company said earlier this year that it planned to invest $3 billion each year for the next five years to revamp century-old mines and exploit new deposits as part of its plan to lift output to around 2 million tonnes of copper per year.


Ninety percent of Codelco's copper production is in the form of cathode, but the ratio of copper concentrate is expected to rise in the next 7 to 8 years after the expansion projects at Mina Ministro Helas and Andina mines are executed.

Toro said the company will focus on resources in Chile, rather than venturing overseas, in the period.

"We would be impractical to be thinking of additional projects in the next five years," he said.

Toro declined to forecast term premiums for next year, but said if based on current situation in the market, term premiums should rise for 2011.

Chinese merchants are keen to build copper stocks in the next few months through bargain-hunting, fed by expectations term premiums to China for shipments next year will rise to over $100 over cash LME prices MCU0 for Chilean refined copper cathode imports, up 18 percent from this year's $85 level. [ID:nTOE66S08T]

Copper treatment fees, also known as TC/RC, were expected to remain at low levels, Toro also said.

"Treatment charges for copper concentrate will remain extremely low for quite some time. The overcapacity in smelting and refining is so big that the demand for concentrate will exceed largely the possibility of supply of copper concentrate," he said. (Reporting by Rujun Shen and Jacqueline Wong; editing by James Jukwey)

© Thomson Reuters 2010 All rights reserved

Source: Mineweb

Connexion Connexion AT 11:29 am   |  Permalink   |  0 Comments  |  Email
Tuesday, 10 August 2010
The latest news from around the world on the markets, sectors and companies Casey Research specializes in. Click any headline to read the full article.

So, Fed's choice?   August 9, 2010
US Treasuries and crude oil went their merry opposite ways overnight, as the former held near their lows over in Europe on anticipation the Fed may engage in fresh bond purchases, and the latter climbed on bets that the US economy will recover at a better pace [perhaps owing to such Fed largesse].

Gold and silver huge short position   August 9, 2010
There is a case to be made that world production is not the only issue, but the available supply is just as important, if not more.

US economy structural problems still intact   August 9, 2010
Bill Watkins, a California Lutheran University professor, provides a nice summary on New Geography of the failure of various stimulus efforts to do anything meaningful in the wake of a collapse by Lehman, a collapse he says is a "regime shift".

Where's the copper to come from?..   August 9, 2010
According to Robert Friedland we need to mine as much copper in the next 20 years as we have in the past 110 - where is this copper to come from?

China pushes for gold; India follows suit   August 9, 2010
Hot on China's heels, India's Central bank is mulling over a proposal to allow banks to trade in gold. If cleared, the move will only strengthen the validity of the bull case in gold.

From the bowels of the South African dream   August 6, 2010
A rough guide for foreign investors: is the country's mining sector on a skewer, or down in the sewer?

Vale announces plans to extend new Peru mine   August 6, 2010
Vale CEO, Roger Agnelli said the Bayoyar phosphate mine will be expanded over the next 18 months and added that he expects iron ore prices to hold steady around $140 per tonne.

Making deals in gold and energy   August 6, 2010
Natural resources deals are on the upswing.

In the second quarter, there were 142 announced deals totaling $37 billion in the oil and gas sector – that’s the highest level of M&A activity in 18 months. In the same period late year, M&A deals were worth just $14 billion.

The golden decade   August 6, 2010
As gold hovers near $1,200 an ounce and pundits speculate about a 'gold bubble', it's important for investors to remember that a mere decade ago the picture was very different. In the year 2000, gold sat at an unimpressive annual average of $279 an ounce - a two-decade low. At that time, most analysts thought gold was finished as a monetary metal. They said its price would never recover and only kooks with tin hats would invest in it. I was one of the very few financial commentators publicly saying that gold was not only viable, but entering a long-term uptrend.

How important is gold to the states?   August 6, 2010
Since the demise of the Gold Standard, monetary authorities have tried as many ways as possible out there to sideline gold as part of the monetary system. Since the early eighties they have succeeded to some extent, but this was by discrediting it and by emphasizing the benefits of paper currencies. Paper money in a paper system was working very well and everybody felt that much more prosperous, so ignored gold's departure.

New gold ETF planned...   August 5, 2010
ETF Securities is looking to launch a new gold ETF which will hold the gold backing it in secure vaults in Singapore to parallel its similar ETF which holds its gold in Switzerland.

Gold on a fast boat to China   August 5, 2010
As China's position in the global economy expands, so the reaction from the West should perhaps be less antagonistic and more like that of gold.

Yellow, black gold are shining    August 5, 2010
Commodities have been shining recently as the US dollar loses its luster for investors. Also the weakening dollar has helped boost equities as a lower US currency helps the large multi-national companies. This report is a quick follow-up from my report showing what the odds were favoring – which was higher gold, oil and S&P 500. As of today each investment is unfolding as planned, one candle at a time.

Take the next exit ahead   August 5, 2010
The enactment of exit strategies by the ECB as well as the Bank of England remained on hold this morning as both institutions left key interest rates unchanged, at 1% and 0.5% respectively. The central banks appear to be eyeing the continuing but fragile recovery in their respective economies and are opting to remain on the "loose" end of interest rate policies for the time being. The psychology of the moment remains defined by ensuring that growth really sticks and intangibles such as confidence show clear signs of having become fully repaired.

State to stay out of Norilsk Nickel   August 4, 2010
The Kremlin on Tuesday ruled out the possibility of the government buying a stake in Russia’s biggest mining company, Norilsk Nickel, to end a bitter dispute between its two major shareholders, Oleg Deripaska and Vladimir Potanin.
Connexion Connexion AT 11:21 am   |  Permalink   |  0 Comments  |  Email
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