Copper Gets A Pick-Me-Up

priceCopper prices are up slightly in London, as the dollar— which has been showing some strength recently— stumbled. Three-month copper climbed 1.1 percent on Thursday to sit at $7,279 per tonne. Copper was seeing resistance at the $7.240 per tonne, but the day's climb seems to have broken that barrier. Over in New York, copper futures were behaving much the same. Copper for July was up 0.9 percent at $3.2945 a pound. 

Also giving the red metal a pick-me-up was data from Japan showing an expansion of 3.5 percent for its economy, beating analyst's forecasts of 2.8 percent growth. With its economy expanding, Japan is also expected to boost its copper demand, the Wall Street Journal reported.

It seems that the Chinese yuan will have a limited near-term affect on China's copper imports, Platts reported.

"In theory, the appreciation of yuan should stimulate copper imports. But based on the current market fundamentals, we see very limited positive impact in the near term," He Xiaohui, a copper analyst with state-owned metals consultancy Beijing Antaike, told Platts. Xiaohui went on to say that there is currently a destocking of the excess of domestic inventories, which has created the need to offset imports.

Caveat emptor

On a cautionary note to copper investors, Shanghai Cifco Futures Co released a technical analysis of the copper market that doesn't bode well for the red metal. According to the firm, copper looks to be heading for a 16 percent drop by the end of September — its lowest level in three years — as it completes the final leg of its journey through the Elliott Wave.

Bloomberg reported that copper is currently on the rebound, on the back of its third bearish cycle from February to April. The firm expects prices to climb until the end of June before pulling back to $6,037.50 per tonne.

The Elliott Wave, for investors unfamiliar with the terminology was developed by Ralph Nelson Elliott in the 1930s. The theory looks at specific price movements — waves —to determine a cycle or trend. Long-term bear markets move down in three waves whereas long-term bull markets move up in five waves.

Company News

Antofagasta (LSE:ANTO) has been feeling the effects of weak copper prices. The Chilean miner released its first quarter results, posting a 29 percent drop in profits. The company's price for copper dropped in Q1 to $3.411 per pound from $4.296 for the same period in 2012.

Freeport McMoran Copper and Gold (NYSE:FCX) has halted operations at its Indonesian Grasberg mine due to a training tunnel collapse on May 14th.  Thirty-nine workers were attending an underground training class at Grasberg when the tunnel collapsed. So far, five people have been reported dead; rescuers are still working to reach any workers still trapped underground.

Rozik Soetjipto, president director of Freeport Indonesia, said in an earlier statement that “[t]he rescuers have been working around the clock for two days now and they continue to strive to reach the rest of our trapped colleagues in the shortest time possible.”

Turquoise Hill Resources (TSX:TRQ) announced a net loss of $50.7 million in Q1 2013 compared to the Q1 2012 loss of $80.6 million. In the first quarter of 2013 Turquoise Hill completed construction of the open-pit mine and concentrator complex at Oyu Tolgoi. The company expects the concentrator to be running at a production rate of 70 percent of nameplate capacity by the end of June 2013.

Ivanplats (TSX:IVP) announced its first quarter results for 2013, which included the increase of the high-grade indicated mineral resources at the Kamoa copper discovery in January. Kamoa, located in the Democratic Republic of the Congo, ranks as the world's largest undeveloped high-grade copper discovery. The project hosts a total of 739 million tonnes of 2.67% copper and contains 43.5 billion pounds of copper.

Yellowhead Mining (TSX:YMI) announced drill holes from the remaining six holes from the winter drill program at Harper Creek in British Columbia. Hole HC13-161 showed an intersection grading 0.39% copper over 108.77 meters starting at a depth of 237.42 meters. The grade was consistent with other holes drilled on the property.

Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned. 

Copper Gets a Pick-Me-Up from Copper Investing News