The fate of Copper

Found a informative & interesting perspective on the copper market from Ship Chartering this afternoon.


Ship Chartering is a site which "aims to inform readers on the Shipping Industry with emphasis on Ship Chartering, Sale and Purchase of Vessels, Bunker Cost for Ship Owners, Ship Brokers, Charterers and Traders as well as the Baltic Index."

Some significant and furious activity is happening in China where Copper is concerned. This is not recent and there has been a significant rise in Chinese demand for refined Copper imports since the last three consecutive months.

Imports reached a record 211,527 tonnes in December 2008, up 89 percent more than December 2007 and 49 percent higher than November 2008. Only last month we talked of slowing down of the Chinese economy and these rising imports of Copper don’t match the growth pattern of China.

One of the reasons for China’s sudden rise in demand could be the result of its government’s serious and wide scale efforts to ease bank lending, and hence stimulate domestic business.

The requirement could be for some large scale planned project that the Chinese government has chalked and ready but awaiting funds which the government’s stimulus package will provide for.

Click here to access the full entry from Ship Chartering

Bloomberg LP - Mining giant Rio says rising commodity prices won't be enough to convince China to stop buying... high prices are here to stay

Rio Says China Inflation Won't Undermine Commodities (Update1)

By Jesse Riseborough

June 16 (Bloomberg) -- Rio Tinto Group, the world's third- largest mining company, said recent gains in inflation in China driven by rising food and energy costs won't undermine strong demand for commodities.

``A leveling out in food and energy prices will lead to falling 'headline' inflation without a dramatic impact on economic growth,'' Tom Albanese, chief executive officer of London-based Rio, said in a slides presentation sent today to the Australian stock exchange. ``Any sustained inflation is likely to support aluminum and iron ore prices.''

Inflation in China, the world's fastest growing economy and biggest consumer of commodities, slowed to 7.7 percent in May, from 8.5 percent in April, still exceeding the government's annual target of 4.8 percent, according to the statistics bureau. Demand from China has spurred six straight years of commodity gains, including record prices for iron ore and copper.

Prices for Rio's products ``are supported by economic fundamentals, not financial bubbles,'' Albanese said, citing dwindling supplies of metals including copper. ``Current prices of key Rio Tinto products are justified by the economic fundamentals of sustained demand growth and tight supply; together these factors will support long-run prices.''

Rio, battling a $164 billion takeover offer from the world's largest mining company BHP Billiton Ltd., rose A$4.62, or 3.6 percent, to A$134.50 on June 13 on the Australian exchange.

To contact the reporters on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net;

Last Updated: June 15, 2008 19:39 EDT

Commodities in Focus -- Energy, food and metals grab world attention as prices continue to sour and supply problems emerge

Fitch analyst calls for new investment as oil prices soar - Regional

by Nathan Crooks

Business News Americas
http://www.bnamericas.com/news/privatization/Fitch_analyst_calls_for_new_investment_as_oil_prices_soar

Tuesday, June 10, 2008

High international oil prices should encourage oil companies that operate in Latin America to invest in new projects, Gianna Bern, senior director and oil and gas analyst for Fitch Ratings Latin America Corporate Finance, told BNamericas.

"In Latin America, governments have been the one of the biggest beneficiaries of high crude oil prices in terms of taxes and royalties," Bern said.

For example, Venezuela, Ecuador and Bolivia have increased their take of oil profits in recent years. Brazil and Colombia are mulling plans to increase the state's gains from oil production as well.

"Having said that, at US$135/b WTI, now is the time for the oil companies to invest and pursue those projects that they wouldn't ordinarily," she said in reference to West Texas Intermediate prices. "The economics become compelling."

The analyst, meanwhile, does not see an end to high oil prices in the short term.

"High crude oil prices are driven by a fundamental imbalance in the global market between crude oil supply and demand. Supplies are not able to keep up with rising demand, primarily from non-OECD countries," she said.

The Organization for Economic Cooperation and Development (OECD) includes 30 member countries, including Mexico.

"There could be upward pressure on crude prices until there is more of a market balance which could take months, if not longer, for additional supplies to hit the market," Bern continued.

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Grow more food or starve: FAO
Commodity Online
http://www.commodityonline.com/news/topstory/Grow-more-food-or-starve-FAO-9365-3.html

NEW DELHI: Want to beat the food crisis? Go for more investments in the agriculture sector and grow more food.

That is what United Nations Food and Agriculture Organization (FAO) has to advise the countries across the world.

If you don’t listen to FAO, your population will starve. That is the clear message came from Rome after a summit on food crisis there.

“There is an urgent need to help developing countries and countries in transition to expand agriculture and food production, and to increase investment in agriculture, agribusiness and rural development from both public and private sources,” the FAO summit declaration said.

Donors and International Financial Institutions are urged to provide balance of payments support and budget support to food-importing, low-income countries. Other measures should be considered as necessary to improve the financial situation of the countries in need, including reviewing debt servicing as necessary.

The final declaration also called on governments to assure United Nations agencies the resources to expand and enhance their food assistance and support safety net programmes to address hunger and malnutrition, when appropriate, through the use of local or regional purchases.

Speaking about the growing social threat from rising food prices at the opening of the summit, FAO director general Jacques Diouf said: “What is important today is to realise that the time for talking is long past. Now is the time for action.”

The declaration also called for development partners to participate in and contribute to international and regional initiatives on soaring food prices and assist countries to put in place the revised policies and measures to help farmers, particularly small-scale producers, to increase production and integrate with local, regional and international markets.

Also recommended by the declaration are initiatives that moderate unusual fluctuations in food grain prices. “We call on relevant institutions to assist countries in developing their food stock capacities and consider other measures to strengthen food security risk management for affected countries,” FAO said.

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Is Nymex admitting to speculation in crude oil? By Sreekumar Raghavan MUMBAI: The debate is still raging on what is causing the crude to rise. It is going from one extreme to the other. Some blame it on high speculation, others on demand-supply imbalances and forecasters predicting it would rise to $200. The actions of world’s largest commodity derivatives exchange, The New York Mercantile Exchange, Inc. during the past two days indicates the possibility that speculation is indeed beyond allowable limits. In the case of oman crude oil, the margins were raised from $8300 to $9500 on June 9. For members it was raised from 9,130 to 10,450 and for customers from 11,205 to 12,825. On June 10 it was further revised to 11,500, 12,650 and 15,525 for clearing members, members and customers respectively. It has announced margin changes for its crude oil and related futures contract even though no explanation has been provided for such actions by Nymex or market regulator Commodity Futures Trading Commission. Among the contracts attracting higher margins from now include: July to December 2008 crude oil, crude oil calendar swap, MiNYTM crude oil futures, Nymed MACI index futures, natural gas, oman crude among others. July-December Contracts Margins for the July to December 2008 crude oil, crude oil calendar swap, and crude oil financial futures contracts will increase to $8,750 from $7,750 for clearing members, to $9,625 from $8,525 for members, and to $11,813 from$10,463 for customers. Margins for all other months will increase to $8,500from $7,750 for clearing members, to $9,350 from $8,525 for members, and to$11,475 from $10,463 for customers. The margins for the July through December NYMEX miNYTM crude oil futures contracts will increase to $4,375 from $3,875 for clearing members, to $4,813 from $4,263 for members, and to $5,906 from $5,231 for customers. Margins for all other months will increase to $4,250 from $3,875 for clearing members, to $4,675 from $4,263 for members, and to $5,738 from $5,231 for customers.The margins for the NYMEX MACI index futures contract will increase to $1,742 from $1,550 for clearing members, to $1,916 from $1,705 for members, and to$2,351 from $2,093 for customers. Natural Gas Margins for the first and second months of the natural gas, natural gas penultimate financial, and natural gas last day financial futures contracts will increase to $8,250 from $7,500 for clearing members, to $9,075 from $8,250 for members, and to $11,138 from $10,125 for customers. The margins for the third and fourth months will increase to 9,000 from $8,000 for clearing members, to $9,900 from $8,800 for members, and to $12,150 from $10,800 for customers. Margins for the fifth to ninth months will increase to $9,250 from $8,500 for clearing members, to $10,175 from $9,350 formembers, and to $12,488 from $11,475 for customers. The margins for the 10th to 21st months will increase to $6,000 from $5,500 for clearing members, to $6,600 from $6,050 for members, and to $8,100 from $7,425 for customers. Margins for the 22nd to 33rd months will increase to $4,750 from $4,500 for clearing members, to $5,225 from $4,950 for members, and to $6,413 from $6,075 for customers. The margins for the 34th to 45th months will increase to $4,500 from $4,250 for clearing members, to $4,950 from $4,675 for members, and to $6,075 from $5,738 for customers. Margins for all other months will increase to $4,000 from $3,750 for clearing members, to $4,400 from $4,125 for members, and to $5,400 from $5,063 for customers. The margins for the first and second months of the NYMEX miNY natural gas and Henry Hub swap and penultimate swap futures contracts will increase to $2,063 from $1,875 for clearing members, to $2,269 from $2,063 for members, and to$2,784 from $2,531 for customers. The margins for the third and fourth monthswill increase to $2,250 from $2,000 for clearing members, to $2,475 from$2,200 for members, and to $3,038 from $2,700 for customers. Margins for the fifth to ninth months will increase to $2,313 from $2,125 for clearing members, to $2,544 from $2,338 for members, and to $3,122 from $2,869 for customers. The margins for the 10th to 21st months will increase to $1,500 from $1,375 for clearing members, to $1,650 from $1,513 for members, and to $2,025 from $1,856 for customers. Margins for the 22nd to 33rd months will increase to $1,188 from $1,125 for clearing members, to $1,306 from $1,238 for members, and to $1,603 from $1,519 for customers. The margins for the 34th to 45th months will increase to $1,125 from $1,063 for clearing members, to $1,238 from $1,169 for members, and to $1,519 from $1,434 for customers. Margins for all other months will increase to $1,000 from $938 for clearing members, to $1,100 from $1,031 for members, and to $1,350 from $1,266 for customers. The margins for the Henry Hub swing swap futures contracts will increase to $2,063 from $1,875 for clearing members, to $2,269 from $2,063 for members,and to $2,784 from $2,531 for customers.

Heating Oil
Margins for the first month of the heating oil, New York Harbor heating oil calendar swap, and heating oil financial futures contracts will increase to $10,000 from $9,000 for clearing members, to $11,000 from $9,900 for members, and to $13,500 from $12,150 for customers.

Margins for the second month will increase to $9,500 from $8,500 for clearing members, to $10,450 from $9,350 for members, and to $12,825 from $11,475 for customers. Margins for the third through ninth months will increase to $8,750 from $8,000 for clearing members, to $9,625 from $8,800 for members, and to $11,813 from $10,800 for customers. The margins for all other months will increase to $8,000 from $7,500 for clearing members, to $8,800 from $8,250 for members, and to $10,800 from $10,125 for customers.

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Margins for the first month of NYMEX miNY heating oil futures contract will increase to $5,000 from $4,500 for clearing members, to $5,500 from $4,950 for members, and to $6,750 from $6,075 for customers.

The margins for the second month will increase to $4,750 from $4,250 for clearing members, to $5,225 from $4,675 for members, and to $6,413 from $5,738 for customers. Margins for the third through ninth months will increase to$4,375 from $4,000 for clearing members, to $4,813 from $4,400 for members,and to $5,906 from $5,400 for customers. Margins for all other months will increase $4,000 from $3,750 for clearing members, to $4,400 from $4,125 for members, and to $5,400 from $5,063 for customers.

Margins for the first month of the RBOB gasoline, RBOB financial, and RBOB calendar swap futures contracts will increase to $8,750 from $7,750 for clearing members, to $9,625 from $8,525 for members, and to $11,813 from $10,463 for customers. The margins for the second to fourth months will increase to $8,250 from $7,250 clearing members, to $9,075 from $7,975 for members, and to $11,138 from $9,788 for customers. Margins for the fifth to11th months will increase to $7,500 from $6,500 for clearing members, to $8,250 from $7,150 for members, and to $10,125 from $8,775 customers.Margins for all other months will increase to $7,250 from $6,250 for clearing members, to $7,975 from $6,875 for members, and to $9,788 from $8,438 for customers.

Margins for the first month of the NYMEX miNY RBOB gasoline futures contract will increase to $4,375 from $3,875 for clearing members, to $4,813 from $4,263 for members, and to $5,906 from 5,231 for customers. The margins for the second to fourth months will increase to $4,125 from $3,625 for clearing members, to $4,538 from $3,988 for members, and to $5,569 from $4,894 for customers. Margins for the fifth to 11th months will increase to $3,750 from $3,250 for clearing members, to $4,125 from $3,575 for members, and to $5,063 from $4,388 for customers. Margins for all other months will increase to$3,625 from $3,125 for clearing members, to $3,988 from $3,438 for members, and to $4,894 from $4,219 for customers.

If indeed, $25 of the present crude prices are on account of speculation, as suggested by some experts, will Nymex actions result in a fall in prices in near future? That itself can be cause for a speculation.

Meanwhile, a query related to increased margins from Commodity Online is awating reply from Nymex and CFTC

Chile asserts its position as Global Copper Monitor -- Estimates global demand for copper to increase 5.2% in 2008

Chile forecasts copper 450.000 tons surplus in 2009

The Chilean Copper Commission (COCHILCO) predicted this week a 450,000 ton surplus in the global copper production for the year 2009. Global supplies are expected to increase by 7.9% between now and then due to increased production.

Growing demand from China, which should increase by 370,000 tons over the next year, as well as demand from European and other Asian countries, should raise global demand by 5.2%. “China has always been the main motor of global refined copper demand” said the COCHILCO quarterly report. Global mining production is expected to rise by 8.2% to 17.8 million tons in 2009. Meanwhile, 2008 production growth will only reach 3.8%. Chile’s copper production is expected to grow by 2.6% for 2008. Chilean copper mines Gaby, Spence, Escondida Oxidos and Collahuasi predict to raise their production to 5.6 million tons alone. COCHILCO said global copper production will record a slight deficit of 46,000 tons for 2008 because of high copper prices. Still, the expected 2009 surplus should make copper price drop. The Santiago Times