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Copper mine supply: on track for no growth in 2011
Feature article
Antofagasta management on Wednesday announced that full year production
from Esperanza on current run-rates would be between 80-100kt, compared
to the company’s already downgraded number of 130kt (from 160kt). In this
article we highlight that should current disruption run rates continue through
the remainder of the year, copper mine supply would fall by a marginal 0.3%
YoY in 2011. Our view on copper is very bullish over the next 3-12 months.
Latest news
US dollar appreciation on the back of Bernanke’s commentary saw precious
metals under pressure on Wednesday. Base metals were mixed, with copper
the worst performer, down 1.2% on the day.
The Chinese copper import arbitrage has been slightly positive for the past 4
business days, which if sustained will result in stronger Chinese copper
imports in June/July than we have seen in through the first 4 months of the
year. May copper import numbers are to be released this week - we expect a
modest MoM uptick from very low levels in April.
The latest high frequency data from CISA highlights that, as expected,
Chinese steel output edged down in late May. The average daily output was
1.915mt, or 699mtpa, down 3.5% sequentially. We expect further drifts
downward in the coming weeks, potentially amplified by power rationing, but
certainly no collapse.
The potential for a strike at BHP Billiton Mitsubishi Alliance’s Queensland met
coal mines is growing by the day, with unions potentially stopping work next
Monday and Tuesday. The mines affected cover around 140,000tpd of met
coal output. At present, we do not believe a strike will be prolonged however
the spectre is certainly adding support to the premium hard coking coal spot
market price, which has now rebounded back above $300/t FOB Australia.
North American lead-acid battery shipments increased by 10% YoY to an
annualised rate of 128m units in March. For Q1 2011 as a whole, total
shipments were up by 12% YoY to 31.1m units, which marks the second
highest quarterly volume on record (after Q4 2010; battery shipments in the
fourth quarter of the year are usually higher for seasonal reasons) and reflects
solid demand for lead in a market that accounts for almost 20% of world
consumption.
BHP Billiton will roll over prices for manganese ore for shipments in July, from
current levels for June, leaving medium-grade (43%-44% Mn) lump
unchanged for the third month in a row at $5.30/dmtu CIF China and lower
grade siliceous material at $4.75/dmtu. Prices for manganese ore had fallen
steeply from peak levels of well over $8/dmtu in May / June 2010 but prices
now appear to have found a floor. However, we are not expecting any
significant rise in the short term with stock levels at some points along the
supply chain still high but at least now falling.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Copper mine supply: on track for no growth in 2011
Feature article
Antofagasta management on Wednesday announced that full year production
from Esperanza on current run-rates would be between 80-100kt, compared
to the company’s already downgraded number of 130kt (from 160kt). In this
article we highlight that should current disruption run rates continue through
the remainder of the year, copper mine supply would fall by a marginal 0.3%
YoY in 2011. Our view on copper is very bullish over the next 3-12 months.
Latest news
US dollar appreciation on the back of Bernanke’s commentary saw precious
metals under pressure on Wednesday. Base metals were mixed, with copper
the worst performer, down 1.2% on the day.
The Chinese copper import arbitrage has been slightly positive for the past 4
business days, which if sustained will result in stronger Chinese copper
imports in June/July than we have seen in through the first 4 months of the
year. May copper import numbers are to be released this week - we expect a
modest MoM uptick from very low levels in April.
The latest high frequency data from CISA highlights that, as expected,
Chinese steel output edged down in late May. The average daily output was
1.915mt, or 699mtpa, down 3.5% sequentially. We expect further drifts
downward in the coming weeks, potentially amplified by power rationing, but
certainly no collapse.
The potential for a strike at BHP Billiton Mitsubishi Alliance’s Queensland met
coal mines is growing by the day, with unions potentially stopping work next
Monday and Tuesday. The mines affected cover around 140,000tpd of met
coal output. At present, we do not believe a strike will be prolonged however
the spectre is certainly adding support to the premium hard coking coal spot
market price, which has now rebounded back above $300/t FOB Australia.
North American lead-acid battery shipments increased by 10% YoY to an
annualised rate of 128m units in March. For Q1 2011 as a whole, total
shipments were up by 12% YoY to 31.1m units, which marks the second
highest quarterly volume on record (after Q4 2010; battery shipments in the
fourth quarter of the year are usually higher for seasonal reasons) and reflects
solid demand for lead in a market that accounts for almost 20% of world
consumption.
BHP Billiton will roll over prices for manganese ore for shipments in July, from
current levels for June, leaving medium-grade (43%-44% Mn) lump
unchanged for the third month in a row at $5.30/dmtu CIF China and lower
grade siliceous material at $4.75/dmtu. Prices for manganese ore had fallen
steeply from peak levels of well over $8/dmtu in May / June 2010 but prices
now appear to have found a floor. However, we are not expecting any
significant rise in the short term with stock levels at some points along the
supply chain still high but at least now falling.
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