Major copper market developments in February

Reuters copper prices reached a new all time high of USD 10,190 per tonne in February and while they have since retreated as global demand worries dominate sentiment near term, tight supplies will limit declines.

Mr Dan Smith analyst of Standard Chartered said that "Copper will be fairly choppy and trade sideways for now. I don't think there'll be that big a pull back and long term the bull story will reassert itself. We are recommending our clients to buy on dips."

Copper prices briefly fell below USD 9,000 per tonne on Friday. A major earthquake hit Japan, unsettling global financial markets. Sentiment was also hurt by Chinese inflation data which fuelled concerns over demand from the world's top consumer of the metal.

Prices have since bounced off those lows and the London Metal Exchange 3 months copper price CMCU3 was last indicated at USD 9,104 per tonne.

Mr Neil Buxton MD of GFMS Consulting said that any correction over the past two years had proved to be a buying opportunity because of the structural supply shortage in copper. Even so GFMS saw copper prices falling to USD 8,200 per tonne at some point this year.

He said that an independent consultant predicted copper would continue to meet with good support around the psychological USD 9,000 per tonne level. Demand growth is healthy and the increase in production is not keeping up.

Below are some of the more significant recent developments in production and prices that may continue to influence the direction of the market in 2011.

Production:

February 28 - The National Statistics Institute said that Chile's copper output CLCOPP=ECI rose 5.4% in January compared with a year earlier to 446,887 tonnes. Chile which holds by far the world's top copper reserves and is the globe's No.1 producer is expected to steadily increase output in the next two years on new mine projects and upgrades.

February 25 - Buenaventura said that shareholders will decide in several weeks on a plan to double or triple output the Cerro Verde copper molybdenum mine in southern Peru. The mine Peru's No. 3 copper producer which mined 308,370 tonnes of copper last year, is majority owned by Freeport McMoRan. Buenaventura holds a 19 percent stake.

February 25 - A company spokeswoman and a union leader said that the world's top copper mine, Chile's Escondida restarted operations after halting output for about four hours due to rains. Machinery and mine installation were not damaged by the rains.

February 23 - Any move by Chinese state owned Chinalco to take a stake in the giant Oyu Tolgoi copper project in Mongolia would need to be approved by the government. Chinese investment in Mongolia had been welcome but any change to the Oyu Tolgoi partnership agreement between Mongolia, Rio Tinto and Ivanhoe Mines would have to go through government approval procedures.

February 22 - Chile's Collahuasi plans to spend USD 470 million in a 10 year exploration plan near its open pit operation.

February 21 - An industry report showed that the world copper market had a deficit of 400,000 tonnes in the January to November period of 2010 compared with a surplus of 98,000 tonnes in the same period the previous year.

The International Copper Study Group said in its latest monthly bulletin that world refined copper production in January to November was 17.37 million tonnes and consumption was 17.77 million tonnes.

February 21 - Taseko Mines Limited submitted a new plan to win approval for its Prosperity mine in British Columbia, saying it had fixed environmental concerns that saw its last plan rejected. But Mr Stephen Harper PM of Columbia indicated Taseko and its supporters will have a tough time overturning the federal government's decision last year.

February 19 - Copper output in Zambia, Africa's leading producer of the metal is expected to rise to 900,000 tonnes in 2011 from 819,159 tonnes last year as mining companies boost output.

February 18 - Pakistan's top court may rule in a month on a probe which is key for the development of USD 3.3 billion copper and gold project owned by Antofagasta and Barrick Gold. The Supreme Court has barred the local Balochistan government from deciding on the approval of the Reko Diq mining lease until it rules on an investigation over the awarding of the concession in the past.

February 18 - China's Jinchuan Group said that it plans to produce 500,000 tonnes of copper this year. Last year it produced less than 400,000 tonnes of copper.

February 16 - Chile's Codelco has inked an early wage deal with workers at its Gaby copper mine. Gaby which is Codelco's newest operation produced nearly 150,000 tonnes of copper in all of 2009 and 86,000 tonnes in the first nine months of 2010.

February 15 - Tiger Resources said that it was about a month away from completing a study on the second phase of its Kipoi copper mining project in the Democratic Republic of Congo which could yield as much as 50,000 tonnes a year. The initial stage of the project is scheduled to start producing 35,000 tonnes of copper in concentrate annually in April and run for three years before being replaced by the second stage which is the subject of a study nearing completion.

February 14 - Output from Chile's Escondida fell slightly in 2010 on lower production of copper cathodes but the pace of output declines at the deposit slowed following two years of sharp falls. Escondida which is majority owned by global miner BHP Billiton said that it produced 1.09 million tonnes of copper in 2010 compared with 1.1 million tonnes in 2009.

(Sourced from Reuters)

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