Barclays: Copper,tin were the only positive base metals
Copper and Tin were the only metals to close higher yesterday. This morning the whole complex is lower as macro fears dominate with news that some French banks have been downgraded. Yesterday, the Chinese National Bureau of Statistics (NBS) released a Lead in concentrate production figure of 953Kt, which was more than three times the previous monthly high and, as we opined, looked incorrect.Our discussions with market participants lead us to the conclusion that production at some mines had likely been wrongly reported. In particular, we believe that some of the data coming from places like Inner Mongolia has been particularly troublesome recently. It has been suggested to us that there has perhaps been some misreporting of units with perhaps ore production being reported as metal contained.
Indeed, this morning Bloomberg has reported that the NBS has now confirmed that the figure is wrong and that the revised data will not be available until next month. The world’s largest copper producer, Codelco, released its Q2 11 production data which, according to Reuters, showed a 3.5% y/y decline to 419Kt, from 434Kt during the same period of 2010.
Output at Chuquicamata fell particularly harshly, down by 21% y/y in H1 to 206Kt compared with 261Kt in the same period of 2010. Codelco also lost 23Kt of Copper production as a result of the companywide strike on July 11 and contract workers protest in June.
The same strike in July will be a drag on the Q3 production figures. Indeed, Codelco has stated that its output may fall for the fifth time in six years because of falling ore quality, a cold winter in the Atacama desert and labour disputes. Finally, although the company said that there had been some interest from buyers to reduce orders, there had been equal interest from other buyers to increase orders.
Strike action continues to hang over the copper market like a bad smell with Freeport McMoRan workers at 510Ktpy Grasberg copper mine in Indonesia threatening to go on strike for a month unless the company agrees to a pay deal before midnight this evening. This would be the second strike in three months at the mine with the previous strike resulting in 16Kt lost production.
Workers want a pay rise to between $17.5-43 per hour, which is above the current rate of $1.5-3 per hour. Workers at another of Freeport McMoRan’s mines, 312Ktpy Cerro Verde in Peru, have also threatened to go on indefinite strike starting today over working conditions and pay.
Indeed, this morning Bloomberg has reported that the NBS has now confirmed that the figure is wrong and that the revised data will not be available until next month. The world’s largest copper producer, Codelco, released its Q2 11 production data which, according to Reuters, showed a 3.5% y/y decline to 419Kt, from 434Kt during the same period of 2010.
Output at Chuquicamata fell particularly harshly, down by 21% y/y in H1 to 206Kt compared with 261Kt in the same period of 2010. Codelco also lost 23Kt of Copper production as a result of the companywide strike on July 11 and contract workers protest in June.
The same strike in July will be a drag on the Q3 production figures. Indeed, Codelco has stated that its output may fall for the fifth time in six years because of falling ore quality, a cold winter in the Atacama desert and labour disputes. Finally, although the company said that there had been some interest from buyers to reduce orders, there had been equal interest from other buyers to increase orders.
Strike action continues to hang over the copper market like a bad smell with Freeport McMoRan workers at 510Ktpy Grasberg copper mine in Indonesia threatening to go on strike for a month unless the company agrees to a pay deal before midnight this evening. This would be the second strike in three months at the mine with the previous strike resulting in 16Kt lost production.
Workers want a pay rise to between $17.5-43 per hour, which is above the current rate of $1.5-3 per hour. Workers at another of Freeport McMoRan’s mines, 312Ktpy Cerro Verde in Peru, have also threatened to go on indefinite strike starting today over working conditions and pay.
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