Copper Refusing to Budge, Even for an Earthquake

Speculations regarding Chinese demand continued to keep the red metal in flux this week as copper rose to $6,675 per tonne on Monday on hopes that China would step in aggressively to meet economic growth targets. Today, the pendulum swung again, as apprehension over the upcoming release of Chinese data drew prices back by 0.5 percent to $6,636.50 per tonne. Other factors have failed to make much of an impact on copper prices .

Chile copper mines were rocked by an 8.2 magnitude earthquake on April 2, causing prices to rise up to 1.1 percent according to Bloomberg. However, most of Chile’s larger copper mines remained largely unaffected, and even though the country was forced to close several ports, metal prices continued to react more to an expected global surplus and slowing demand from China than to news of the quakes.

On Tuesday, Reuters reported that Japan could expect an increased copper demand due to expanding urban development and a greater amount of refurbishment of older infrastructure. Furthermore, the country is seeing an increased demand for copper automobile parts and copper electric cable as a result of the construction of new solar power plants on the island nation, but demand from the small island nation will not be enough to make a dent in the worldwide surplus. According to Reuters, Japanese demand will likely be met by a 4 percent increased output from local miners.

Industry leaders are meeting this week at the CESCO world copper summit in Santiago, and the worldwide surplus is definitely up for discussion. Notably, Thomson Reuters released its much anticipated annual GFMS copper survey tuesday, further highlighting forecasted trouble for red metal prices. The report predicted a modest surplus of 2 percent relative to global consumption, despite robust economic growth increasing demand for copper consumers.

Is overproduction halting?

In recent weeks, miners have so far fulfilled the Thompon Reuters prediction that copper companies will continue to follow through with investments they made during the red metal boom years, further contributing to the broader trend of a growing copper surplus.

Chilean miner Coldelco revealed it has found significant deposits near its current South American operations this week following explorations over the past four years, while Copper Mountain Mining Corporation (TSX:CUM) achieved record production results from its British Columbia Copper Mountain mine for the first quarter of 2014.

However, it is also worth noting that Freeport McMoRan Copper & Gold Inc (NYSE:FCX) may fail to meet a deadline for its copper smelter venture with Indonesia’s Aneka Tambang, which could mean a dramatically reduced copper output from the fifth largest copper mine in the world if the miner is unable to comply with recent changes to Indonesian export laws. Furthermore, Bloomberg reported that a sizeable portion of copper projects under consideration in Chile are being revised or postponed.

Investors are speculating that copper may have finally bottomed, as Canaccord Genuity noted that shares for Teck Resources (TSX:TCK.B) and First Quantum Minerals (TSX:FM) have traded up. However, the market is still poised to react in either direction to China’s economic intentions.

Zinc Hits One-month High as Analysts Forecast Bright Future

A market in deficit?

The ILZSG said last week at a Portugal-based meeting that it sees that trend continuing in 2014. Specifically, it believes that, driven by increased zinc usage in China, Europe and the United States, global demand for the metal will exceed supply by 117,000 MT this year, as per The Wall Street Journal. Respectively, consumption in those locations is expected to rise 5.8, 3 and 1.7 percent. For its part, worldwide zinc use should rise by 4.5 percent, hitting 13.58 million MT.

Meanwhile, the group expects global zinc mine production to increase just 2.6 percent, to 13.57 million MT.

Of course, it’s impossible to say with certainty where zinc prices are set to head. But if the ILZSG is correct and zinc demand does continue to outpace supply, positive price movement may be in store for the base metal.

Looking longer term

Two longer-term — but equally positive — zinc forecasts, both out of the aforementioned International Zinc Conference, reveal that at least two zinc market watchers are optimistic that further good fortune is in store for zinc.

One is Stephen Wilkinson, director of the International Zinc Association. Platts quotes him as saying that new initiatives could add 1.9 million MT of demand to the zinc market over the next three years. Interestingly, Wilkinson identified health and fertilizer applications as two “key areas of demand” for the metal moving forward, though he also said that “[z]inc is becoming more and more married to steel.”

The other is CRU analyst Helen O’Cleary. She told conference attendees that zinc prices could rise to between $4,000 and $4,500 per MT by the end of the decade, another Platts article states.

That’s a far cry from the $2,060 per MT that LME zinc was selling for at the beginning of January and even further from yesterday’s price tag. However, O’Cleary believes the prediction is realistic given that during that time “demand will run ahead of supply pushing the metal closer to ‘pinch point’” — essentially, she’s counting on a continued deficit.

Zinc market watchers have awhile to wait before it becomes clear whether higher prices for the metal will become the norm. Until then, perhaps they had best enjoy the metal’s most recent high point.

Zinc Rises to One-Month High on IMF Outlook for Economy

Zinc prices advanced to a four-week high on speculation that global economic gains forecast by the International Monetary Fund will spur demand for the metal amid declining supplies.

Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the IMF said today in a report. Refined supplies will fall short of consumption by 117,000 metric tons this year, the International Lead & Zinc Study Group said on April 3.

“All these reports could do is remind people that the fundamentals are decent and demand isn’t bad,”Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “Some people are reversing their short positions,” or bets on price declines, he said.

Inventories tracked by the LME have dropped 28 percent in the past 12 months.

DOW JONES INDUSTRIAL AVERAGE WHAT YOU THINK IN 2015

Today's pattern is often called a Megaphone Pattern and it is showing up on this 20 year chart of the DOW.

WHAT YOU THINK IN 2015 OR 2016 ? 17000 OR 5900

BJP Promises Investor-Friendly Regime

India's Bharatiya Janata Party accused its main political rival, Congress, of driving away investors during its decade in power and promised more business-friendly policies if it is elected in national polls that started Monday.

In its election manifesto, released Monday morning in New Delhi, the BJP said: "We will bring back credibility and trust in government, resowing confidence in the India story domestically as well as internationally."

The Hindu nationalist party also attacked the incumbent Congress party-led government for using "tax terrorism" against companies. The BJP said it would provide a nonadversarial administration and simplify the country's complicated tax laws.

The BJP, and its candidate to be prime minister, Narendra Modi, appear to be in the lead as voters began casting their ballots in an election that is to last five weeks. A recent poll by the Pew Research Center found that more than 60% of Indians favor a BJP-led government.

A string of corruption allegations, rising inflation, slow policy-making and huge tax notices to several foreign companies have hurt investor confidence in India, dragging down economic growth to its weakest in several years.

Indian stocks have rallied on investors' belief that the BJP is likely to win and run a government more attuned to business interests.

Election results are to be announced on May 16.

http://www.bjp.org/manifesto2014

Antofagasta CEO Says Price of Copper May Have Found a Bottom

SANTIAGO, Chile--The price of copper may have found a bottom, even as the market for the beaten-down industrial metal faces its first supply glut in four years, the chief executive of Chilean miner Antofagasta said Monday.

Prices for copper, which have fallen more than 9% this year, may have already seen the worst of a slowdown in China, the world's largest consumer of the industrial metal, Antofagasta CEO Diego Hernandez said in an interview with The Wall Street Journal.

"At least in the short term, there is no reason why copper should go any lower," the former CEO of state-owned Chilean copper miner Codelco said.

Antofagasta has no plans to shut any of its mines ahead of a surplus the company estimates could be between 300,000 and 400,000 tons this year and persist until at least 2015, Mr. Hernandez said.

Mr. Hernandez is joining other top mining executives, among them Codelco CEO Thomas Keller, Anglo American PLC's head of copper Hennie Faul and Rio Tinto Copper chief Jean-Sebastien Jacques, at the 2014 Cesco copper conference in Chile, the world's biggest producer of the metal.

London-listed Antofagasta, 65%-owned by the Luksic family, saw its earnings slump by more than a third last year, after a sharp fall in the metal's price offset the company's increased production. Still, the company plans to spend $3 billion on three key projects between now and 2018, in a bid to boost its copper production to 900,000 metric tons, from 721,000 last year, it said on March 18.

"If the price of copper goes up, we want to be there in a big way," Mr. Hernandez said.

Rio Alto says gold output from Peru mine rose 47% in Q1

Canadian miner Rio Alto Mining said on Monday that gold production from its La Arena mine in northern Peru rose 47% in the first quarter compared to the same period a year ago.

Rio Alto Mining said in a statement that while output in the first quarter was higher than forecast, it still expects to produce between 200 000 oz to 220 000 oz of gold this year from La Arena after producing 214 742 oz in 2013.

The company produced 53 463 oz of gold in the Q1 of 2014 compared to the 36 355 oz in the first quarter of 2013.

                                     Peru is the world's sixth biggest gold exporter.