U.S. copper futures ended lower on Tuesday, after touching nine month highs earlier in the session, as copper climbed for a third day on speculation that the global economy is well on its way to a recovery. The index of leading indicators in the U.S., the world's second-largest copper consumer, increased in June for a third consecutive month. Copper for September delivery ended down 1.80 cents at $2.4510 a lb on the New York Mercantile Exchange's COMEX division, the day's range spanned from $2.4305 to $2.4945.
Internationally, copper was mixed. On the Shanghai Futures Exchange October-delivery copper dropped as much as 1.5 per cent to hit 43,020 Yuan per tonne, before trading at 43,340 Yuan. Premiums paid by Chinese importers, typically a good indicator of demand, are now about $85 to $90 a tonne over the LME cash price, compared with around $70 to $75 last month, according to traders and analysts. This is down from the peak of around $280 in April. On the MCX, Indian copper futures traded up on Tuesday evening on hopes of an early economic recovery. The most-active August contract was 0.33 per cent lower at INR 262.30 per kg after gaining about 1 per cent in the previous session. The contract had gained about 9 per cent since last week.
World refined copper consumption exceeded production by 37,000 tonnes between January and April this year, versus a deficit of 147,000 tonnes in the same year-ago period, the International Copper Study Group said in its latest monthly bulletin. The Lisbon-based ICSG said world refined copper output in January to April was 5.891 million tonnes, while consumption amounted to 5.927 tonnes. Globally, copper inventories are low.
Combining these low inventories with a favourable demand outlook, Invests Asset Management forecasts copper to average USD 4,600 per tonne this year Next year it sees copper prices at an average of USD 5,400. After the seasonal summer lull, the firm sees Chinese demand as robust, while the end of destocking in the western world will lend further support. LME inventories in copper are at 261,100 tonnes, its lowest level since November 2008.
Southern Copper Corp., the largest copper producer in Peru and Mexico, posted a 68 per cent decline in second-quarter profit on slumping metals prices. Net income fell to $175 million or 21 cents a share, from $548.5 million, or 62 cents a share, a year earlier. Southern was expected to earn 17 cents a share. Southern halted all investment projects in the first quarter on slumping prices. Copper prices have plunged 45 per cent in the past year, while zinc is down 30 per cent and silver has slid 20 per cent. Quarterly net sales fell 43.6 per cent to $824.5 million. Copper output in the second quarter rose 1.7 per cent to 119,278 metric tonnes and molybdenum gained 12.6 per cent. Zinc production climbed 0.3 per cent and silver added 9 per cent, the company said.
Freeport-McMoRan Copper & Gold Inc., the world's largest publicly traded copper producer, reported second-quarter earnings that beat analysts' estimates because of lower operating costs. Posted profit was $1.35 a share, analysts were expecting 71 cents. Net income dropped 38 per cent to $588 million, or $1.38 a share, from $947 million, or $2.25, a year earlier. Chief Executive Officer Richard Adkerson is benefiting from output and cost reductions implemented after a drop in manufacturing began to pull down copper prices in the second half of 2008.
Freeport's Grasberg mine in Indonesia contains the world's largest recoverable reserves of copper and the biggest single gold reserve. Freeport forecast gold sales will rise to 2.4 million ounces in 2009, revising an earlier projection of 2.3 million ounces. The company increased its molybdenum sales forecast to 56 million pounds from 50 million pounds.