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Copper, Gold, and Silver Markets
Copper
Fundamental Notes
On August 24, 2010, the International Copper Study Group's (ICSG) preliminary data showed that world copper production fell short of refined usage by 190,000 tons in the first five months of 2010. On an annual basis, the ICSG showed that world copper production exceeded refined usage by 179,000 tons in 2009, up from a production surplus of 166,000 tons in 2008.
On August 17, 2009, the world's largest copper producer, Codelco, said that it had production costs of roughly $1.70 per pound in the first half of 2009.
| World Copper Mine Production (million metric tons): | |||||||||||
| 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
| 12.7 | 13.2 | 13.6 | 13.6 | 13.8 | 14.6 | 14.9 | 15.0 | 15.5 | 15.4e | 15.8e | |
|
Top Three Producers In 2009:
Chile (34% of world production) Peru (8%) U.S. (8%) |
Key Events - Copper
2010
7-20 - Harbor Intelligence est.: World copper production deficit of 125,000 tons in 2010 and 180,000 tons in 2011.
7-19 - LME inventories fell to 422,850 tons, the lowest level since Nov. 20 (almost 8 months).
7-15 - Real GDP in China +10.3% in Q2 from a year ago, down from an annual gain of 11.9% in Q1.
7-14 - Copper inventories in London are down to 428,500 tons, the lowest since November 23rd.
6-22 - ICSG: World refined usage was up 13.4% in March from a year ago.
6-21 - China announced that it will allow greater flexibility in the price of the yuan.
6-14 - Euro zone industrial production was up 9.5% in April from a year ago, the biggest annual gain in any month since records began in 1991.
6-14 - Chile Mining Report: Chile's copper production will be up 14.4% in 2010.
6-11 - China's industrial output was up 16.5% in May from a year ago.
6-10 - China's exports were up 48.5% in May from a year ago, much more than expected.
6-4 - World Bank est.: China's economy will grow between 9-10% in 2010.
5-13 - Copper inventories in London were down 1,255 tons this morning to 485,150 tons, the lowest since late-December.
4-14 - A survey of mining analysts by the Chilean government expects copper to average $3.35 a pound in 2010 and $3.29 in 2011.
4-1 - Better-than-expected manufacturing reports from the U.S., U.K., and Euro area.
3-19 - The Reserve Bank of India increased its key interest rate from 4.75% to 5.00%, the first increase since July of 2008.
2-27 - 8.8 earthquake in Chile.
2-24 - China's copper imports total 196,926 tons in January, up 9% from a year ago.
1-21 - China's copper imports total 244,013 tons in December, up 25% on the month.
1-20 - Chinese government orders banks to restrain lending.
1-20 - LME copper inventory at 526,650 tons, the most in ten months.
1-12 - China will raise its bank reserve requirement by .5% on January 18th.
1-12 - Industrial production in India was up 11.7% in November from a year ago, the biggest gain in over two years.
1-11 - Bloomberg survey of 23 analysts: World copper production in 2010 will exceed demand by 63,500 tons.
1-4 - An index of manufacturing in China increased from 55.7 to 56.1 in December, the highest in five years.
2009
12-11 - China's industrial production +19.2% in November from a year ago, the biggest annual gain in over two years.
12-1 - The Chinese government's index of manufacturing was unchanged at 55.2 in November, the ninth consecutive month of expansion.
11-30 - LME copper inventory at 438,525 tons, the highest since late-April.
11-11 - China's industrial production up 16.1% in October from a year ago, stronger than expected. Copper imports totaled 263,109 tons in October, down 34% on the month.
11-3 - LME copper inventory at 373,800 tons, the most since May 12th.
11-2 - Positive manufacturing reports from China, U.S., U.K., and Europe.
10-29 - IMF est.: 2010 GDP growth of 9% in China and 6.4% in India.
10-22 - Real GDP in China +8.9% in Q3 from a year ago, the most annual growth in a year.
10-14 - China imported 399,052 tons of copper in September, up 23% from August.
10-14 - LME copper inventory at 353,225 tons, the most since May 18th.
10-8 - ICSG est.: World production surplus of 370,000 tons in 2009 and 540,000 tons in 2010.
9-22 - Asian Development Bank: Real GDP in China will be up 8.2% in 2009 and up 8.9% in 2010.
9-11 - China's industrial output was up 12.3% in August from a year ago, much stronger than expected.
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Gold
Fundamental Notes
In September of 2009, the European Central Bank and 18 others agreed to limit sales for five years to 400 tons per year. Now that gold prices are higher and concerns in financial markets persist, most banks aren't so eager to sell. On April 8, 2008, the International Monetary Fund let it be known that it may sell 13 million ounces of gold over several years to raise cash. On November 3, 2009, the IMF sold roughly half of that amount to India.
On August 25, 2010, the World Gold Council (WGC) said that world mine production was up 3% in the second quarter of 2010 while total demand was up 36%. On August 19, 2009, the WGC noted that central banks bought 14 tons of gold in the second quarter of 2009 - "the first net purchase by central banks for a considerable length of time." On September 14, 2009, GFMS, Ltd. said that production costs at primary gold mines were over $600 per ounce.
| World Gold Mine Production (million troy ounces): | |||||||||||
| 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
| 81.7 | 83.1 | 84.3 | 83.3 | 81.7 | 77.8 | 79.7 | 79.9 | 79.6 | 77.5e | 82.1e | 86.2e |
| Source: U.S. Geological Survey | |||||||||||
|
Top Four Producers In 2009:
China (13% of world production) Australia (9%) U.S. (9%) South Africa (9%) |
Key Events - Gold
2010
8-25 - WGC: World mine production +3% in Q2 from a year ago. Identifiable demand +36% in Q2 from a year ago.
8-10 - Federal Reserve keeps federal funds rate unchanged and says that they will be buying more Treasury securities.
8-4 - People's Bank of China agrees to let more commercial banks trade gold internationally.
6-8 - GFMS Ltd. CEO: Gold should trade between $1,050 and $1,300 an ounce for the rest of 2010.
5-26 - WGC: World mine production +5% in Q1 from a year ago and total demand -25%.
3-29 - WGC: China's gold demand amounts to 11% of world demand and is expected to double in 10 years.
3-19 - The Reserve Bank of India increased its key interest rate from 4.75% to 5.00%, the first increase since July of 2008.
2-17 - WGC: World mine production up 6% and total demand down 11% in 2009.
2009
11-19 - WGC: Mine production up 6% in Q3 v. a year ago. World demand down 34% in Q3 from a year ago.
11-3 - IMF sells 200 tons of gold to the Reserve Bank of India for $6.7 billion.
8-19 - The World Gold Council said that central banks bought 14 tons of gold in the second quarter of 2009 - "the first net purchase by central banks for a considerable length of time."
8-13 - South Africa gold production down 12% in June v. a year ago.
2001
9-11.
Silver
Fundamental Notes
Until prices exploded higher in late-2003, it was hard to find anything positive to say about silver. The main changes have been the consolidation that has taken place in the gold and copper industries and the difficulty in developing new sources of production. As much as 75% of silver's production comes from gold, copper, lead, and zinc mining which is why changes in these other industries have a large impact on the price of silver. On the demand side, silver (like most commodities) benefits from strong world growth, a weaker U.S. dollar, and increasing use in electronic applications. According to an article in Barron's on June 8, 2009, the cash cost of producing silver is somewhere around $4.50 to $5.30 an ounce, but that rises to as much as $12 per ounce if exploration costs are included.
Fundamental data is hard to come by for the silver market, but on May 27, 2010, the Silver Institute said that 2009 world mine production totaled 709.6 million ounces in 2009, up 4% from the previous year. Fabrication demand totaled 729.8 million ounces, down 12% on the year.
Notable Quote:
(Penoles) has one of the lowest cost structures in silver because of above-average ore grades. (S&P Credit Analysts Juan Pablo) Becerra and (Laura) Martinez estimates the company cash cost was $4 to $5 per ounce as of March 31, 2009, which they said compares favorably with Penoles' global peers and the average price of silver during the same period.
Dorothy Kosich, Standard and Poor's. August 3, 2009.
| World Silver Mine Production (million ounces): | |||||||||||
| 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
| 557 | 591 | 606 | 594 | 597 | 613 | 637 | 641 | 664e | 685e | 710e | |
| Source: The Silver Institute | |||||||||||
|
Top Three Producers In 2009:
Peru (18% of world production) China (14%) Mexico (12%) |
Ounces per ton?
Reading about precious metals is sometimes confusing because one source speaks in terms of troy ounces and another uses metric tons. There are 32,150.7 troy ounces in each metric ton.
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