Freeport-McMoRan Copper & Gold Inc. (
FCX
), Rio Tinto plc (
RIO
), Southern Copper Corp. (
SCCO
), BHP Billiton plc (
BHP
)
FXC, BHP, RIO, SCCO
In February Copper weighed in at about 4.60 lb, and since the
prices have declined to about 3.60 lb, which is a bit better than
the price at the beginning of this year.
Copper miners Freeport-McMoRan Copper & Gold Inc. (
FCX
), Rio Tinto plc (
RIO
), Southern Copper Corp. (
SCCO
), and BHP Billiton plc (
BHP
) have been producing less by design and .
other reasons.
Freeport-McMoRan reported Q-1 earnings Thursday morning, and
revenues are down nearly 20% from the same period a year ago,
$4.6-B this year vs. $5.7-B a year ago. Copper production is down
from 950-M lbs a year ago to 833-M lbs this year and unit net
costs have risen from 0.79 to 1.26.
In the earnings report, the CEO said that the Company plans to
increase Copper production by 25% in the next 3 or 4 yrs, and he
noted Freeport's longer-term prospects:
EPS for the Quarter came in at 0.80, vs. estimates of 0.86 and
year-ago EPS of 1.57. Gold production was down by 46% although
the average realized price per ounce was 21% higher.
Labor problems in Indonesia get some blame for the production
declines and for higher unit costs. But the Company did face
higher labor costs in the Americas, and that will likely turn out
to be a drag for some time to come.
Southern Copper's unit costs in Y 2011 were just 0.41 lb and
the Company has said nothing yet about Q-1 production, it has not
announced a date on which it plans to report earnings.
The consensus estimate for EPS is 0.59 on revenue of $1.6-B.
That's above last year's actual EPS of 0.55, . Southern Copper
gets nearly 77% of its total sales from Copper.
Rio Tinto published its operational review earlier this week,
noting that Copper production at its Kennecott mine is down -18%,
due to the lower grade ores being mined.
The Company expects the low-grade ores to persist through 1-H
of the year, but is planning to mine a higher grade area later in
the year. The Company also plans to shut down its smelter for 26
days in order to switch to equipment to handle the higher grade
ores. The Company did not say anything about costs or sales in
its operations review.
BHP Billiton released an operational review Wednesday, showing
Copper production down 10% for the 1st 9 of F-Y 2012 compared to
the period in F-Y 2011.
The March quarter showed a raise of 3% compared with the same
period a year ago, and sequential production was flat. Copper is
less important to BHP, which is the World's largest Iron Ore
miner, but the Company is expanding its Copper production.
A lot of the recovery in Copper prices depends on Chinese
demand, which takes about 40% of the World's Copper and is
currently constrained by near-record inventories of around 3-M
metric tons.
Warehouses at the London Metals Exchange are more than 50%
empty which could signal a price rise.
Prices for Copper deliveries are higher for immediate delivery
than they are for July delivery, a commodities market condition
known as 'backwardation'.
Usually this market supports higher prices, but this time a
lot depends on how fast and by how much China uses its
stockpiles.
Freeport shares finished at 38.03 Down 0.26(0.68%) 52-wk range
of 28.85-56.78.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red
Roadmaster's Technical Report on the US Major Market Indices, a
weekly, highly-regarded financial market letter, read by opinion
makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and
stock markets since 1984, following a successful business career
that included investment banking, and market and business
analysis. He is a specialist in equities/commodities, and an
accomplished chart reader who advises technicians with regard to
Major Indices Resistance/Support Levels.