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MARKETS Protracted Outages Could Impact Copper Markets By Steve Fiscor, Editor-in-Chief Production at two of the largest copper mines has been suspended. Officials are unsure if or when production will resume at Bingham Canyon, after the U.S. mine suffered a massive landslide. Bingham Canyon produced 163,000 metric tons (mt) of refined copper in 2012. Production has also been suspended at Freeport McMoRan Copper & Gold's Grasberg mine in Indonesia, while authorities conduct investigations into recent incidents. A 90-day stoppage at Grasberg would remove another 125,000 mt of copper from the market. Basic supply demand fundamentals would lead one to assume that copper prices should begin to track upward, but so far the response has been somewhat muted. When these announcements were made, the copper market was over supplied. According to preliminary data released by the International Copper Study Group (ICSG), the refined copper market balance for February 2013 (most recent data available) showed a production surplus of about 40,000 mt. The refined copper balance for the first two months of 2013 indicated a production surplus of 127,000 mt. This compares with a production deficit of 170,000 mt in the same period of 2012. In the first two months of 2013, world usage is estimated to have declined by around 6.5% compared with the same Source: London Metal Exchange period of 2012. Chinese demand declined by 11% owing to a 45% decline in net imports of refined copper. World mine production is estimated to have increased by almost 12% in the first two months of 2013 compared with production in the same period of 2012, mainly owing to a recovery in production levels from constrained output in early 2012. Mine production increased by 7% in Chile, the world's leading producer accounting for 32% of world mine production, and by 9% in the United States, but declined by 0.5% in Peru. World refined production is estimated to have increased by 2.3% in the first two months of 2013 compared with refined production in the same period of 2012. The main contributor to growth was Africa, with refined production declining by 8% in Chile. The average LME cash price for April 2013 was $7,203/mt, down from the March 2013 average of $7,663/mt. Copper prices currently stand at $7,311/mt. So will the production suspension at these mines have an immediate impact on copper prices? Probably not, but longer term it could create a tighter supply situation for 2014. More information on copper markets is available at: www.icsg.org. (June 5, 2013) Precious Metals ($/oz) Gold $1,402.70 Silver Platinum Palladium Rhodium Ruthenium $22.55 $1,512.00 $756.00 $1,040.00 $85.00 Base Metals ($/mt) Minor Metals ($/mt) Exchange Rates (U.S.$ Equivalent) Aluminum $1,927.50 Molybdenum $24,000 Euro (€) 1.3144 Copper $7,311.00 Cobalt $30,000 U.K. (£) 1.5470 Lead $2,205.50 Canada ($) 0.9690 Nickel $14,920.00 Australia ($) 0.9517 Tin $20,900.00 South Africa (Rand) 0.1003 Zinc $1,895.50 China (¥) 0.1620 Iron Ore ($/dmt) Fe CFR China $116.60 Gold and silver prices provided by KITCO Bullion dealers (http://www.kitco.com). Platinum group metals prices provided by Johnson Matthey (http://www.platinum.matthey.com). Non-ferrous base and minor metal prices provided by London Metal Exchange (http://www.lme.co.uk). Iron ore prices provided by Platts Iron Ore Index. Currency exchange rates were provided by the GoCurrency.com. 168 E&MJ; • JUNE 2013 www.e-mj.com