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thekiwi

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Weekly chart for POC is still active despite the large drop in the POC on Friday night-Saturday morning. No close below the Equilateral trend line as yet. Could very easily bounce off it upwards. http://www.sharescene.com/html/emoticons/smile.gif

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In reply to: appals on Sunday 19/11/06 04:53pm

Sorry Nizar. I have just realised that I have an incorrect Target written on the chart.

 

The Target is $2.06. Not a drop of $2.06.

I'll correct that on the next chart.

 

Apologies. http://www.sharescene.com/html/emoticons/sad.gif

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A very interesting article here that means the miners effectively have had a cushion against falling prices delivered to them courtesy of the shortage of concentrate, in BHP's case equating to $US25c-35c/lb which is around 10% of the copper price.

 

Copper Producers Turn The Screws

FN Arena News - November 13 2006

 

By Greg Peel

 

Treatment charges and refining charges (TC/RC) have been a bone of contention for copper producers all year (for a full explanation see "Copper Smelters Scramble For Supplies", 12/09/06). The biggest sticking point has been the price participation scheme, which has weighed in favour of the smelters and against the producers as the copper price has only trended one way of late.

 

The problem now for the smelters is that given all the disruptions in the copper industry, copper concentrate is in short supply, meaning smelters are competing to acquire concentrate to turn into finished product. This puts the ball in the court of producers, who have countered by reducing TC/RC price payments and overturning price participation.

 

This time last year producers were being charged a total of US24c/lb, but with price participation smelters were receiving as much as US50c/lb. Copper giant BHP Billiton (BHP) has just settled deals with Korea and India at a charge of US16c/lb and no participation.

 

Thus UBS calculates the removal of price participation alone will save BHP US20-25c/lb, based on a copper price forecast of US$3.25/lb.

 

UBS is not going to change its forecasts until the new price regime is ratified by those hard-bargaining customers, Japan and China. But on the assumption that a new benchmark has been set, there will be earnings benefits for copper producers.

 

UBS sees BHP, Rio Tinto (RIO) and Oxiana (OXR) gaining 1-2%, while less diversified miners will fair better. UBS suggests a 13% increase for Aditya Birla (ADY) and 14% for Newcrest (NCM).

 

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Another wave of doom and gloom sweeping through the media. Must be short of news. The reality is that China is stills strong, Japan is coming out of recession and the US/Europe are reasonably solid. All this appears to be short term weakness and may I suggest speculators are the ones getting hurt as leveraged positions are called in.

 

http://www.fnarena.com/index2.cfm?type=dsp...5C948610A2EA409

 

http://metalsplace.com/metalsnews/?a=8514

 

I still think we are going to be reasonably strong out to 2008. Also, many companies put out forecasts at US$2-$2.50/lb, a price which still seems robust to me.

 

 

 

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I've heard anecdotal evidence from two sources that the recent rise in LME stocks is due to destocking in China. Have heard from one source that 5,000 tonnes was drawn down from Chinese government reserves for one firm alone. This suggest to me that copper is very difficult to come by at the moment and I suspect prices will climb from here.
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They can't have it both ways! recent media comment that copper prices could revert back to 1990 levels is in my mind a complete beat up (Lets face it the alternatives are oil based)

What is the comparitive cost to extract these metals (read ALL metals) now as compared to 1990.

Add the extra physical tonnage demand by the world markets to declining EXISTING mine output then why then would new projects come to fruition?

If they do - then they need todays or better prices to justify - if they dont then present demand on flagging production would send prices to the moon.

 

Therefore it is really in the interests of major consumers of these metals (ie China , India etc ) to maintain prices to ensure supply and their own growth or even survival.

 

Obviously those consumers will at time attempt to cool the abrupt rise in commodity prices as China is doing now but I am sure this can only be a short term abhoration .

 

These prices may seem high in todays dollars terms but when any comparisons are done with the buying power of our dollar 25 years ago they have hardly budged!

 

Am I just a silly old baby boomer or does somebody else agree!!!

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