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UPDATE 6-Copper hits six-month low as confidence crumbles | ETFs | News | Reuters - 0 views

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    LONDON, Aug 11 (Reuters) - Copper prices slid to six-month lows on Monday as a strengthening dollar triggered a sell-off ina market already worrying about weak demand from top consumers China and the United States. Copper for delivery in three months MCU3 hit $7,315 a tonne on the London Metal Exchange, the lowest since early February, before closing at $7,330 down from Friday's $7,410. "The correction that we are seeing is really a reflection ofthe slowdown of the global economy," said Ashok Shah, chief investment officer at London & Capital. He said weakness in industrial production would continue to weigh on metals as demand was seen slowing and as more investors unwound long positions. "I would expect some more speculative money to be exiting."
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Credit crunch will exacerbate the commodity super-cycle - FT - 0 views

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    The commodity super-cycle is not over, it is just pausing. For the world economy to resume growth of 5 per cent, energy supply must expand by a similar rate. But with lower oil prices and a credit crunch, energy investment is plummeting, suggesting global energy demand will eventually pick up more rapidly than productive energy capacity. Assuming the ongoing global recession does not turn into a multi-year event that pushes energy demand down structurally, steep decline rates could again put upward pressure on oil prices as soon as 2010 or 2011. In particular, if the low oil price/high cost of money environment persists for most of this year and next, our base case scenario for non-OPEC production could prove optimistic, exacerbating the second leg of the commodity super-cycle. If and when the global economy starts to recover, too many dollars chasing too few barrels will only lead to much higher oil prices.
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Global Wind Turbine Markets and Strategies, 2008-2020 - 0 views

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    The global wind turbine market has seen rapid shifts in scale and product sophistication on the back of booming demand for wind power globally. Effective wind turbine pricing is a major challenge for all manufacturers as they strive to keep pace with higher volume and more complex demand. Suppliers are expanding their sales and production globally. Turbine prices and cost of installations are increasing as multiple players move on 2 MW turbines and above.
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The end of Bretton Woods 2? - 0 views

  • The Bretton Woods 2 system – where China and then the oil-exporters provided (subsidized) financing to the US to sustain their exports – will come close to ending, at least temporarily. If the US and Europe are not importing much, the rest of the world won’t be exporting much.
  • And rather than ending with a whimper, Bretton Woods 2 may end with a bang. In some sense Bretton Woods 2 has been on life support for a while now. China’s recent export growth has depended far more on Europe than on the US. US demand for non-oil imports peaked in 2006. One irony of the past year is that the US was borrowing far more from China that it was buying from China. Campaign rhetoric that the US was paying for Saudi oil with funds borrowed from China isn’t far off – though it leaves out the fact that the US also borrows from Saudi Arabia to pay for Venezuelan, Mexican and Nigerian oil.
  • If Bretton Woods 2 ends in 2009 – if US demand for imports falls sharply in the last part of 2008 and early 2009, bringing the US trade deficit down – it won’t have ended in the way Nouriel and I outlined back in late 2004 and early 2005. We postulated that foreign demand for US debt would dry up – pushing up US Treasury rates and delivering a nasty shock to a housing-centric economy. As Brad DeLong notes, it didn’t quite play out that way. The US and European banking system collapsed before the balance of financial terror collapsed. Dr. DeLong writes: All of us from Lawrence Summers to John Taylor were expecting a very different financial crisis. We were expecting the ‘Balance of Financial Terror’ between Asia and America to collapse and produce chaos. We are not having that financial crisis. Instead we are having a very different financial crisis. Catastrophic failures of risk management throughout the entire banking sector caused a relatively minor collapse in housing prices to freeze up global finance to a degree that has not been seen since the Great Depression. The end result of this crisis though could be rather similar: a sharp contraction in credit, a fall in US economic activity, a fall in US imports and a fall in the amount of foreign financing the US needs.* The US government is (possibly) trying to offset the fall in private demand by borrowing more and spending more — but as of now there is realistic risk that the fall in private activity will trump the fiscal stimulus.
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  • Or, to put it more succinctly, Bretton Woods 2, as it evolved, hinged both on the willingness of foreign central banks to take the currency risk associated with lending to the US at low rates in dollars despite the United States large current account deficit AND the willingness of private financial intermediaries to take the credit risk associated with lending at low rates to highly-indebted US households.
  • But now US financial institutions are neither willing nor able to take on the risk of lending even more to US households. For a while the US government was able to ramp up its lending to households (notably through the Agencies) and in the process effectively take over the function previously performed by the private financial system (over the last four quarters, the flow of funds data indicates that the Agencies provided around $800 billion of net credit to US households). But now the US government is struggling to keep the financial system from collapsing. It doesn’t seem like it will able to avoid a sharp fall in the overall availability of credit.
  • It is now clear how the financial sector kept profits up: it took on more risk, as it shifted from borrowing short to buy safe long-term assets (Treasuries and Agencies) to borrowing short to buy risky long-term assets. Leverage in the system also increased (and for some broker dealers that seems to be an understatement), as more and more financial institutions believed that the US had entered into an era of little macroeconomic or financial volatility. The net result seems to have been a truly explosive concentration of risk in the hands of a core set of financial intermediaries in the US and Europe. Securitization – it seems – actually didn’t disperse risk into the hands of institutions able to handle it.
  • I hope that the process of adjustment now underway isn’t as sharp as I fear. The US economy gradually can shift from producing MBS for sale to US investors flush with cash from the sale of safe securities to China and Saudi Arabia to producing goods and services for export – but it cannot shift from churning out complex debt securities to producing goods and services overnight. Indeed, in a slowing US and global economy, improvements in the US deficit will likely come from faster falls in US imports than in US exports – not from ongoing growth in US exports.
  • But right now it looks like there is a real risk that the adjustment won’t be gradual. And it certainly looks like the flow of Chinese (and Gulf) savings to US households over the past few years has produced one of the largest misallocations of global capital in recent history.
  • US taxpayers are going to be hit with a large tab for the credit risk taken on by undercapitalized financial intermediaries. Chinese taxpayers may get hit with a similar tab for the losses their central bank incurred by overpaying for US and European assets as part of its policy of holding its exchange rate down. The TARP is around 5% of US GDP. There are plausible estimates that China’s currency losses will prove to be of comparable magnitude. Charles Dumas puts the cost at above 5% of GDP: “Charles Dumas of Lombard Street Research estimates that China makes 1-2 per cent on its (largely) dollar reserves. It then loses up to 10 per cent on the exchange rate and suffers a Chinese inflation rate of 6 per cent for a total real return in renminbi of about minus 15 per cent. That is a loss of $270bn a year, or a stunning 7-8 per cent of gross domestic product.”
  • Jboss — if some of the Chinese inflow could be redirected into investment in alternative energy, that would indeed be a win/ win. Some infrastructure bank style ideas have promise in my view — basically, the flow that used to go to freddie/ fannie could go to wind farms and the like. I would rather see more adjustment in china (i.e. more investment in Chinese infrastructure) but during the transition, if there is one, to a lower Chinese surplus, redirecting chinese financing toward new energy tech would be offer real benefits.
  • China likes 3rd generation nuclear power. Safe, lower cost than NG or coal, very much lower cost than coal with carbon sequestering, and zero carbon footprint. Wind is about 4X more expensive than our electric costs now. That’s in an area with consistent wind. Solar is worse. I don’t know if we can sucker them into investing in our technical fairy tales. Here’s a easy primer on 3rd gen nukes. http://nuclearinfo.net/Nuclearpower/WebHomeCostOfNuclearPower
    • Wade Ren
       
      is this true?
  • btw, solar thermal installations are so easy & affordable to retrofit onto existing structures, it’s amazing that there aren’t more of them here…until you realize that they work to decentralize energy. cedric — china is already doing it in china. they are way ahead of the curve over there. my partner brought back some photos of shanghai — rows of middle class homes each with a small solar panel on top. and that’s just the tip of the iceberg — an architect friend just came back from beijing and wants to move to china (he’s into designing self-powering structures and is incredibly frustrated by the bureaucracy and cost-prohibitive measures in the US).
  • I went to engineering school right after the Arab Oil Embargo, and alternative energy was a hot topic then. All the same stuff you hear of nowadays. They even offered entire courses on it , which I took. Then my first mini career was in the power plant biz, before Volker killed it with interest rates and the Saudies killed any interest in alt. energy with their big oil field discovery. For the last 5 years I’ve been researching what’s changed, and it is frighteningly little. Solar cells are still expensive and only have a 15% conversion efficiency. They developed the new cost reduced film technology, but that knocks down efficiency to 7%. Wind power works where there is wind constantly. Generators are mature technology and are already 90 some percent efficient. Geothermal, tidal, ect. work where they are available. Looks like coal gasification and synfuel is out because it makes too much CO2. Good news is 3rd gen nuclear is way better than 1st gen plants. Hybrid cars are good, and battery technology is finally getting barely good enough for all electric cars to be practical.
  • According to news report today, Japan’s trade surplus is less than 1 billion $ in September 08, a whopping 94% decrease compared to September 07. Does it imply that going forward Japan can not buy as much treasury as before?
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Strategies for reducing the carbon footprint of copper : New technologies, more recycli... - 0 views

  • Existing approaches to reducing environmental impacts along the metal production and consumption chain are focused largely at the plant scale for primary production, rather than considering the whole metal cycle. As such, many opportunities for systemic improvements are overlooked. This paper develops an approach to designing preferred futures for entire metal cycles that deliver reduced carbon footprints. Dynamic material flow models in Visual Basic® are used to provide life-cycle-impact-assessment indicators, which help identify key intervention points along the metal cycle. This analysis also identifies which actors or agents along the value chain are responsible for, or can influence, behaviour which affects environmental performance. With this information, it is possible to evaluate different scenarios for transition paths to achieve reduced impact. These scenarios consider combinations of new technology, increased metal recycling and demand management strategies. A case study for the copper cycle in the USA shows that to meet a CO2 reduction target of 60% by 2050, innovative technologies for primary processing of mined ore will play a limited role, due to their increasing impacts in the future associated with mining ever lower ore grades. To compensate for this whilst meeting demand projections, recycling of old scrap would be required to increase from 18% to 80%, requiring extensive collaboration between primary and secondary producers. An alternate scenario which focuses on demand reduction for copper by 1% per year, meets the CO2 target whilst only requiring an increase in the recycling rate from 18% to 36%. Together, these suggest that there is merit in examining the 'metal-in-use' stage of the metal value chain more closely in order to achieve targeted reductions in CO2. The approach also highlights the inherent trade-offs between different aspects of environmental performance which are required when pursuing CO2 reduction targets.
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Strong copper, steel and iron ore data from China - are they sustainable? - 0 views

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    The world's metals producers are still looking to China as the panacea for all ills with the often expressed hope that the country's need to support the domestic metals smelting, refining and steel industries will be the saviour of this sector and supply sufficient demand to support prices in the West. Consequently Chinese data are followed intensely and the latest information suggests that copper, iron ore and steel demand are holding up well - indeed increasing substantially - while aluminium is flat and zinc and lead suffering. But Chinese data requires interpretation and can be misleading as pointed out by Macquarie's Bonnie Liu in her latest China Commodities Weekly research note, and she concludes that there has to be some doubt that the latest extremely strong figures can be maintained. The notes below are abstracted from Macquarie's latest China Commodities Weekly and give us some considerable food for thought.
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US - Copper imports fell by 14.2% y-o-y in the first 11 months of 2008 - 0 views

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    According to the United States International Trade Commission, US copper imports in November rose by 2.5% m-o-m to 50,992 tonnes, compared with 49,737 tonnes in October. The rise in the imported quantity of copper is not attributed to an increase in physical demand for the red metal, but to the narrowing Comex-LME arbitrage ratio that favoured imports. The physical demand for copper is suffering from ongoing weakness due to the downturn in the US construction, manufacturing and automotive industries. As a result, in the first 11 months of 2008 US copper imports have contracted by 14.2% to 661,918 tonnes, compared to 771,125 tonnes in the same period of 2007.
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UK - Copper prices - 0 views

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    Intraday copper three-month prices on the LME rose by 4.1% to US$ 2,940 per tonne on December 29th compared to the closing price on December 24th, affected by higher oil prices and the weaker US dollar. Increases in oil prices are correlated with increases in copper prices since investors see oil as a barometer for the entire commodity class. Then, the weaker US dollar makes metals cheaper for holders of other currencies. However, analysts remain pessimistic about the red metal due to plunging demand as the ongoing economic slowdown will continue to take its toll on the demand for copper.
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Why energy demand will rebound - 0 views

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    But unless policy makers can find ways to improve the balance between energy supply and demand, the current slackness in energy markets will last no longer than it takes for the global economy to recover. That scenario will eventually impose significant costs on consumers and businesses in the form of higher energy prices.
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UAE - Vedanta plans 100,000t copper rod plant in Fujairah - 0 views

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    The London Stock Exchange listed Indian company, Vedanta, will build a US$15M (Dh55M) continuous copper rod plant with annual capacity of 100,000 tonnes in Fujairah, UAE, which will be operational by December to capture the strong demand from regional infrastructure projects. Copper rods manufactured by the plant will be used in cables for power grids for the region and the company is expecting more demand coming from not only the UAE and the GCC but the whole Middle East.
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Germany - Aurubis sees product demand improve - 0 views

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    Aurubis, a leading European copper semis fabricator, said that it saw product demand and production recover in mid-May in the wire and cable industry and in some other copper semis sectors. The wirerod market, especially the automotive wiring industry, is supported by government stimulus packages. It said orders for continuous cast shapes also stabilised in May then rose slightly in June. The company reported pretax profit in the third quarter to June fell to 51m euros (US$72m). Product output was 479,000t of wire rod and 111,000t of continuous cast shapes for the first nine months.
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KME H1 copper, alloys product output down 30 pct - 0 views

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    Italian leading manufacturer of copper and copper alloy products KME said that its H1 output dropped 30% to 218,000 tonnes from 313,000 tonnes for the same period a year ago. The company said that there is 'persistent uncertainty and fears that an impulse to industrial activity triggered by a necessity to rebuild stocks will not be sufficient to consolidate recovery.' Demand for copper semis has been badly hit due to the economic downturn as residential construction activities are halted. Demand from industrial production is also adversely affected by a slowdown in investments in new plants and machinery. However, a fall in copper prices earlier in the year helped easing substitution threats from cheaper materials, KME said. The company previously announced that its consolidated sales fell 45% year-on-year to €898.5m (US$1.29b) for the first half of 2009. Net loss was €20.1m, compared to €12.3m of net profit a year ago.
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Elektrokoppar sees solid copper demand growth - 0 views

  • Global copper demand will rise by 8-9% this year versus 2009 as China's economy powers ahead, the U.S economy continues to improve and Europe follows suit, Swedish copper fabricator Elektrokoppar said on Monday. The privately owned firm, Europe's fifth-largest copper wire rod producer, said its April order books were about 7-8% up on last year due to improved demand from white goods, infrastructure and autos sectors.
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Chile - Sonami and Cesco predict strong Japanese copper demand in Q3 2011 - 0 views

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    Chilean private miners association Sonami and copper and mining study group Cesco anticipate that Japanese copper demand will significantly recover in Q3 of the current year. It is expected that the market for copper will remain weak for several months due to the 9.0 earthquake and tsunami that hit the country on 11th March. However, reconstruction-related copper demand is predicted to exhibit significant growth rates from Q3 2011.
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China - Codelco Optimistic on Copper Demand - 0 views

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    Codelco, the Chilean copper producer, is optimistic about medium to long term copper demand prospects, primarily due to Chinese growth. The company also sources its optimism from predictions that the Japanese earthquake will have only a marginal and short term impact on the copper market, before growth resumes. In addition, it was reported that world demand is strong and has a good outlook despite expectations that the market in the developed world will only return to pre-crisis levels.
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Germany - Fundamentals to support copper price says Aurubis - 0 views

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    According to Aurubis, the largest producer of copper in Europe, copper prices will be supported by strong demand from China and Europe over the next year. The struggling mine supply of the metal will also help to sustain price levels. Aurubis believes that the recent drop in price was caused by a change in market sentiment rather than a physical fall in demand, although the company noted that some customers have become cautious when placing orders recently. Market insiders at the 2011 China International Mining Expo & Summit Forum supported the view of continuing robust demand. Some sources from the forum estimated Chinese demand for the metal to grow between 5% and 10% in 2012.
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Video: Chile's Codelco takes cautious copper outlook - 0 views

  • “What is happening now is not related to supply-demand in copper – it’s more related to the economic crisis in Europe,” Mr Hernández told the Financial Times in a video interview on the sidelines of LME week, the largest annual gathering of the metal and mining industry.
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    ""What is happening now is not related to supply-demand in copper - it's more related to the economic crisis in Europe," Mr Hernández told the Financial Times in a video interview on the sidelines of LME week, the largest annual gathering of the metal and mining industry."
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Reuters poll reveals weakened market sentiment on Chinese demand growth for 2012 - 0 views

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    Thomson Reuters, the global news and information agency, conducted a survey of 10 analysts on their impressions of China's copper demand growth outlook. The survey revealed that on average analysts forecast growth of 6.3% y-o-y in 2012; a figure which excludes the purchasing of metal for stockpiling. Expectations of this real demand growth ranged between 4% and 8% y-o-y in 2012, while estimates of apparent demand growth, which includes restocking, ranged from 6% and 12% y-o-y in 2012. Analysts cited fears of weak exports of copper products to the US and Europe amidst their ongoing debt crises, as well as the tight credit environment in China which they expect to limit restocking potential. Previously, analysts had been anticipating growth in the coming year of 7-9% y-o-y.
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Japanese copper, brass demand expected to increase 0.72% - 0 views

  • Annual demand is likely to increase 0.72% year-on-year to reach 800,700 tonnes in the upcoming year, compared with an estimated 795,000 tonnes in the current fiscal year.
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Japan's Copper-Alloy Demand Seen Little Changed as Tax Increases - 0 views

  • Demand for products, including sheets and tubes, may rise 0.7 percent to 800,700 metric tons, compared with estimated 795,000 tons for this fiscal year, according to the association.
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