Mercator Minerals Ltd MLKKF

Copper Leads Metals Gains, Tracking Gold, Oil

[24~Karat]

The pessimism on commodities has been spearheaded by margin calls to overleveraged hedge funds, but has also been aided and abetted by the popular media, including one prominent television pundit who has stated recently that China, the primary copper consuming country, “has disappeared.”Perhaps a more objective analyst would take a look at the facts, such as the graph below, showing that China’s forecasted GDP is on a pace to slow from 12% growth to 9.75% growth.That is not exactly an earthshaking event.

Meanwhile, back in the real world, it is reported in the Bloomberg story below that Chinese stockpiles of Copper have fallen to record lows. Now THAT is an ingredient for an explosive rally!

Associated Press

FROM BLOOMBERG:

Copper Leads Metals Gains in London, Tracking Gold, Oil Rally

By Chanyaporn Chanjaroen

Sept. 12 (Bloomberg) -- Copper rose in London, leading gains in metals traded on the London Metal Exchange, as gold rebounded from this year's low and oil recovered from its weakest in five months, bolstered by a declining dollar.

The S&P GSCI index of 24 commodities advanced 0.9 percent as the dollar fell against currencies such as the euro. Copper has lost 17 percent since the end of June because of concern that a global economic slowdown may trim demand.

``The dollar has had an amazing run and clearly needed a pullback,'' Randy North, a trader at RBC Capital Markets in London, said by phone. ``It's getting people back in the bull mode for commodities.''

Copper for delivery in three months advanced $211, or 3 percent, to $7,141 a ton as of 5:27 p.m. on the London Metal Exchange, heading for a 3.5 percent weekly gain. The contract fell 8.1 percent last week.

This week's 29 percent drop in copper stockpiles monitored by the Shanghai Futures Exchange added to concern that supply will struggle to match demand after disruptions at mines. Production at Escondida, the world's largest mine, will decline between 10 and 15 percent for the next two years, according to BHP Billiton Ltd., which owns the mine.

Copper stockpiles tracked by the Shanghai exchange slid to 13,554 tons, the lowest since at least when records began in January 2003 and taking this year's decline to 47 percent. Including those at the LME and the Comex division of the New York Mercantile Exchange, they total 221,519 tons, or 4.3 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.

Copper Mine

Freeport-McMoRan Copper & Gold Inc. said today two explosions along roads at its Grasberg mine in Indonesia caused no injuries or production disruptions. Grasberg is the world's second-largest copper mine.

Phoenix, Arizona-based Freeport-McMoran said on Sept. 10 that a ``small-scale failure'' at the mine will reduce copper and gold output in the second half. The company cut its 2008 production target to 4.03 billion pounds of copper, 1.6 percent below an earlier estimate.

Industrial production in China, the world's largest consumer of industrial metals, expanded 12.8 percent in August from a year earlier, the statistics bureau said today. Still, that's the slowest pace in six years and below the 14.5 percent median estimate of 22 economists surveyed by Bloomberg News.

Aluminum output in China unexpectedly rose last month after a pledge in July by the nation's top 20 smelters to cut production by as much as 10 percent.