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What’s The Outlook For The Copper Industry In 2015?
More than 1.5 million tonnes of fresh copper supply may come online this year. The increase in the copper supply will put pressure on copper prices.
China cracked down on the metal financing deals. Exceeding $150 billion, these deals represent one-third of China’s short-term foreign exchange borrowing.
Copper prices have corrected downward by more than 25% in the past year. The drop in copper prices can be largely attributed to the global slowdown.
After reaching their peak in 2011, copper prices have fallen more than 40%, mainly driven by the weakness in the Chinese economy.
China is the largest importer of copper ores, anodes, and refined copper. Chile, on the other hand, is the biggest exporter across these product categories.
The largest consumer of copper, China isn’t self-sufficient in its raw material needs. China must import raw copper for its smelters and refining plants.
China overtook the US and Japan as the premier manufacturing location. China doesn’t have sufficient copper reserves, leading to the global copper trade.
Cathodes are not used directly by copper consumers. Cathodes are melted and cast into shapes based on end usage, such as cakes, ingots, rods, and billets.
Copper mining is concentrated in Latin America, while the major copper consumers are in Asia. More than 60% of global copper consumption comes from Asia.
Copper radiators, motors, brakes, and bearings are used in the automobile industry. The copper content in an average mid-sized vehicle is around 50 pounds.
Because of its excellent heat transfer capabilities, copper is also widely used in producing heat exchange equipment and other uses in extreme environments.
A good conductor of electricity, copper outperforms aluminum in many applications such as electrical wires, plumbing components, and semiconductor chips.
Mining giants Rio Tinto and BHP Billiton have diversified portfolios of iron ore, aluminum, and copper assets, with most revenues coming from iron ore.
Cliffs’s guidance for its Asia Pacific Iron Ore (or APIO) segment is ~11 million tons of full-year sales and production from APIO.
Market expectations for Cliffs are varied. One has buy, 12 have hold, and nine have sell recommendations for the stock.
Any update on restructuring regarding ring-fencing of the parent company from potential liabilities of Bloom Lake will be a major catalyst for stock price.
Cliffs Natural Resources (CLF) announced the restructuring of Bloom Lake on January 27. The Bloom Lake Group recently suspended operations.
Cliffs’s board of directors has decided on a dividend cut and will eliminate the quarterly dividend of $0.15 per share on Cliffs’s common shares.
An operations overview reveals that iron ore accounts for most of Cliffs’s production and earnings, contributing 87% to total sales value in 3Q14.
Cliffs’s results on February 2 are important in order to know its operating performance since iron ore price touched fresh lows in the fourth quarter.