Market Favors UK Miners, Copper
Source: Reuters, Julie Crust (1/27/11)
"Mining stocks have underperformed metal prices this year."
"We have seen the UK mining sector fall back in January; the FTSE 350 mining index is down 9%, while the LME index is down only 2% over the same period," Citi said, noting copper was its most favored metal.
Its comments came as Kazakhmys, one of the world's top 10 copper miners, said annual copper cathode production from its own concentrate was in line with expectations amid strong demand, as was its output of by-product gold.
Zinc, silver and power output all beat expectations.
"Interestingly, copper cathode production was below the run-rate of concentrate production, suggesting some build in concentrate stocks (perhaps 15,000 tons of copper in concentrate) that could come through in 2011," said Liberum Capital.
Copper prices gained over the fourth quarter and continued to rise this year with three-month copper CMCU3 hitting a record high this month. A Reuters poll this week showed prices for the metal, used in power and construction, are expected to keep posting new highs.
"Copper supply from the majors is struggling, inventory levels are falling and we see a sustained deficit in the copper market in 2011/12," said Credit Suisse.