HSBC raises 2013 copper price outlook on tighter market

Updated 30 January 2013
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HSBC raises 2013 copper price outlook on tighter market

LONDON: HSBC has raised its 2013 copper price forecast, saying it expects positive sentiment to drive prices for the metal in a structurally balanced market.
The bank lifted its 2013 forecast for the average cash copper price to $ 8,000 per ton from $ 7,500 to reflect the metal’s relatively good start to the year.
“Copper, perennially described as fundamentally tight, actually finished 2012 posting a gain in inventories,” analyst Andrew Keen said in a note to clients.
“This market remains balanced in our view, and this is enough to keep prices high when sentiment is good.”
Benchmark three month copper futures on the London Metal Exchange (LME) were at $ 8,066 a ton at around 1000 GMT yesterday.
HSBC raised its aluminum price forecast by about 5 percent to $ 2,250 per ton, but maintained its view that prices would remain around this level due to a continued structural surplus.
“It would not take a revolution in the rate of global demand growth to fix the structural surplus in aluminum,” analyst Keen said.
Keen expects aluminum to be in a 5.9 million tons surplus over the 2012-2016 period, with the excess absorbed by a compound annual growth rate (CAGR) of 6.2 percent for global demand, and the market could be brought back into balance in one good year of demand.
Three months aluminum on the LME was at $ 2,056 a ton yesterday.
The bank also raised its iron ore price forecasts for this year to $ 123 per ton from $ 105 earlier, saying that the market was probably driven by seasonal restocking by Chinese mills and short-term concerns over supply.
The bank said, however, that it believes the lack of marginal cost support will see weakness for iron ore later in 2013.
Chile’s state copper commission, Cochilco, earlier said Chile is seen producing 5.596
million tons of copper this year, up 3 percent from 2012 levels, as heavy investment in mines in the world’s No. 1 producer pays off.
Cochilco said a pick-up at state copper producer Codelco’s century-old Chuquicamata deposit and the launch of its Ministro Hales mine at the end of the year will help lift
output of the metal, which is used in construction and power generation and transmission.
But analysts have warned that several factors — deteriorating ore grades, delays to key energy and mining projects, and operational woes — threaten forecast production jumps.
Cochilco expects output in Chile, which mines roughly a third of the world’s copper, will rise to 5.754 million tons in 2014 from an estimated at 5.433 million tons last year,
which was an 3.2 percent increase from the year before.
“This is fairly positive news because international estimates said Chile couldn’t reach predicted output and Chile’s production rose 3.2 percent,” Mining Minister Hernan de Solminihac said.

Cochilco had estimated 2012 copper output at 5.45 million tons in November, and de Solminihac had said in April that production would reach a whopping 5.7 million tons. Many analysts at the time had called his forecast too ambitious.
If Chile meets its production forecast, the higher copper supply could “slightly weigh on prices,” said George Gero, precious metals strategist at RBC Capital Markets Global
Futures.
The Andean country will attract $ 100 billion in mining investment in the next 10 to 12 years, a slightly longer time frame than previously forecast, as regulatory uncertainty and energy woes loom as key risks, the Sonami mining association said earlier this month.
Industry experts say Chile is failing to take a firm hand in regulating its mining and energy industries, leaving billions of dollars worth of projects exposed to the risk of lawsuits by local communities.
The forecast for climbing output from Chile comes as some global miners are scaling back investment plans as operating costs soar and the world’s economic outlook remains volatile.
But many miners in the Andean country have major plans to revamp aging mines.
World No. 1 copper miner Codelco has an ambitious investment plan worth roughly $ 27 billion to maintain and ultimately lift production at its copper mines to more than 2 million tons.
In addition, BHP Billiton and Rio Tinto have approved plans for a $ 4.5 billion expansion of Escondida, already the world’s biggest copper mine.
The world’s third-biggest copper mine, Collahuasi, hopes to have a good year and turn the corner to produce more than it did in 2012, its CEO told Reuters recently.
Anglo American’s major growth project, Los Bronces, helped increase the company’s copper production in 2012, a relative bright spot for the global miner.
Cochilco sees copper prices averaging $ 3.57 per pound this year, unchanged from its previous estimate, before dropping to around $ 3.32 per pound in 2014.
Globally, it sees copper output growing 3.3 percent this year, outpacing demand growth, which is seen up 1.5 percent. It expects a 56,000 ton copper surplus in the market in 2013.


Airbus warns could leave Britain if no Brexit deal

Updated 22 June 2018
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Airbus warns could leave Britain if no Brexit deal

  • Industry analysts say Airbus would be unlikely to pull out of the UK abruptly because of long lead times and waiting lists for its planes
  • Airbus, which makes wings for all its passenger jets in the UK, said that leaving both the EU’s single market and customs union immediately

PARIS: European aviation giant Airbus warned Thursday it could be forced to pull out of the UK if Britain leaves the European Union without a deal.
In a Brexit risk assessment, Airbus said Britain withdrawing from the EU without a deal “would lead to severe disruption and interruption of UK production.”
“This scenario would force Airbus to reconsider its investments in the UK, and its long-term footprint in the country, severely undermining UK efforts to keep a competitive and innovative aerospace industry, developing high value jobs and competences,” it warned.
“Put simply, a no deal scenario directly threatens Airbus’ future in the UK,” Tom Williams, chief operating officer of Airbus Commercial Aircraft, said in a statement.
In its risk assessment, Airbus said under a “no deal” scenario, delays and disruptions to its production could cost it up to one billion euros ($1.2 billion) a week in lost turnover.
It said a no-deal Brexit “would be catastrophic” for the aviation group.
Airbus employs 14,000 people at more than 25 sites in Britain, where it manufactures the wings of its aircraft.
“In any scenario, Brexit has severe negative consequences for the UK aerospace industry and Airbus in particular,” Williams said.
“While Airbus understands that the political process must go on, as a responsible business we require immediate details on the pragmatic steps that should be taken to operate competitively,” he said.
“Without these, Airbus believes that the impacts on our UK operations could be significant. We have sought to highlight our concerns over the past 12 months, without success.”
On the future trade relationship between Britain and the EU, Airbus said the current transition period, which runs until December 2020, “is too short for the EU and UK Governments to agree the outstanding issues, and too short for Airbus to implement the required changes with its extensive supply chain.”
“In this scenario, Airbus would carefully monitor any new investments in the UK and refrain from extending the UK suppliers/partners base.”
Britain is due to leave the European Union in March 2019 but continue the current trading arrangements during the transition phase to December 2020 to give time for the two sides to agree the terms of a new partnership.