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Stock Strategist Industry Reports

Recent Developments in Copper

More production cuts are likely.

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Copper prices have fallen 68% to $1.30 per pound from their peak in July as the outlook for copper demand dimmed. According to the most recent data released by the International Copper Study Group, world refined copper usage in the first nine months of 2008 increased by 2.7% compared with the first nine months of 2007. Refined copper usage in China, the world's largest user of copper, increased 12.7% while usage in the key markets of the United States, Japan, and Europe fell. World mine production decreased 0.8% as a result of lower output in Indonesia, Chile, and Argentina. Lower copper prices and tight credit markets are causing copper miners to delay expansion projects, but production cuts at operating mines are only just beginning. If prices remain depressed, we think further curtailments are likely.

Background: Copper Production and Uses
Chile is the top copper-producing country, followed by the U.S. and Peru. Leading publicly traded copper miners include  Freeport-McMoRan (FCX),  BHP Billiton (BHP), Xstrata,  Rio Tinto (RTP),  Anglo American (AAUK), and  Southern Copper (PCU). Copper has many applications, including electrical wire, plumbing pipe, and motors.

Elizabeth Collins does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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