Circle Property Share Discussion Threads

[pinhead3] 10/4/2006 22:38

With the price of copper rising 400% in the last few years & no sign of falling I think we can safely say we're in a metal boom or a 'commodities super cycle' which typically last 10 years+.
Short term corrections are likely on the way up but until we see a sign of the Chinese or Indian economies slowing the price trend in the short / medium time is only going one way, up.

For a miner like CRC it is the long term price that is important. Short term prices rises however allow them to find financing & start projects that would otherwise be uneconomical or unattractive. Haib & Kinsenda were both shut down due to low prices in the 80's/90's. Anything above $1.25/lb is a bonus for CRC & my valuation.

If you want to really profit from the short term rises in the copper price I suggest you look at taking a long position in copper through a spreadbet.

[nikesh2] 10/4/2006 22:26

pinhead do you think a metal boom could occur?
would be nice to get in if was a possibility!!!!!!

[drewz] 10/4/2006 22:25

wassapper - re WTI - bit opaque though isn't it?

No website/no presentations/no broker notes/no numbers/no visible business plan to read up on.

Ok I know this guy brought in from FQM or whoever is supposed to know his onions, but they are hardly making much effort to attract investors with transparent readily accessible information.

If it wasn't for your gentle reminders here there and everywhere, the company would be nigh on invisible.

p.s. didn't you mention that IG are able to spreadbet WTI now? By phone only I presume, as it is not yet listed on the trading platform.

[tonystringy] 10/4/2006 22:12

Yet again, it's down to basic economics: global inventory levels of copper are at record lows, but demand - especially from China, is at record highs.
China's industrialisation is sucking in all kinds of metals... but the rate they're consuming copper is almost unbelievable. Last year China's copper demand leapt 48%.
Why? China is building more factories, more highways and more power plants than any other nation. And copper is the widely-used metal of choice for construction and power-generation industries.

Adam Rowley, a commodities analyst at Macquarie, says: "There has been strong investment in the Chinese power sector to compensate for the severe power shortages seen over the past few years. And a big chunk of Chinese demand for copper is coming from this." Figures also showed that production of power-generation equipment in China doubled last year.
With so many widespread uses, it's no surprise copper demand keeps growing in countries that are starting to industrialise and urbanise.
And if you think Chinese demand for copper is strong now - just think of what's ahead...
Per capita demand for copper rises as GDP per capita rises. Japan consumes around 12kg per capita, North America consumes around 10kg per capita and Europe around 9kg per capita.
The large populations of China, India, Eastern Europe and South America are all consuming less than 2kg per capita - this is a huge indicator of what lies around the corner for copper demand..."

[wassapper] 10/4/2006 22:08

Just another small reminder for you copper fans not to keep all your eggs in one basket; take a look at what has been happening at Weatherley (WTI). It is a pure copper play now (just needs a name change). Move now before the herd? DYOR no advice intended etc

[wassapper] 10/4/2006 22:08

Just another small reminder for you copper fans not to keep all your eggs in one basket; take a look at what has been happening at Weatherley (WTI). It is a pure copper play now (just needs a name change). Move now before the herd? DYOR no advice intended etc

[pinhead3] 10/4/2006 22:03

Is there no stopping copper?

BaseMetals.com Report

There seems no stopping copper with the rally being fuelled on a high octane mixture of supply concerns, fund buying and roaring momentum. Supply concerns seem to be coming from all directions, from ongoing strikes, geopolitical concerns in various producing countries and even concerns over potential shortages of water in producing countries, not to mention the base metals' adoption as a substitute currency vs the dollar. With so many factors driving the markets you have to ask whether things have indeed changed that much or is the situation running ahead of itself. Although there is little doubt that fundamentals are tight there seems an awful lot of hype in the market and with prices knocking on $6000 ($5965 on lates), the whole complex looks over cooked and in need of a reality check.

One of the most difficult factors to understand is the apparent low level of producer selling, although hedging has become unpopular with a lot of shareholders, which was largely behind the move by gold producers to dehedge in recent years, and which maybe affecting producers of other metals, it seems strange that producers are not trying harder to take some of the steam out of the market to help consumers. Aluminium producers in the past have voiced their desire to keep aluminium prices from rising too high (perhaps this is why aluminium is lagging behind). But with producers relatively un-hedged and funds long, there seems a lot of potential sellers. Even if the bull market is not about to end, a meaningful correction is going to be an ongoing high risk.

[drewz] 10/4/2006 19:55

Deluding themselves in what way? By buying CRC stock at 98p? I think not.

[goatherd] 10/4/2006 19:38

Pinhead,

I quite agree with you! Your valuation is soundly based - and the management is being sensible.

My concern is purely that some investors are deluding themselves.

Richard

[pinhead3] 10/4/2006 19:32

It's a good job my valuation is based on $1.25/lb for Kinsenda (& rest) & $1.00/lb for Hinoba-an then!

I think that it is a good sign that the mngt have their heads screwed on that they are not playing that card to push up the share price

[goatherd] 10/4/2006 19:24

Pinhead,

Good basic economics! However sharp spikes in commodities have in the past caused substantial increases in supply, at the same time as substantial decreases in demand from price elasticity and substitution; this sudden imbalance has then caused a large overreaction, sometimes lasting for years. This has happened with oil and gold at times - lots of other commodities as well. Substitution has played havoc with platinum/palladium price structures too.

Do you really think that Indian and Chinese builders will be less price conscious than British ones? I have to say I do not.

I would agree that $1.25 is a reasonable medium term basis for investment. However those who up their targets every time the copper price rises by 5% are, in my opinion, merely fooling themselves.

Richard

[pinhead3] 10/4/2006 19:19

Bigbobjoylove
Thanks for the reminder, updated the header for the 3 month copper closing price today $5,910.50 (+$179.00) or $2.69/lb.
Looks like the $6,000 price level could be broken tomorrow.

[pinhead3] 10/4/2006 19:15

It's the Chinese & Indian economies that are driving the commodities boom, I don't think the UK house builders & plumbers will have much impact on demand.

A fall in demand will cause a fall in price until the equilibrium between supply & demand is stabilised. At which point it won't make any difference cost wise whether you use copper or alluminium or plastic. That point will be above $1.25 /lb for copper so it is irrelevant as far as the valuation on this thread.

By the way almost all commodities are near record highs including Aluminium.

[goatherd] 10/4/2006 18:57

Pinhead,

Actually many builders will not choose the "best" material for a job, at best they will choose the most economic, and an awful lot will choose the cheapest [without life expectancy coming into it at all.

There are now plastic pipes that will accept high temperatures; and all the IEE tables specify aluminium as well as copper for conductors.

I think substitution at the lowest level will be occurring already - try asking your local builder's or plumber's merchants. At current levels I think even the really big users will be substituting as much as possible within a year.

It is a pity because CRC does not need these high prices - and once the price drops then I suspect the CRC price will drop in sympathy. Good buying point, of course.

Richard

[bigbobjoylove] 10/4/2006 18:49

pinhead get ya facts right, copper tonight is $2.70 ;-0

[pinhead3] 10/4/2006 18:45

Goatherd
What do you think plastic is made of? Oil! In the long term switching to an oil based product will not be the solution.
Plastic pipework is also not suitable for high temperature applications such connecting to boilers,etc & does not have the life expectancy as copper.
There is a reason why copper is used in pipeworks / wiring & that is because it's best material for the application.

There is a concern amongst producers that ultra high copper prices will force substiutions but only if the demand /supply remains 'out of whack' for a long period of time 10+ years.
The long term price used is around $1 rather than the current $2.65+ & that is because in the long term (10 years) prices will fall back towards these levels even if they never fall below $1 again.

Regarding CRC by the time the price falls back to below $1.50 Kinsenda / Hinoba-an & Haib will probably have been producing for years & the initial set up costs will be covered.

[goatherd] 10/4/2006 18:25

drez,

Surely the point is that prices could be reduced by increasing supply, or decreasing demand?

Take a house builder for example. He could switch to using aluminium wiring and plastic plumbing/central heating pipes in much less that a year.

Richard

[drewz] 10/4/2006 17:01

Given the demand profile of the newly consumerist BRIC nations over the next decade, it is going to need a heck of a lot of new copper mine commissioning to meaningfully impact the supply/demand balance and get the price back down to anywhere near $1.25/lb. I certainly don't see it happening in the medium term - 12-18 months.

[goatherd] 10/4/2006 16:45

The FT article also says that most copper producers are still making production plans on copper prices of 80c to 90c; and this is one reason that copper prices will rise - because new mines are not being brought into production.

So CRC's use of £1.25 is rather higher than the industry uses - not that I think it is to high. But I do think investing on the basis of current copper prices is rather optimistic.

When one gets a very sharp spike in prices as we have seen three things happen/

1. mothballed mines are brought back into production - but there are very few
2. new mines are started
3. consumers will substitute where possible. Aluminium is an alternative to copper for power transmission [not so good for data]. ABS and other plastics are substitutes for copper in central heating applications. Doubtless there other examples too.

Richard Dawson

[pinhead3] 10/4/2006 13:30

Commodity prices keep rising - FT comment today.

[unionhall] 10/4/2006 12:35

Shares in issue 60.494m
Fully diluted shares 71.797m
Exchange rate $1.75/£1

From the header....

[drewz] 10/4/2006 12:33

Is the advfn figure for current mkt cap - £27m - correct?

[pinhead3] 10/4/2006 12:13

Same thing happened around the end of February, couldn't fill even the smallest order in the morning & then suddenly in the afternoon you could buy loads. Unfortunately the price also fell back to 65p within a couple of weeks!

Hopefully the reverse will happen this time.

[nikesh2] 10/4/2006 11:40

pinhead something is definitely going on in the background!!!
we have to guess what!
can only buy 1.5k online

[drewz] 10/4/2006 11:19

Well said, Simon. Calling a spade a spade, as ever.

Ashers really is letting himself down, and others, by posting misleading and untrue assertions in this nonsensical ACU versus CRC feud he has engineered pointlessly. Silly boy.

All because he had jumped in feet first with the judgement that CRC is a no-goer, and now that the price action has been moving to undermine his judgement he comes out with all these hysterics to try and knock the share and save face.

Ashers, put your ego aside for one moment, swallow your pride and buy a line of CRC stock to sit alongside your ACU holding. You know it makes sense.

I hold CRC. However, I hold considerably more ACU and SCR both of which I believe will perform well and have a safer investment profile.