Chile's quake fuels rally in Asia's mining sector
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TOKYO (MarketWatch) -- Asia's mining sector rallied Monday as traders poured over the latest reports of disruptions to metals production in the wake of the massive earthquake in resource-rich Chile.
Shares of Asia's metals producers posted broad gains, and copper prices on Globex climbed by as much as 6%.
"Having the world's largest copper producer crimped should enable other suppliers, including Asia miners, to move in quickly to pick up slack," said Patrick Kerr, a managing director at Amerifutures Commodities & Options.
A massive 8.8-magnitude earthquake shook Chile on Saturday, reportedly killing more than 700 people.
Media reports over the weekend said that up to one-fifth of the copper-mining capacity for the nation, which exports a third of the world's copper supply, was halted after the quake. see story on quake's impact on Chile's mining industry.
'The ongoing issue with the earthquake will no doubt be good for miners, as we are seeing a spike in copper prices, and there will be minimal, if any, capital laid out for repairs.'
Chris Weston, IG Markets
"The ongoing issue with the earthquake will no doubt be good for miners, as we are seeing a spike in copper prices, and there will be minimal, if any, capital laid out for repairs," said Chris Weston, an institutional dealer at IG Markets in Melbourne.
Reports of the output disruptions lifted prices for the may copper contract to as high as $3.49 a pound in electronic trading on Globex, the highest intraday price since early January, according to FactSet Research. it eased back slightly in late morning trading Monday in Asia to $3.376, still up 2.8%.
Shares of major miners throughout Asia rallied as a result. In Sydney, OZ Minerals ltd. /quotes/comstock/22x!e:ozl (AU:OZL 1.09, +0.05, +4.81%) /quotes/comstock/11i!ozmlf (OZMLF 0.89, -0.10, -10.10%) climbed 5.3%, and Equinox Minerals ltd. /quotes/comstock/11i!eqxmf (EQXM.F 3.14, -3.14, -50.00%) added 2.4%.
In Tokyo, Sumitomo Metal Mining Co. /quotes/comstock/!5713 (JP:5713 1,262, +13.00, +1.04%) /quotes/comstock/11i!stmnf (STMNF 14.20, +0.16, +1.10%) rose 2.4%, Nippon Mining Holdings Inc. /quotes/comstock/!5016 (JP:5016 443.00, +10.00, +2.31%) /quotes/comstock/11i!nmhdf (NMHDF 4.99, +0.12, +2.37%) climbed 2.5%, and Nittetsu Mining Co. /quotes/comstock/!1515 (JP:1515 384.00, +4.00, +1.05%) tacked on 2.6%.
Jiangxi Copper Co. /quotes/comstock/11i!jixay (JIXA.Y 82.33, +1.43, +1.77%) /quotes/comstock/22h!e:358 (HK:358 16.70, +0.92, +5.83%) was up 5.5% in Hong Kong, while its Shanghai-listed stock /quotes/comstock/28c!e:600362 (CN:600362 37.47, +2.43, +6.93%) added 6.9%.
Strength among the mining shares helped boost the broader Asian indexes. China's Shanghai Composite climbed 0.4%, Hong Kong's Hang Seng Index rose 1.6%, Japan's Nikkei 225 Average tacked on 0.5%, and Australia's S&P/ASX 200 rose 0.6%.
Quick fix
But some analysts were unconvinced the strength in the mining sector due to the quake would have any lasting impact on the global market, given some reports of a quick resumptions to operations in the nation's copper sector.
What the copper market is experiencing is more of a "sentiment reaction, rather than a fear that actual production levels will really be affected," said Weston.
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NHL’s path to Sochi not a smooth one
Their amazing Vancouver Olympic showdown complete, National Hockey League superstars return to work for their clubs on Monday with no assurance their skills will be seen in 2014 at Sochi or beyond.
Canada beat the United States 3-2 in Sunday's emotional gold medal final but the league has made no promises about returning to the Olympics. Most players want it. Many owners do not because it means a two-week NHL shutdown in February.
"Any other business does this, they would win the award for imbecility," US Olympic team general manager Brian Burke said.
"From a business perspective, it doesn't make sense. there are really compelling reasons to not go."
The issue will be a bargaining chip in NHL labour talks on a new deal ahead of one expiring in September 2011, although NHL scoring leader Alex Ovechkin of Washington has said he will play for Russia in 2014 no matter what.
"The NHL belongs in the Olympics," US goaltender Ryan Miller of the NHL Buffalo Sabres said.
"We're the best at what we do. We should be there."
Thirty NHL club owners worry about risking the health of their players for two weeks and have seen great benefits from Olympics staged in North America but little boost from those staged in Europe and Asia.
The fact it happens at all is enough for some, and with one of every four NHL players from outside North America, others want their chance to bask in the Olympic glow by playing for gold at home.
The NHL season resumes Monday with Detroit at Colorado and 12 more games on Tuesday. Six weeks remain before 16 of 30 teams start the two-month playoffs for the Stanley Cup, not a lot of time to capitalise upon the Olympic stage.
"We do not operate in a vacuum. This costs us money," NHL commissioner Gary Bettman said. "This disrupts our season. We don't make any money off it. We're here because it's good for the game.
"The value of the contracts of the NHL players that are participating in this tournament is $US2.1 billion ($A2.34 billion). We have turned over, for two weeks, control of the most important asset of our game. That's our players."
Ovechkin's Washington Capitals lead the league, just ahead of the San Jose Sharks, who had the most Olympians of any NHL team and five players on the ice in Sunday's final.
Many will see how they play in the coming weeks to see what impact the Olympics have on the quality of their NHL performance.
"We want to continue to grow the game around the world. We have to decide, on balance, is it worth it?" Bettman said.
"It's difficult for any business to shut down for two weeks with the attendant loss of attention and everything that flows from that."
But an Olympics without elite NHL talent would hardly be worthy of the name.
"We need to have them," International Ice Hockey Federation president Rene Fasel said. "This is the pinnacle of hockey."
International Olympic Committee president Jacques Rogge does not want the NHL to walk away either.
"The Olympic tournament is the best possible promotion for hockey in North America," Rogge said. "Of course, here in Vancouver it was easier, because of logistics, than it will be in Sochi."
AFP
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