By Sarah Turner
SYDNEY (MarketWatch) -- Sydney-listed mining companies are
riding high along with commodity futures, as analysts sift though
quarterly production reports for future performance cues.
On Thursday, Rio Tinto Ltd. (RIO) shares gained 4.4%, while BHP
Billiton Ltd. (BHP) stocks climbed 2.1% and Newcrest Mining Ltd.
(NCMGF) shares rose 3.3%.
The advance helped the S&P/ASX 200 index finish 1.7% higher.
Across Asia, it was a similar story, with metal stocks on the move
in Japan, helping the Nikkei 225 index end higher by 1.9%.
Meanwhile, Hong Kong's Hang Seng Index , rose 0.9% and Korea's
Kospi Index climbed 1.3%, while the Shanghai Composite Index rose
1.2%, and the Singapore Strait Times index rose 0.2%.
The metals and mining sector has lately been buoyed by a
relentless rise in metal futures, with investors heading into
commodities on expectations that the U.S. Federal Reserve will ease
policy further, and that Chinese demand for commodities will
continue.
Gold futures ended New York trade at their 16th record high in
five weeks, and moved higher in electronic trading in Asia, trading
over $1,380. Copper futures climbed 4 cents to $3.87 per pound.
Watching for production
Rio Tinto released quarterly production figures on Thursday, and
the iron-ore production numbers likely reassured investors worried
that demand from Asia is holding up.
The mining giant said that its global iron-ore production
reached a record in the quarter, rising 1% to 47.6 million metric
tons.
Iron-ore production is expected to remain at close to capacity
over the remainder of the year, and the firm said it expects annual
production to hit 179 million tonnes on an attributable basis. Over
the first nine months of the year, attributable production totaled
134.6 million tonnes, a rise of 10% from 2009.
Fortescue Metals Group Ltd. , up 1.7%, also gave investors some
clues about iron-ore trading on Thursday.
It posted a 7% quarter-on-quarter drop in total ore shipped to
10.3 million metric tonnes following maintenance shutdowns. Still,
the figure exceeded guidance for 9.5 million tonnes.
BHP Billiton is also expected to see a record quarter for iron
ore, according to UBS analysts. It reports next week on Oct.
20.
Coal weak
Still, Rio Tinto's coal-mining operations didn't show the same
kind of performance as iron ore, as expected by the UBS analysts,
following recent heavy rain in parts of Australia.
It was the wettest September in 100 years for Queensland, and
heavy rain came down in New South Wales too. That led to
speculation that production was offline at coal mining operations
in the region for longer than usual.
Although Rio Tinto's hard coking coal production rose 17% in the
third quarter compared to the same period in 2009, production from
other Australian coal operations fell 14%, and U.S. coal production
dropped 49%.
Rio Tinto-managed and 75%-owned Coal & Allied Industries
Wednesday projected lower fiscal-year production and sales after
13% of allotted production time was lost to rain over the third
quarter.
Rio Tinto gave its production update at the start of the
third-quarter reporting season for the miners, and the UBS analysts
said that "all coal companies have the potential to disappoint,
relative to our forecast, due to the unseasonably wet weather."
Similarly, BHP Billiton, Macarthur Coal Ltd. (MCC.AU) and
Whitehaven Coal Ltd. (WHITF) could see some weather-related impact
in their coal operations, the UBS analysts said.
"Commentary on inventories will be important to assess the
vulnerability of supply going into the wet season between November
and March and the potential for higher metallurgical coal prices,"
they added.