Markets will be more focused on the global economy and the U.S. presidential election than on copper fundamentals, Grupo Mexico cautions.
While Grupo Mexico reported metals production up for the second quarter, net income dropped 5%.
For the first half of the year, however, Grupo Mexico's net income increased nearly 13% as copper, silver, gold and molybdenum output continued to be strong despite lower metals prices.
During the first half of this year, the company reported copper production rose 13%, silver was up 10%, gold jumped 35%, and moly increased 6%.
In financials published Monday, Grupo Mexico observed, "We believe that the demand for copper will remain solid given the estimated economic growth in China (8%) and the US (2%), the major copper consumers in the world, as well as the growth of almost all developing."
"In terms of supply, future production will be affected by lower ore grades, increased investment costs, and delays in the startup of production on new projects. All of these lead us to believe that the expected deficit for 2012 will hold into 2013, supporting the current copper prices," said Mexico's largest miner.
"However, we believe that the market will be more focused in the development of the debt crisis in Europe, the economic slowdown in China, and the presidential election in the US, than to the copper fundamentals," Grupo Mexico cautioned.
The company reports mining production in sales, noting that copper sales were up 13.2% in the first half of the year or from 376,933 metric tons for the first six months of 2011 to 426,829 metric tons. For the second quarter of the year, copper sales increased 6.1% from 198,203 metric tons for the second-quarter 2011 to 210,353 metric tons. The increased production in the second quarter was attributed to improved ore grades at the Ray, Cuajone and Caridad mines.
Moly sales for the first half of this year increased 4.6% from 8,848 metric tons in the first six months of last year to 9,251 metric tons. For the second-quarter 2012 moly sales increased 1.7% from 4,565 metric tons in the second-quarter 2011 to 4,641 metric tons. Improved ore grades at the Cuajone and Caridad mines increased second-quarter 2012 production.
Silver sales increased 23.7% in the first half of the year from 7,983,000 ounces in the first six months of last year to 9,876,000 ounces. For the second-quarter 2012, silver sales increased 27.8% from 3.98 million ounces in second-quarter 2011 to 5,087,000 ounces. The increase was attributed to higher output at the Buenavista, Cuajone and Caridad mines, due to better recovery.
Gold sales were up 29% during the first half of this year from 27,653 ounces in the first six months of last year to 35,677 ounces. For the second quarter of this year, gold sales were up 17.9% from 14,896 ounces in second-quarter 2011 to 17,562 ounces.
Grupo Mexico reported a net profit of $624 million for the second quarter, down from $657 million in the same period of last year. For the first half of this year, Grupo Mexico reported a net income of $1.34 billion, up from $1.19 billion for the first six months of last year.
Capital expenditures for the first half of this year reached a record high for organic growth of US$1 billion, a 130% increase over the first half of 2011.