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Important notice! JTVIR provides independent research reports to institutional clients for fixed and subscription fees. JTVIR's affiliate, JTVIO, provides advisory services to entities in connection with financing deals, mergers and acquisitions, mine services, valuations, fairness opinions, strategy, corporate services and capital raising. For its advisory services, JTVIO may be compensated up to a year after the termination of JTVIO's services or advisory agreement. It is JTVIR's policy not to provide research reports or updates to such reports for any entity that has engaged JTVIO's services.
Company ProfileJOHN TUMAZOS VERY INDEPENDENT RESEARCH, LLC (JTVIR LLC) is registered as an investment advisor in the State of NJ. We have 30-odd institutional clients in New York, CT, Massachusetts, California, Wisconsin, Minnesota, North Carolina, and Florida. We do fundamental research on commodities markets and common stocks in the metals and forest products sectors. For example, in the second-half of 2007 we traveled abroad five times to visit mines and smelters, and published 92 investment reports. We collected our first revenue on September 20, made our first email communications seeking revenue September 4 and 10, became registered August 27, filed for registration August 10, formed our LLC on July 6 and "changed course" on June 6, 2007 when the former Prudential Equities Group shut down. We sent reports "developmentally" to our former mailing list from July 8 to August 27, 2007 "not for compensation" while we completed registration and through mid-November in a "grace period" as our clients engaged us.We are regulated like a money manager, but we manage no client funds as our business is to advise active money managers. We are not a broker-dealer, but deliver the same basic research services that we had since 1981 as an employee at major brokerage firms. In our business model we sell our research direct payments and deliver it via email and our www.veryindependentresearch.com web site. Our clients pay us via direct checks, wire transfer, commission sharing agreements or soft dollar payments. Initially we have had no sales force, and our clients learn of us from our existing reputation, existing relationships and "word of mouth." Please click on the "Become a Subscriber Member" button to the left or simply phone or email us if you want to buy our research Special Events webcast link for March 24-25 conference
August 30, 2010
Dear Friend,
Much copper market strength resides in nations other
than the U.S. and China. The CRU estimates global
copper tube output up 5.4%, as gains in air conditioners
and refrigerators offset housing declines in the U.S. or
southern Europe. The CRU estimates copper alloy rod and
bar is up 30.6% worldwide. Japanese copper rod and bar
is up over 70%, European copper rod and bar is up over
40% and German copper tube is up over 40%. The Big
Six diversified mines, FCX, ANTO and small caps like
Quadra FNX, Capstone Mining, Duluth Metals, PolyMet,
Mercator and others benefit from higher copper prices.
· The odds of regional copper shortages rise as copper exchange inventories are quite low at 48,000 in Europe and about 160,000 in Asia of the 597,541 tonne total. The 32 week copper inventory build averaged about 13,000 tonnes per week in July 2009 to February 2010, and the absence of buildups in July and August “exposes” the market to shortage risks next Spring 2011 or if China re-enters the market to buy copper. Aluminum, nickel and zinc have larger inventories and little 2011 shortage risks, while lead and tin stocks are less.
World Gold Council data reported August 25th showed that various forms of investment demand were 51% of June quarter gold demand. Precious metals are ebullient as investors returned in August.
In contrast, nickel markets appear softest with inventories rising now that Vale settled its Ontario strike. Exchange inventories of various nonferrous metals create a fairly safe buffer stock for nickel, aluminum and zincin particular. Iron ore and met coal show some softness with a 10% drop in world steel output since April.
We take a non-consensus bear view of containerboard, and recent data supports our view. We believe consumers have built inventories to beat back price hikes at the current seasonal peak. July data suggests that domestic demand supports only 76% or 77% of the 98% operating rate as 5.3% went to inventory, 6.2% went to "unidentified uses" and 9.7% were exported. July Fibre Box Assn. data reported a 2.2% decline in July 2010 corrugated box square footage compared to last year, and the YTD gain through July fell to 3.2% from 4.4% owing to the July softness. While containerboard mills ran at 98% of capacity in July in the U.S., they built 160,000 tons of inventory. We rate IP Underweight and Temple-Inland, Packaging Corp. of America and Smurfit-Stone Container each Neutral. Our forest products sector Overweights are MeadWestvaco and Domtar owing to modest valuations of free cash flows and dividends.
Faithfully,
John C. Tumazos, CFA
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LLC
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