Freeport-McMoRan 2013 Annual Report Download - page 34

MANAGEMENT’S DISCUSSION AND ANALYSIS
32 | FREEPORT-McMoRan
for each $50 per ounce change in the average price of gold,
$120 million for each $2 per pound change in the average price of
molybdenum and $125 million for each $5 per barrel change in the
price of Brent crude oil above $100 per barrel.
MARKETS
Metals. World prices for copper, gold and molybdenum can
fluctuate significantly. During the period from January 2004 through
January 2014, the London Metal Exchange (LME) spot copper
price varied from a low of $1.06 per pound in 2004 to a record high
of $4.60 per pound in February 2011; the London Bullion Market
Association (London) PM gold price fluctuated from a low of
$375 per ounce in 2004 to a record high of $1,895 per ounce in
September 2011, and the Metals Week Molybdenum Dealer Oxide
weekly average price ranged from a low of $7.35 per pound in 2004 to
a high of $39.25 per pound in 2005. Copper, gold and molybdenum
prices are affected by numerous factors beyond our control as
described further in our “Risk Factors” contained in Part I, Item 1A
of our Form 10-K for the year ended December 31, 2013.
Historical LME Copper Prices
Through January 31, 2014
This graph presents LME spot copper prices and combined
reported stocks of copper at the LME, Commodity Exchange Inc.
(COMEX), a division of the New York Mercantile Exchange
(NYMEX), and the Shanghai Futures Exchange from January 2004
through January 2014. From 2006 through most of 2008, limited
supplies, combined with growing demand from China and other
emerging economies, resulted in high copper prices and low
levels of inventories. In late 2008, slowing consumption, turmoil in
the United States (U.S.) financial markets and concerns about the
global economy led to a sharp decline in copper prices, which
reached a low of $1.26 per pound in December 2008. Higher
copper prices since that time are attributable to a combination of
continuing demand from developing economies and an improving
global economic environment. During 2013, LME spot copper
prices ranged from a low of $3.01 per pound to a high of $3.74 per
pound, averaged $3.31 per pound and closed at $3.35 per pound on
December 31, 2013.
We believe the underlying long-term fundamentals of the
copper business remain positive, supported by the significant role
of copper in the global economy and a challenging supply
environment. Future copper prices are expected to be volatile and
are likely to be influenced by demand from China and emerging
markets, as well as economic activity in the U.S. and other
industrialized countries, the timing of the development of new
supplies of copper and production levels of mines and copper
smelters. The LME spot copper price closed at $3.25 per pound on
February 14, 2014.
London Gold Prices
Through January 31, 2014
This graph presents London PM gold prices from January 2004
through January 2014. An improving economic outlook and
positive global equity performance contributed to lower demand
for gold in 2013. During 2013, gold prices ranged from a low of
$1,192 per ounce to a high of $1,694 per ounce, averaged $1,405
per ounce and closed at $1,205 per ounce on December 31, 2013.
Gold prices closed at $1,320 per ounce on February 14, 2014.
Metals Week Molybdenum Dealer Oxide Prices
Through January 31, 2014
This graph presents the Metals Week Molybdenum Dealer Oxide
weekly average price from January 2004 through January 2014.
Market conditions for molybdenum declined in 2013 because
1,500
2004 20082006 2010 2012 2014
$5.00
$4.00
$3.00
$2.00
$4.50
$3.50
$2.50
$1.00
$1.50
$0.50
1,200
900
600
300
Dollars per pound
000s of metric tons
2004 20082006 2010 2012 2014
$1,950
$1,350
$1,550
$750
$1,750
$950
$1,150
$550
$350
Dollars per ounce
2004 20082006 2010 2012 2014
$40
$35
$30
$25
$20
$15
$10
$5
Dollars per pound
LME Copper Prices
Exchange Stocks