Custom Search

Copper price forecasts for 2011 still rosy

Posted by

After hitting a record high of $4.62 a pound on Feb. 14, copper prices have fallen off nearly 9 percent to close at $4.23 yesterday. Analysts have largely shrugged off the decline as temporary, though, convinced that China’s on the verge of more buying – even in the face of dwindling global supplies.

“Taking the risk of contagion in the MENA (Middle East/North Africa) region out of the equation, then copper has a very good chance of rising a lot higher,” Martin Squires, executive director of J.P. Morgan Securities, tells the Wall Street Journal. “I don’t think the industry is carrying a lot of stock, global PMIs are robust and in some places the best they’ve been in years. Could copper see a new high? Most certainly.”

China, in particular, appears poised to start buying more of the red metal after scaling back imports towards the end of 2010. The country sold off its contracted and warehoused metal early this year as prices spiked. Now, they’ll look to replenish their stores even as analysts like Squires predict a supply deficit of between 500,000 and 600,000 tons this year.

In a recent interview with Bloomberg, Lundin Mining Corp. Chairman Lukas Lundin argues that the metal is in the midst of a 10-year supercycle.

“I’m very bullish on the copper price because we can’t meet demand,” he says. “If the economy stays strong, mining is going to be unbelievable for the next five to 10 years minimum.”

Don’t expect the 10-year bull market to rise in a straight line, though. Analysts say China will start importing more copper soon, but that buying hasn’t happened yet. Customs numbers released yesterday showed China’s copper purchases dropped 35 percent in February – the biggest decline in more than two years. Not coincidentally, copper spiked to all-time record highs in February, which played a big role in the decline in demand.

“I think Chinese participants are still waiting for more declines,” Zhuo Guiqiu, an analyst with Minmetals Futures, told the Journal. “We saw a lot of Chinese buying when LME copper was around $8,000/ton, so I guess many people are still waiting.”

The moral? Copper will likely keep falling until demand in China picks up. When it does, we might just see copper at $5 a pound. U.S. Global Investors Inc., which manages $3 billion in San Antonio, said in December that copper would reach $5 a pound within 24 months. We’ve got 21 months to go.



Silver market manipulation can’t be ruled out


Three triggers that could push silver over $50 ounce


How to pick small-cap gold and silver mining stocks


Top 10 best gold and silver ETF funds


Not enough gold in the world to return to a gold standard, Bernanke says


How to Invest in Copper



Powered by Facebook Comments

Tags: ,

One Response to Copper price forecasts for 2011 still rosy

  1. […] sector index in August. “I think Chinese participants are still waiting for more declines,” Zhuo Guiqiu, an analyst with Minmetals Futures, told the Wall Street Journal. “We saw a lot of Chinese buying […]

Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Killer Articles

Top 10 best gold and silver ETF funds

Here’s a look at the Top 10 best gold and silver ETFs that trade on major U.S. exchanges. We’ve ranked them by volume, as some of the niche ETFs in the precious metals market are so... Read on.

3 reasons NOT to invest in Groupon’s IPO

An IPO date hasn’t been set, but here are three big warning signs you might want to consider before investing in Groupon’s stock... Read on.

From start-up to titan: The unofficial tech IPO calendar for 2012

From Facebook to Twitter to Groupon, the planned tech IPOs in 2012 could be among the most exciting string of new public companies... Read on.

How to invest in water stocks

Often overlooked as a commodity, water supplies could become increasingly critical as emerging economies around the world improve their diets and demand more agricultural resources for the production of meat... Read on.

World’s largest economies in 2050 will look very different

India’s rapid ascent to economic supremacy will be driven by a surging working age population, which will grow more than 40 percent between now and 2050... Read on.

How to invest in cotton stocks

If you’d like exposure to cotton markets without delving into futures and options contracts, a handful of cotton ETNs and cotton-related stocks are available... Read on.

How to buy Chinese Yuan

The Chinese yuan or renminbi has risen about 5 percent a year over the past five years, and some investors argue that China’s currency is still undervalued by 40 percent. If the dollar suffers ... Read on.

Five cheap franchises to start with less than $10,000

Franchises are so ubiquitous we often don’t realize we’re shopping at one. From McDonald’s to Hampton Inns and doggie day cares to campgrounds, they’re literally everywhere. All told, franchises account for 10.5 percent of all businesses in the U.S, and they... Read on.

Why invest in silver?

Ask 10 people why you should invest in gold and silver, and you’ll probably get 10 different answers – many of which will be accompanied by a shrug. Most investors don’t understand the motivation for holding gold or silver bullion. Nonetheless, it’s been difficult to ignore... Read on.

How to Invest in Copper

Copper isn’t as glitzy or glamorous as gold or silver, but in many ways it feels safer. Since copper is regularly used in electronics, it’s consumption per person (particularly in the developed world) has been on the rise for decades. So how does one invest in copper? Read on.