It seems to me, however, that whatever demand increase may come from China because of their stimulous package, needs to be seen in context of an apparent world wide destruction in demand for copper from other parts of the world as the world's economic activities contract - while Chinese infrastructure projects might be big users, so are the aggregate volumes used in house/ industry constructions, cars, white goods etc, in China and elsewhere in the world.
Having said that, I want to be a bit optimistic about copper demand, in that, given the apparent fall in world economic activity, I had expected LME copper stocks to have grown faster than they have, especially if you assume that there would probably have been deliberate actions taken by users to reduce their own stockholdings, in anticipation of falling demand for products with a copper content.
Also, I would assume that users, such as China, would be doing their best to frog march the reduction of price, by deliberately curtailing demand to less than normally required levels.
In any event, you would expect all users to try and minimise their stock holdings, in anticipation of economic pressures and to avoid being saddled with high cost stocks at a time when copper prices are plunging.
Or are copper stocks being held in other than the usual places, thus hiding the true level of stock build up?
The other issue to keep in mind, from the PNA perspective (as supposedly a "low" cost producer [when production is fully established]), is the possible positive impact on copper prices, when the less cost competitive copper producers materially reduce their production volumes/ cease production.
There is also the potential for world wide stimulous activities [presumably to be announced in increasing numbers soon]to positively affect copper demand.
Anyway, we can grasp straws in the meantime.
Any thoughts from others?
PNA Price at posting:
13.3¢ Sentiment: None Disclosure: Held
