This is an interesting read...Copper, Coal to Lead Commodity...

This is an interesting read...

Copper, Coal to Lead Commodity Rally, Standard Chartered?s Mittal Predicts
By Madelene Pearson - May 27, 2011 11:15 AM ET

Copper, gold, iron ore and coal will lead a rally in commodities over the next two to three years as demand for raw materials from China and India outpaces supplies, according to Standard Chartered Plc.

?There is a lag between the supply and the demand and that?s going to drive these commodities higher over the next three years,? Ashish Mittal, the bank?s global head of commodity sales, said in an interview in Mumbai. ?During the global financial crisis a lot of investments got postponed.?

Goldman Sachs Group Inc. said this week it?s turning ?more bullish? on raw materials and suggested buying oil, copper and zinc, reversing its call last month to sell commodities, while Deutsche Bank AG said copper will probably climb. Barclays Capital is predicting supply deficits in copper, nickel, tin, lead and platinum.

The Standard & Poor?s GSCI Index of 24 commodities beat stocks, bonds and the dollar for five straight months through April, the longest run in at least 14 years. That kept global food costs near a record, prompting central banks from Brasilia to Beijing to raise interest rates and helping spur conflict and riots in the Middle East and North Africa.
Significant Threat

The index plunged 11 percent in the week ended May 6, the most since December 2008. Still, it?s gained 9.9 percent this year, led by silver, gas oil and gasoline. Silver for immediate delivery has jumped 12 percent this year, while crude oil has advanced 9.8 percent.

Group of Eight leaders yesterday singled out the surge in commodity prices as a significant threat to the global economic rebound and pledged to cut the debt built up in the wake of the 2008 financial crisis.

?It?s good the correction happened because the run-up was pretty steep and it was one-way,? Mittal said. ?We will see some of these commodities rally back up again.?

Assets allocated to commodities including index-tracking funds climbed to a record $412 billion in March, according to Barclays Capital. Inflows into metals, energy and farm products have increased as gold and copper climbed to all-time highs this year, attracting investors seeking to protect their money from inflationary pressures.
?Tipping Point?

Demand for commodities from India, the second-most populous nation, will increase from current levels, Mittal said.

?Consumption of commodities in India is still quite low,? he said. ?As power plants develop, the road network develops, you see development happening in the hinterland. There will be an increase in consumption, an increase in demand from the current levels in India, and it?s going to be pretty substantial.?

India?s commodity demand has reached a tipping point and growth is set to accelerate significantly, with metals demand likely to increase 80 percent in the next five years, Barclays Capital said in November last year.

Coal demand in India may more than triple to 2 billion tons in the next two decades as Asia?s second-fastest-growing major economy seeks fuel to generate electricity and run steel and cement plants, according to the government.

To contact the reporter on this story: Madelene Pearson in Mumbai at