Source: www.theaustralian.news.com.auCopper surges on Chinese...

Source: www.theaustralian.news.com.au

Copper surges on Chinese demand
Kevin Andrusiak
April 02, 2007

COPPER prices are again on the march as the metal's fortune dances to the tune of the booming Chinese economy and closes in on its record high set in May last year.

The spot price of copper gained 14 per cent in March to trade above $US3 a pound as copper inventories in warehouses monitored by the London Metal Exchange dropped for the seventh consecutive week.
The spot price last traded on the New York market on March 30 at $US3.0997 a pound, with the June contract worth $US3.15 a pound, or $US6938 a tonne.

According to LME data, there are 178,075 tonnes of copper in warehouses around the globe, a figure which is down 1800 tonnes from the previous last day of record on March 29.

The record copper price was set on May 1 last year when it briefly moved to $US3.90 a pound, or $US8600 a tonne. LME-monitored warehouses at that stage showed about 90,000 tonnes of copper in storage.

That price also helped push the share prices of both BHP Billiton and Rio Tinto, major suppliers of copper to hungry Asian markets, to record levels not seen since.

Analysts and industry commentators said the rise in the copper price is due chiefly to the strong demand from China.

"China's economy is going strong," Freeport chief executive officer Richard Adkerson told Bloomberg.

"We feel optimistic about the outlook for copper."

Market data shows Chinese copper imports are also surging, probably in response to supply de-stocking attempts during the past 12 months.

Chinese copper demand could grow 24 per cent to 4.7 million tonnes by the end of the decade, according to Man Financial.

JB Were analysts said its expectations for copper growth in real demand would range from 5 to 12 per cent this year. The investment bank has put a price forecast for 2007 at $US3.09 a pound, or about $US6800 a tonne, and consistent with current pricing levels.

However, its commodities team said there was "unanimity" among the industry that the Chinese consumption figure could grow by as much as 15 per cent.

"The tone of our meetings with copper industry contacts in China two weeks ago was considerably more upbeat than during our 2006 visits," the commodities team, led by Malcolm Southwood, said in a recent note to clients.

"According to our industry sources, copper inventories at fabricators are at an all-time low, with some manufacturers carrying just three days of supply, versus a more normal 14 days.

"We therefore believe that at least some re-stocking has to occur this year.

"One of our copper industry sources believes that strategic re-stocking is unlikely with the copper price above $US6000 a tonne, or $US2.72 a pound, but that a price of $US5000 a tonne would be regarded as a re-stocking opportunity."


End.

Cheers, Pie