"PARTY" where, when, how do I get there ? "Unless you have a...

"PARTY" where, when, how do I get there ?

"Unless you have a very bearish view of the Chinese economy as a whole, then at some point in time those Chinese buyers are going to have to come back into the market in much greater size than we've seen."

As a result, Credit Suisse is looking for copper to trade up to $11,000 a tonne before the end of this year.

"Going forward, we think 2012 is going to be strong as well. Beyond that you start to look at some supply side response, but we don't see a near term end to the copper bull story for the time being."

thats $11,000/t or $5/lb guys/Gals. cheers Mx.

I'll post the whole read at the bottom just in case anyone wants to read it all. its a longish read.

China-led copper bull market to continue into 2012
Demand from Chinese buyers is expected to return to the copper market in the second half of 2011 which is expected to help buoy prices of the red metal
Author: Geoff Candy
Posted: Wednesday , 20 Jul 2011

Expectations of a pick-up in developing country growth, particularly in China, are behind much of the rise in base metal prices in recent weeks.

As a result, investors are keeping a close watch on what is happening in the region and, more importantly, what is likely to happen in the second half of the year.

According to Tom Kendall, vice president for commodities research at Credit Suisse, "Copper actually has been trading very well since the end of June where we saw, for the first time in about six weeks or so, some reasonable size institutional money coming back into the copper market."

He adds that, around that time we also saw Shanghai prices looking relatively expensive compared to LME so we saw a brief period where Chinese buyers came back into the market.

"That gave us a lift up from where we were trading then - about $9,000 to the $9,500 - $9,600 sort of area where we've been since."

In the last couple of weeks however, he says, "the copper market is currently not seeing a great deal of activity from physical buyers in China, nor is there much action in the North American and European markets, which seem already to have entered the traditional period of summer softness but, he says, " when we get through into the back end of August and September, we expect to see a significant pickup in Chinese activity in the market."

He adds, "It looks to us as though the Chinese have made very significant draw downs in stocks over the year-to-date and there will come a point where they will need to come back to the international markets in much greater size than they have been and that certainly will have an effect on the price."

This belief is borne out by Fitch Ratings which writes in a report out earlier this week "China is tightening its money supply to reduce speculation in its property market as well as to curb inflation. Fitch believes this has resulted in significantly reduced stocking from the end of 2010 through May 2011."

The rating agency adds that it expects, copper consumption to grow 5% - 6% over the next 18 months, benefitting from " growth in demand for domestic autos, low cost housing, and consumer durables, as well as consumer durables exports."

"While urbanization trends will remain supportive of copper consumption, Fitch expects opportunistic destocking when prices are high," it adds.

French bank, Natixis, agrees with this but cautions in its latest Commodities Weekly Note, "In recent weeks, the rise in LME copper prices has once again closed the import arbitrage window which, alongside the disappearance of the backwardation in SHFE copper prices, suggests that the recent uplift in Chinese import demand may give way to another period of temporary weakness if Chinese restocking demand remains price-sensitive until inflation begins to subside and growth can then re-accelerate."

For Natixis, the question of inflation is an important one for the base metals complex but, while it believes that headline inflation rates are likely to begin to subside in the second half of the year it is unlikely to happen simultaneously in all markets.

"For some countries, the peak in inflation may already be behind us. Inflation peaked in Indonesia and South Korea during Q1, while Russia experienced a drop in headline inflation in June. The jump in Chinese inflation to 6.4% in June was therefore something of a shock, and suggests that we may have to wait longer, and potentially endure a more protracted period of economic weakness before inflation is finally brought under control and a reacceleration of growth can be permitted," it writes.

According to Kendall, however, inflation in China is likely to begin to moderate from here. " We saw the headline figure for new lending move higher in June. Now almost certainly there are going to be further moves on the headline interest rates in China, but I don't think that is going to derail the overall growth in the economy."

What is more important is what has been happening with copper inventories in the country.

"We've seen very sizeable draw downs in, until recently, Shanghai Exchange warehouse stocks," he says, "We've also seen much greater draw downs in bonded warehouse inventories of metal, and indeed we think in inventories of metal held by merchants and consumers, and there's only so long that that can continue. At some point in time, they will get to a point at which they have run down inventory levels to an uncomfortably low level and then really, there is no alternative to coming back into the international market."

"Unless you have a very bearish view of the Chinese economy as a whole, then at some point in time those Chinese buyers are going to have to come back into the market in much greater size than we've seen."

As a result, Credit Suisse is looking for copper to trade up to $11,000 a tonne before the end of this year.

"Going forward, we think 2012 is going to be strong as well. Beyond that you start to look at some supply side response, but we don't see a near term end to the copper bull story for the time being."

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Buried in yesterday's BHP Billiton 2011 production report was this little gem picked up by Fairfax's Barry Fitzgerald: "BHP Billiton has unveiled a stunning $525 billion increase in the copper resource estimate at the Escondida mining complex in northern Chile. The 54 million tonne increase to 106 million tonnes of the red metal, worth more than $US1 trillion (before mining and treatment costs), means the operation could well be producing in 100 years time. The Escondida boost was contained in BHP's June quarter production report, released yesterday. The report was slightly better than the market expected, giving renewed confidence that BHP's June year profit � to be announced on August 24 � would weigh in at a record-breaking $US22 billion."