quarterly report, page-16

Good news for the copper bulls
Extract Forbes 14.1.2014

China Buying Copper For Its Electricity Grid

What makes the copper market worth watching is news the China’s State Grid, the world’s biggest single consumer of copper which it uses in electricity production and distribution, has just announced a 13% increase in infrastructure spending for 2014 to a record $63 billion.

One investment bank, Citi, noted last week that expanding grid investment: “fits with the stronger-than-expected copper demand experienced in China this year, including the solid 6% growth in power cable production.”

Another investment bank, Macquarie, also recognized the significance in the State Grid’s budget boost with a note to clients pointing out that Chinese copper demand growth was set to beat growth in steel demand in 2014.

Copper stockpiles, and growing mine supply, will sit on the copper price for much of the next six-to-12 months, but after that the effect of limited new mine developments will start to have an effect on the supply pipeline, just as those forces are effecting nickel supply and will soon effect zinc and lead.

The commodities boom of a few years ago is dead, but cyclical is a word that should never be forgotten when it comes to the supply and demand of basic raw materials.