trading buy on copper sentiment

according to Fosters.................

Today’s Top Picks.

Copper price and sentiment expected to remain buoyant on the back of recent incidents at Freeport’s Grasberg and RIO’s Bingham Canyon.

Trading BUYS OZL and TGS.

•We highlight the strength in copper futures, which have rallied in recent days following a major incident at Freeport’s Grasberg mine in Indonesia last week. A tunnel at the mine collapsed, killing 21 workers (to date) and leaving 7 unaccounted for. Grasberg is the world’s second largest copper mine and operations are expected to remain suspended until the conclusion of an investigation.

•Also, RIO’s Bingham Canyon Mine in Utah was last month shut down following an enormous landslide at the 1km deep open pit (the largest open pit mine in the world). It is expected that operations will be suspended for at least a year, wiping ~160,000t of copper supply from the global market.

•Both these incidents lend weight to the argument of slowing output in copper and keeping the commodity price firm. The weakening dollar is also supporting the copper price and likely resulting in some short-covering.
•Bernanke’s comments on the US economic outlook on Wednesday following the Fed’s latest meeting could provide further momentum.

•We prefer to play the producers in the sector, and highlight OZL (offers value based on Prominent Hill, SFR stake and ~$650m cash) and TGS (low cash cost, fully funded to Stage 2 and proven operational performance during Stage 1 at Kipoi) as our preferred picks.