# Copper – Barometer for the Global Economy



## Magdoran (14 July 2006)

Copper is sometimes referred to as being the barometer of the Global economy.  It seemed odd to me that there is not a thread for Copper for this reason, so here it is...  If it rallies in the next week or two, this may signal an ongoing strength to the world economy, but it is also inflationary.  

In the weekly chart Copper is still looking bullish, but in the daily chart there is some resistance to the move up.  I’m cautiously bullish if a higher low comes in without too much volume at the lows.

If this is so, it really raises the question how it will affect the XAO/XJO and XMJ.  I was very bearish on these indexes recently looking for a correction for longer term short positions, but today’s strong price action down though is looking somewhat exhaustive and doesn’t have much volume currently.  I would not be surprised if there are a couple of inside days, then an attempted rally. If this fails, then there may be a more significant move down… 

The question is, if unleaded and crude oil spike up as projected in the “Oil Again” thread, what effect will this have?  At one level it is inflationary, but it is also a boost for oil stocks.  What would advancing metal prices and oil prices do for BHP for instance?  So does this mean that resource stocks will continue to prosper, while other sectors suffer, or will the metals correct hard blunting the drive of the XMJ? This is why I think copper is a key commodity to watch.  

What else would be affected by Oil and copper rallying?  How inflationary would this be, and would it constituter a drag on many economic sectors?

The XAO/XJO price action I think will actually be significantly effected by what copper does over the next couple of weeks in conjunction with crude oil, and currency and bond movements.  The big question is if today’s price action is exhaustive, and not the start of a bear sideways market, or if this is a confirmation of the bearish calls being made.  If copper drives down, and other metals follow, this may also affect the resources sector adversely too, considering much of the recent prosperity is resource driven.

This is why I think watching copper is critical.  I’m still working on the technical analysis timing aspects, but have not reached any conclusions yet.


Regards


Magdoran

P.S. Apologies that this comment is off the cuff, I’m struggling with several different markets trying to correlate them into a cohesive model, which is proving quite cumbersome.


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## Magdoran (14 July 2006)

Here are some preliminary charts I'm working on...


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## wayneL (14 July 2006)

Hi Mag,

Been following copper myself. I'm thinking double top myself.

This based completely on gut feel and not to be taken as serious analysis. But thats how the pattern looks to me + my view of the world economy. FWIW


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## lewstherin (14 July 2006)

Copper as a metal is a fundamental material used in most industrial production at some stage.  However its how you measure demand for copper that would make/break the "barometer theory".  I don't think spot prices are particularly good to use these days.

My issue with most spot prices is being able to quantify the amount of speculative influence.  I don't think resources have ever had this much focus from the big funds, and this is distorting things.

However information around how much copper is physically being imported into major producers like China, Japan, Korea may be more valuable for measurement purposes.


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## Magdoran (14 July 2006)

lewstherin said:
			
		

> Copper as a metal is a fundamental material used in most industrial production at some stage.  However its how you measure demand for copper that would make/break the "barometer theory".  I don't think spot prices are particularly good to use these days.
> 
> My issue with most spot prices is being able to quantify the amount of speculative influence.  I don't think resources have ever had this much focus from the big funds, and this is distorting things.
> 
> However information around how much copper is physically being imported into major producers like China, Japan, Korea may be more valuable for measurement purposes.




Good point lewstherin, 

This is where having good fundamental analysts would be most welcome.  The T/A will show sentiment including speculative positions.  I would say though that speculative influences are just that – an influence, and perception and price action is driven by all market participants, especially speculators.

I’m aiming to trade the swings looking to benefit more from a reflexive market than a fundamentally driven one (although I do take note of the fundamentals – hence I welcome commentators from this discipline which not my strong suit).


Regards


Magdoran


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## lewstherin (14 July 2006)

Magdoran said:
			
		

> I’m aiming to trade the swings looking to benefit more from a reflexive market than a fundamentally driven one



Same here.  The current question is whether the Mid-East flare-up will become something more.  Events over this weekend will be a good indication.


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## michael_selway (14 July 2006)

lewstherin said:
			
		

> Same here.  The current question is whether the Mid-East flare-up will become something more.  Events over this weekend will be a good indication.




Hi



> Copper Rises on Concern Output at World's Largest Mine May Drop
> July 14 (Bloomberg) -- Copper rose in London, heading for a third straight weekly gain, amid concern that a pay dispute at the world's largest mine may lead to reduced production.
> 
> Miners at Escondida in Chile plan to strike next month if unions and management fail to reach a wage accord. Workers introduced ``go-slow'' tactics at the mine on July 7. Escondida accounted for 8.5 percent of global mine output last year, according to data from Chile and mine owner BHP Billiton.
> ...




http://www.bloomberg.com/apps/news?pid=20601086&sid=a3sdVZgs.hWk&refer=latin_america


thx

MS


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## rederob (15 July 2006)

I anticipate a breach of the previous high and a platform around the $8000 figure to hold in the last quarter.
I think we can hit $10k this year, and see sustainable high prices enduring into the first quarter 2007, although reckon we may have a psychological barrier maintaining a five digit number.
I think Wayne's double top idea is a plausible cop out - something the technicians will play with until the fundamentals roll it.
Labour negotiations in the Americas over coming months will give us a better picture of supply capability.  Any strike action will spike copper higher, although only enduring strike action in the near term will see record prices in play.
My present view is that copper's tightness has the capacity to cajole prices higher irrespective of strike action, providing we see a reasonable continuation of global industrial production.


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## michael_selway (15 July 2006)

rederob said:
			
		

> I anticipate a breach of the previous high and a platform around the $8000 figure to hold in the last quarter.
> I think we can hit $10k this year, and see sustainable high prices enduring into the first quarter 2007, although reckon we may have a psychological barrier maintaining a five digit number.
> I think Wayne's double top idea is a plausible cop out - something the technicians will play with until the fundamentals roll it.
> Labour negotiations in the Americas over coming months will give us a better picture of supply capability.  Any strike action will spike copper higher, although only enduring strike action in the near term will see record prices in play.
> My present view is that copper's tightness has the capacity to cajole prices higher irrespective of strike action, providing we see a reasonable continuation of global industrial production.




If the DOW tanks do u think Basemetals will follow in general? or are they not linked in anyway? or inversely related? cause in the recent correction they appeared to be in unison.

thx

MS


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## Smurf1976 (15 July 2006)

michael_selway said:
			
		

> If the DOW tanks do u think Basemetals will follow in general? or are they not linked in anyway? or inversely related? cause in the recent correction they appeared to be in unison.
> 
> thx
> 
> MS



If the economy falls in a hole then the DOW ought to, in theory at least, lead the fall by 6 months or so. Under that scenario it's hard to see anything going up except perhaps oil if a shortage of that (due to war etc) were the trigger for the general economic strife. Perhaps gold too if there is genuine fear of war etc.


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## YOUNG_TRADER (17 July 2006)

*Toyota 's Prius hybrid automobile uses five times more copper than a standard gasoline-powered car. With the strong demand growth for hybrids, we will continue to see strong copper demand for products such as the Prius.* 



In the short term, the biggest domestic risk we see for copper prices is the housing market. The average house contains some 400 pounds of copper in the form of wiring, water pipes and appliances, so if home construction were to slow down dramatically, that could hurt copper prices in the short term. Long-term, there is still much demand around the world without much increase in supply. China has been negotiating energy and minerals deals with South American and African countries as a way to ensure supplies to feed its economy. 

When it comes to China , our investment team has a simple philosophy: whatever China needs, get long, and whatever they have as surplus, get it out of the way, because China will just dump it. That happened with both steel and aluminum. 

*It's very important to be able to track those supply and demand factors. Copper prices took off when China stopped selling copper. * Zinc prices were 45 cents a pound last year when China was a net seller, and they're nearly four times higher since the country became a net buyer. China is also no longer exporting silver, whose price is at a 25-year high.


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## michael_selway (18 July 2006)

YOUNG_TRADER said:
			
		

> *Toyota 's Prius hybrid automobile uses five times more copper than a standard gasoline-powered car. With the strong demand growth for hybrids, we will continue to see strong copper demand for products such as the Prius.*
> 
> 
> 
> ...




http://www.icsg.org/News/Press_Release/presrels_2006_06.pdf



> *ICSG PRESS RELEASE Date Issued: 27th June 2006
> Copper: Preliminary Data for First Quarter 2006*
> 
> The International Copper Study Group (ICSG) released preliminary data for March 2006 for world copper supply and demand in its June 2006 Copper Bulletin.
> ...



thx

MS


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## snapper_man (1 August 2006)

Workers at the worlds largest copper mine Escondida are poised to go on strike. Escondida produces 8% of the worlds total copper output - thats 25,000 t p/week. A strike for any length of time will send copper prices skyrocketing both in the short term and medium. If workers get a substantial increase it is likely to have a flow on affect to some of regions other mines creating instability into the future. End of first week in Aug, mediation ends - interesting one to watch.


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## michael_selway (1 August 2006)

snapper_man said:
			
		

> Workers at the worlds largest copper mine Escondida are poised to go on strike. Escondida produces 8% of the worlds total copper output - thats 25,000 t p/week. A strike for any length of time will send copper prices skyrocketing both in the short term and medium. If workers get a substantial increase it is likely to have a flow on affect to some of regions other mines creating instability into the future. End of first week in Aug, mediation ends - interesting one to watch.






> Could Copper Take Off Again?
> FN Arena News - July 31 2006
> 
> By Greg Peel
> ...




http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=C1D60FCB-17A4-1130-F5FA330DE7494A61

ABY - Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS -43.5 56.9 116.2 61.5 
DPS -- 16.5 42.5 19.0 

EPS(c) PE Growth 
Year Ending 30-03-07 56.9 4.3 -- 
Year Ending 30-03-08 116.2 2.1 104.2% 

thx

MS


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## nizar (1 August 2006)

michael_selway said:
			
		

> UBS suggests that for investors looking for pure play copper leverage, Aditya Birla Minerals (ABY) is worth a look. June production was disappointing, but the stock is trading at a 30% discount to NPV.




The mighty OX is good enough for me...  

But those earnings figures look good...


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## snapper_man (1 August 2006)

the words "the mighty ox" is honey to my ears...

interesting article at

http://www.metalsinsider.com/WIR/cu310706.htm


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## wayneL (8 August 2006)

Another view on copper.

enjoy 

http://www.commoditytrader.com/metals/copper_mountain.php#more


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## nizar (8 August 2006)

You'd think news like this would fire up the spot price:



> BHP declares force majeure at Escondida mine as strike cuts output UPDATE
> 
> (Adds details, background)
> 
> ...




http://www.afxpress.com/about488/index.php?lg=en&c=00.00&story=1561147

But it seems speculators are more wary of this:



> Copper Falls in London on Concern Fed May Raise Interest Rates
> Aug. 8 (Bloomberg) -- Copper fell for the first session in three in London on speculation that the U.S. Federal Reserve may continue a cycle of interest-rate increases to rein in inflation, curbing growth in demand for metals.
> 
> Fed officials meet today to consider whether to pause after 17 straight increases in borrowing costs or continue with its tightening. While most Wall Street economists expect no change, Goldman Sachs Group Inc. and Mizuho Securities USA Inc. are among a minority anticipating a quarter-point increase.
> ...




http://www.bloomberg.com/apps/news?pid=20602059&sid=aqqy_uTaGMRM&refer=movers_by_index


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## BlueDaze (15 August 2006)

*Base Metals*

Base Metals
by Doug Casey
August 11, 2006

Base metals are called that because they oxidize, corrode and react easily. The primary ones we're concerned with are: copper, nickel, lead, zinc, aluminum, and iron. Their inherent value lies in their industrial uses, not as money, like the precious metals - though silver is an interesting hybrid, being both an industrial metal and good for making small change as money. Compared with precious metals, base metals are plentiful in nature and therefore much cheaper, of course. The exploration question is not generally one of finding them, but one of finding enough of them concentrated in a large enough deposit to make them profitable to extract for a substantial length of time. Eventually, their fortunes are tied to the state of the world's economy - the fundamentals of supply and demand.

*Supply, Demand and Prices*

As we go to press, copper prices have recovered somewhat from this summer's correction, in part because of a possible labor strike at Chile's Escondida mine. This is characteristic of all base metals; numerous factors, including political and labor unrest, and even floods, affect the supply of base metals. In addition, *cranking up supply in the short term is usually impossible*; the process of prospecting, exploring and developing a mine takes many years, sometimes decades. The scale of most base metal mines is huge - they take an enormous amount of financing, require endless environmental permissions and need extensive infrastructure. These factors make it *very difficult to balance supply with demand in the short term* (meaning, up to a few years), creating frequent cycles of price increases when supplies tighten, followed by corrections when new supplies come online.

On the demand side, Asia, particularly China, has stayed in high gear, requiring prices to go up to match demand with supply. Some day soon, India will join the arena. The result has been rising prices.







Base metal prices during the last couple of years have risen faster than the price of precious metals, generating a lot of interest and excitement, even among mainstream investors. That's a sure sign to a contrarian of at least an intermediate high... though that doesn't mean they can't go higher before they correct. In fact, we wouldn't be surprised if they went to the sky, given price-insensitive demand and fixed supply and the involvement of hedge funds in the metals market. But any spike like that would be short lived, and for now we still see base metal prices as having gotten far ahead of themselves. In addition, we are bearish on the U.S. economy and are *not sure that China can pick up all the slack we see coming, especially with so much of their economy going into exports to the US*. At the same time, continually high prices have prompted everyone with assets that can be put into production quickly to move in that direction, so there could be a short-lived supply glut as that inventory of near-to-production assets come online.

*The Crystal Ball*

In the nearer long term (over the next decade or so), we're bullish on commodities, believing that we are in a super-cycle that corresponds to the 20-year bear market for commodities that started in 1980. In the medium range (3 to 5 years), we are also bullish, as anything that can be quickly dusted off will have been, and new discoveries will take longer to bring online. *In the short term (zero to 12, maybe 18 months) we see a high probability of economic woes leading to a major correction*. That will be our time to re-enter base metal plays aggressively.

Are we just guessing?

Not entirely. Consider the data from the futures market:

Copper for delivery in 27 months is US$5,590/tonne vs. the current US$7,260

Nickel: US$16,675 vs. current US$27,350

Zinc: US$2,293 vs. current US$3,125

Furthermore, as you can see from the production and consumption numbers in the table below, the higher prices have brought enough new supply online that base metals are not actually in a state of shortage at the moment.

*Base Metal Company Stocks*

Consequently, we are holding off on buying any new base metal company stocks, unless the company has something of such extraordinary potential that we don't want to wait, or if a company also has a lot of precious metals, which hedges our base metal bet.


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## dubiousinfo (15 August 2006)

*Re: Base Metals*



			
				BlueDaze said:
			
		

> Furthermore, as you can see from the production and consumption numbers in the table below, the higher prices have brought enough new supply online that base metals are not actually in a state of shortage at the moment.





The production and consumption numbers in the table (the table is in the original article but not shown in the post above) shows a deficit for both zinc & nickel. In fact it shows Zinc actually has a higher deficit this year than the same period last year.


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## michael_selway (15 August 2006)

*Re: Base Metals*



			
				dubiousinfo said:
			
		

> The production and consumption numbers in the table (the table is in the original article but not shown in the post above) shows a deficit for both zinc & nickel. In fact it shows Zinc actually has a higher deficit this year than the same period last year.




Zinc production 9,710 9,871 10,357 10,261 4,268 4,350 
Zinc consumption 9,377 9,848 10,656 10,636 4,366 4,470 

Yeah 4470-4350 = 120 tonnes deficit for the 1st Quarter 2006

http://www.safehaven.com/article-5693.htm

thx

MS


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## mikeg (18 August 2006)

Yet another view on Copper.

Thanks to significant demand worldwide, the base metal has outpaced all of its higher-profile precious peers by a significant margin over the last five years. Spot copper prices are up 393% from their lows in 2001.

Meanwhile, gold is up only 151%, silver is up 188%, platinum is up 202% and palladium is up 122%.

Surely, the price of copper has gotten way ahead of itself and are due for a major correction. Right? That's what the bears are saying these days.

But the underlying fundamentals in the copper industry paint a different picture. They show a world in which prices will go higher - much higher.

World-famous commodities expert Jim Rogers said there are three questions you need to ask (and answer) to determine if a commodity is headed higher in price: How much production is there worldwide? Are there new sources of supply? And are there new potential supplies?

The perfect scenario for a commodity on the rise is that worldwide production is limited or declining, there are no new supply sources that could boost production in the near-term and there is no viable replacement when prices get "too high."

Based on all three of these requirements, copper is the perfect investment right now.

Is Production Limited or Declining? Yes.

Thanks in part to rapid growth in India and China, worldwide copper demand is at an all-time high. From 1998 to 2005, total refined production of copper has gone from 14, 142 k tons to 16, 631 k tons. During that same time period, total refined consumption has gone from 13, 352 k tons to

16,884 k tons. For the last three years, copper consumption has been greater than the total amount of copper produced. As a result, copper supplies and stockpiles have shrunk to five-year lows and copper prices have skyrocketed from 75 cents a pound to as high as almost $4.

Since 1990, copper consumption has increased from 512,000 to 3,482,000 tonnes a year. In India, copper demand has increased from 132,000 to 271,000 tonnes a year. And in the United States, demand has increased from 2,150,000 to 2.5 million tonnes a year. Yet despite this growth, there is massive upside potential from here.

Japan consumes about 12 kg of copper per capita. North America consumes around 10 kg, and Europe consumes 9 kg per capita. But the massive populations in Chile, India, Eastern Europe and South America are all still consuming less than 2 kg per capita. Imagine what will happen to copper prices as they start to catch up to the rest of the world. Prices will rise - especially when you consider there is no major change to the supply side of the equation.

Are There New Supply Sources? No.

There has not been a significant new copper mine discovery in nearly 100 years. And according to the Metals Economics Group, "Worldwide, significant copper discoveries between 1998-2004 have fallen well short of what is needed to replace the copper produced - a total of just 39.9 million mt of copper in reserves and resources has been discovered, while production totaled just about 93.6 mt - although the resources in these deposits have potential for further increases over time."

Think about that for a second...

Over a six-year span, only 39.9 million tons of copper was discovered, while 93.6 million tons of copper was produced. This ratio of production to discovery simply cannot sustain itself. If we don't find a major new copper mine soon, copper production will have to slow down and prices will rise - significantly.

And a lack of new discoveries isn't the only supply concern that can push prices higher. Labor disputes, political instability, natural disasters and major accidents can all wreak havoc on near-term supply issues.

For instance...

The Escondida mine in Chile is the world's largest copper mine. It is responsible for 8.5% of global mine output - according to data from Chile and BHP Billiton (the mine's owner). Global stockpiles depend on it.

For the last five days, production at Escondida has been slashed by 60%.

2,000 unhappy miners are on strike - seeking higher wages and a larger bonus. According to Bloomberg, "The union is seeking a wage increase of

13 percentage points above the inflation rate, which was 3.8 percent in July, and a bonus of 16 million pesos ($29,400) to reflect the surge in copper prices...The company last week offered a wage increase of 3 points above inflation and a bonus of 8.5 million pesos."

Because there is no cushion in the copper stockpiles any disruption in the supply chain will cause prices to rise. According to the BBC, "There is not a lot of supply coming on stream generally this year and therefore a prolonged strike would have the potential for a significant impact on prices."

As I type, Chilean miners are blocking access roads, picketing and insisting on much higher wages. Meanwhile, BHP has already said, it will not budge further. Its last offer is its final.

Given the circumstances, it doesn't look like this strike will end any time soon. I expect copper prices to make an all-time high in the next week. If that happens, you can bet there will be talks about potential alternatives to copper - like aluminum.

Will Aluminum Replace Copper as Prices Continue to Rise? No.

It seems logical to assume that demand for copper could go way down in coming years. After all, conductors, power cables and other wires are being made with aluminum, which is also a very good conductor of electricity, and is lighter and much cheaper.

But how likely is it that everyone will all of a sudden stop using copper in lieu of aluminum?

The bears argue that copper is far heavier and more expensive than aluminum. True. But I would contend that that has always been the case.

And in recent years, you can bet than anywhere it was feasible to replace copper with aluminum it was done. That's evident by the rise in aluminum prices. 

There is no doubt whatsoever that aluminum has replaced copper in wires, conductors and various electrical parts - especially as copper prices have more than tripled recently. But I would remind you that the increase in aluminum has not had any major effect on the demand for copper. In fact, demand for both metals has soared in tandem. One has not risen at the other's expense. And anyone who would have you believe that you could one day stop using copper altogether in lieu of aluminum should consider this one fact: If you took all the aluminum stockpiles in the world, it would only be enough for nine days of global consumption.

In other words, even if aluminum could be used to replace copper in every function under the sun (which it could not), you would only have enough to last nine days.

I don't think copper is in danger of being totally replaced just yet. The developing world needs both metals - not just one.

Regards,

James Boric

for The Daily Reckoning


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## dubiousinfo (25 August 2006)

Interesting to note that LME stocks are up over 15% since the start of the strike at Escondida. If the stike ends soon (some of the striking miners have broken ranks) there could be some short term reduction in the price.


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## moses (25 February 2008)

So what do we think these charts might be telling us?


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## explod (25 February 2008)

moses said:


> So what do we think these charts might be telling us?




Have been reading this thread for the first time this morning.  Interesting that it has bee asleep for so long.    For some time my circle have been discussing the needs and shortage of copper which is why I am so bullish on OXR.  I am also taking a re-look at NGF which has dropped back to a fair value price of late.

There is strong sentiment that the weakness emerging from developed countries due to sub-prime etc., will dampen commodities.   This is true to some degree but the areas you touch, oil and copper are very much in demand by the emerging economies of China and particularly India as it moves into high tech manufacture.

Alternative energy propulsion (electric motors and generators) will make huge demands on copper.   So copper related strongly to energy pulls your charts together well.

Will be most interested in renewed discussion here.


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## Tagore (26 February 2008)

Have to agree with you here and particularly given the recent central bank money printing excesses. Not just commercial demand but a lot of speculative demand will start to wash up in copper, coal in addition to the usual PM suspects.
Question is picking the right areas - unleash the copper experts!


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## refined silver (29 February 2008)

Probably a bit early to call, but it has broken above the neckline. Will need to wait to see.


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## Whiskers (29 February 2008)

explod said:


> There is strong sentiment that the weakness emerging from developed countries due to sub-prime etc., will dampen commodities.   This is true to some degree but the areas you touch, oil and copper are very much in demand by the emerging economies of China and particularly India as it moves into high tech manufacture.
> 
> Alternative energy propulsion (electric motors and generators) will make huge demands on copper.   So copper related strongly to energy pulls your charts together well.
> 
> Will be most interested in renewed discussion here.




I'm inclined to agree there explod.

I remained bullish on copper from last year. A report from Mineweb that I posted on the case for copper thread last Oct, forecast a low late last year and expects it to reack $9'000/tn by 2009. Consequently, I have liked copper gold stocks and been looking for spec's with good resources and or development potential.



> *Copper to $9,000 - upside underestimated*
> Copper specialists Bloomsbury Mineral Economics believe that we can expect copper prices to reach $9,000 a tonne within the next two years.
> 
> Author: Lawrence Williams
> ...


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## 56gsa (3 March 2008)

Are we now at the point where business starts to look for substitutes... copper no longer safe lieing around... now have to consider the cost of security guards to protect your investment!!

reminds me of a story a couple of years ago of people shipping large quantities of coins from the Philippines to China cause they had much more value melted down (nickel and copper i think) than their face value...



> Police bust copper theft racket
> Matthew Burgess
> March 3, 2008 - 4:12PM
> 
> ...


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## wayneL (4 March 2008)

refined silver said:


> Probably a bit early to call, but it has broken above the neckline. Will need to wait to see.




Stockcharts chart is incorrect.

See http://charts.quote.com/cis/qc?cont=HG+#F&period=W&size=1200x550&bartype=candle&bardensity=low


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## MRC & Co (4 March 2008)

Copper is on a nice run tonight!


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## agro (4 March 2008)

*Copper Closes at Record High in New York as Inventories Fall 

By Halia Pavliva*

March 3 (Bloomberg) -- Copper futures closed at the highest price ever as global inventories declined and China, the world's biggest user of the metal, boosted imports. 

Stockpiles monitored by the London Metal Exchange fell 1.6 percent to 141,375 metric tons and are down 28 percent this year. China imported 128,000 tons of refined copper in January, up from 112,000 tons in December, said Robin Bhar, an analyst at UBS AG in London. Demand has jumped as the dollar fell to a record against a weighted basket of six major currencies. 

``Tight concentrate and scrap markets should see strong cathode imports over the rest of this year,'' Bhar said in a report. ``The underlying trend in industrial metals remains strong, driven in large part by a steadily weakening dollar, which has little hope in sight.'' 

Copper futures for May delivery rose 7.35 cents, or 1.9 percent, to $3.9285 a pound on the Comex division of the New York Mercantile Exchange, a record settlement. The price reached $3.9670, the highest for a most-active contract since May 11, 2006, when the metal climbed to an intraday record of $4.04. Copper has jumped 45 percent in the past year. 

Manufacturing in the U.S. shrank at the fastest pace in almost five years and construction spending fell the most since 1994 as the economy moved closer to a recession, reports showed today. 

``The U.S. economy is maybe going into recession, but the market in China is growing,'' which supports copper, Tom Winmill, president of Midas Management Corp., said in an interview on Bloomberg Radio. 

China's Stockpiles 

Stockpiles of copper in Shanghai warehouses rose 3,697 metric tons to 48,885 tons, according to data released by the exchange on Feb. 29. 

``We need to see Shanghai stocks start to `move out' if the copper rally is to sustain itself.'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report. 

On ICE Futures U.S., formerly know as the New York Board of Trade, the U.S. Dollar Index, weighted against the euro, yen, pound and three other major currencies, fell to a record 73.354. The euro reached $1.5275, the highest ever. 

The dollar index is down 3.9 percent in 2008 on speculation the U.S. economic slump will deepen. The gauge dropped 16 percent in the past 24 months. 

``Dollar risks are here to stay,'' Benedikt Germanier, a Stamford, Connecticut-based currency strategist at UBS AG, said in a report. Investors ``are reducing dollar exposure with U.S. downside growth risks,'' he said. 

Copper climbed partly in tandem with other commodities. Crude oil, gasoline, gold, platinum, corn and soybeans rose to records on U.S. futures exchanges. 

On the LME, copper for delivery in three months rose $145, or 1.7 percent, to $8,575 a ton ($3.89 a pound). The metal has advanced 42 percent in the past 12 months.


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