Copper supplies to fall to a 4 year low in relation to demand due to constant supply disruptions from major mines in the world. And this might in fact prove to be the catalyst of a huge upward movement. Copper mines are facing supply declines be it due to employee violence at Freeport McMoRan (which halted production) or low grades Rio Tinto and “All of these issues are going to keep the level of disruptions elevated. There are new projects hitting the market, but it’s a relatively disappointing outlook (for supply)”. As per calculations, copper inventories will be enough to meet just 2.7 weeks of demand by the end of 2012. The last time stocks-to-consumption ratio was below 2.7 was in 2008, when the ratio bottomed at 2.3. In 2011 stocks-to-consumption ratio was 3.2 and in 2010, it was 3.6. It would be worthwhile to note that copper prices bottomed around $3000/tonne in 2008 and has been on an uptrend ever since. LME copper prices are trading around $8250/tonne as of now, a more than 150% rise in value. And this happened when the stocks-to-consumption ratio also bottomed at 2.3. As such, projections do turn out to be true, one might see a massive upside movement in coming months.-it is expected copper markets to be in a deficit of 278,000 tonnes in 2012. The investment bank sees copper prices averaging $8600/tonne in Q2, 2012 before surging to $9300/tonne in Q4, 2012.
For more information Click Here
Stock tips, Commodity tips
For more information Click Here
Stock tips, Commodity tips
RSS Feed