Copper to Outperform; Chinese Dragon Breathes Life-Scotiabank


"Scotiabank's Patricia Mohr expects copper imports to decline this summer and rebound late this year and early 2010"

As imports of refined copper and iron ore achieved records during the first four months of this year, Scotiabank economist Patricia Mohr noted, "China's dragon has breathed life back into commodity prices."

However, she cautioned in an analysis published Monday, China's copper imports will likely fall back in late summer, which is a normal seasonal event. She noted prices edged down to US$2.31 late this month.

Nevertheless, Mohr predicts, "China's copper imports will rebound again in late 2009 and early 2010ódriving prices forward."

Mohr forecasts Chinese production of copper products will likely expand by 10% next year, though more will be met by scrap rather than primary metal. "This development, combined with the gradual return of shutdown mines, will check copper prices from time-to-time in 2010. However, a pick-up in U.S. motor vehicle production in the second half of 2009 and improving global economic conditions should underpin prices."

"The copper price forecast has been revised up to US$1.90 for 2009 and US$2.30 for 2010, with tight market conditions expected medium-term," Mohr advised. "Copper will likely outperform other base metals."

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