China's Metal Demand Returns in 'Big Way'ŚCLSA
"In the next 12 months, having exposure to copper is going to be a good investment."
"Commodities that give investors the most upside potential when the rest of the world demand recovers" are those with supply constraints, Andrew Driscoll, head of resources research at CLSA, said in Shanghai. "In the next 12 months, having exposure to copper is going to be a good investment."
China's $586 billion stimulus plan and a record $1.1 trillion of lending in the first half of this year have countered a 10-month slump in the nation's exports, helping Asia to lead a global rebound from the worst slump since the 1930s. Copper futures have more than doubled this year.
"We've gone through a period in the first half when China's demand growth has recovered but the rest of the world demand has not," Driscoll said late yesterday at a media briefing. "China's commodity demand is back on track in a very big way, and we expect this to continue for the second half."
U.S. Federal Reserve Chairman Ben Bernanke said yesterday that the recession in the world's largest economy has probably ended. Sales at U.S. retailers surged to the highest in three years in August, signaling unexpected strength in consumer demand.
China will expand 8.5% in 2010, after growth of 7.5% this year, helping pull the world out of recession, according to forecasts from the International Monetary Fund. In August, China's industrial production rose more than forecast, lending unexpectedly climbed and retail sales advanced.
The country's economic upswing is "well advanced" and will help drive demand for commodities including coal, BHP Billiton Ltd., the world's largest mining company, said today on its website.
The Asian nation's refined-copper imports rose 168% to a record 2.1 million tons in the first seven months of the year, according to customs data. While shipments of the metal may drop in the second half compared with the first, they will remain at a healthy level, Driscoll said.