Copper on Verge of HUGE Commodities Bull
Source: Daily Markets, Don Miller (11/8/10)
"China's economic plan is fueling a relentless appetite for copper."
Copper has risen 14% this year, with contracts traded on the London Metal Exchange tripling since December 2008. The Bloomberg index of world mining stocks this year has climbed 16% to the highest level since Aug. 1, 2008
"Copper is red gold," Jeremy Gray, global head of resources at Standard Chartered PLC in Hong Kong told Bloomberg. “We're on the verge of the biggest commodities bull market we have ever see.”
Gray predicts the metal could rise by 50% to $12,000/ton in the next 6–12 months.
Copper turned higher in 2003 as the global economy recovered from the 2001 downturn, then slumped in 2008 as the credit crisis kicked in. The metal rebounded in the last days of 2008 and has been on a tear ever since.
The surge in prices has been sparked by a classic supply/demand imbalance, mostly driven by emerging markets—especially China.
China's is on pace to almost triple its copper consumption to 20 million tons (Mt.) by 2020, when it will account for 49% of world copper sales, according to London-based CRU. That's more than the world's total production today. What's more, rising demand will create a potential global shortage of 11 Mt./year by 2035.
China is the world's second-largest economy; for its economy to maintain momentum, the country must urbanize its mostly rural interior. More than half of China's 1.3 billion people reside in rural areas. The per-capita GDP of inland provinces is less than half of that on the coast. Overall, the government wants to quadruple per-capita GDP from 2000–2020.