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Regal Group International: Copper to continue its bull run driven by Chinese demand.
Analysts expect copper to continue to rally because of strong demand from China and current supply constraints.
“We are seeing a serious reduction in the supply of copper at a time when demand is quite robust,” the bank’s global head of commodities research told reporters recently. “Copper will continue to perform incredibly well.”
Copper, commonly used in the manufacture of wiring and pipes, came to within 5%of a record high in October, driven by increased demand, declining stockpiles and the weak U.S. dollar. Factory output in China increased at it fastest pace in six months in October.
According to a recent note from Deutsche Bank AG, copper’s outlook presented a “perfect storm” for bulls.
Michael Haigh, global head of commodities research at Standard Chartered Plc. told Regal Group International that they believe that the copper market “will be in deficit until 2013, maybe 2014. Copper has really been an outlier in terms of its performance, but it is fundamentally driven.”
In August, Jeremy Gray, the bank’s global head of equity research forecast in a report that copper could rise to as high as $12,000 per ton in the next two years, adding in the same report that none of the seven biggest producers would be bringing any new production in the same period.
“Things are not looking very rosy on the supply side given Chile and Peru’s reduction in output,” Haigh told Regal Group International. “We are seeing mammoth demand for copper from China and these two suppliers cannot keep pace.”
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