Copper Demand Still Strong Despite Downturn in Price
24 Februar 2011 - 2:46PM
Marketwired
The price of copper slipped to its lowest price in a month
yesterday as investors feared that surging energy prices may boost
inflation growth and force the Chinese government to once again
raise interest rates. China's copper demand has surged in recent
years as the nation needs loads of the red metal to meet its
modernization requirements for electricity and infrastructure. The
Bedford Report examines the outlook for companies in the Copper
Industry and provides research reports on Taseko Mines Ltd. (NYSE
Amex: TGB) and Freeport-McMoRan Copper & Gold, Inc. (NYSE:
FCX). Access to the full company reports can be found at:
www.bedfordreport.com/2011-02-TGB
www.bedfordreport.com/2011-02-FCX
Despite slipping this week, copper prices remain near all-time
highs. The metal used extensively in power and construction has
surged approximately 50 percent since last June. Tight supply is
the primary reason for the price escalation as output has failed to
keep up with demand. Standard Bank predicts the copper deficit will
grow to nearly 400,000 tonnes this year and more than 560,000
tonnes next year due to the rising demand of the metal.
Mining and metals consulting firm CRU estimates that China's
copper consumption will almost double by the end of 2020, which
would account for nearly 50 percent of world copper sales.
The Bedford Report releases regular market updates on the copper
industry so investors can stay ahead of the crowd and make the best
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Concerns that copper's price may finally be ready to peak has
led to the possibility that hedging may soon return. John Meyer, an
analyst at investment bank Fairfax, argues that "Copper hedging at
these high levels gives companies security. Also if you are
borrowing from banks, then hedging is often one of the conditions."
Hedging programs allow producers to lock in current copper prices
for future production, guarding against any potential price
declines in the future.
Richard Adkerson, president and chief executive of
Freeport-McMoRan Copper & Gold, said, "We have not hedged
copper prices, and as a result we -- with a couple of minor
exceptions -- and historically we have not hedged any other costs
as well."
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