Copper has hit an all-time high mainly due to the supply disruption from Chile Collahusai (world's no. 3 copper mine). It was not clear how long it would take to resume copper concentrate shipments from the facility.
Copper prices are up sharply this year, driven mostly by strong demand in China, the world’s biggest copper consumer, and a gradual recovery in manufacturing and construction industries elsewhere. In the face of ever tighter supply constraints, many analysts predict copper prices will continue to rise well into 2011.
One of the main reasons for the copper boom is the shortage of production/supply and the booming demand for the red metal. BMO projects the 2011 copper deficit to be around 380,000 metric tons. Standard Bank says the copper deficit will be of 385,000 metric tons, widening to 562,000 in 2012. BNP Paribas looks for a supply deficit of 200,000 metric tons this year, widening to 500,000 in 2011.
Metals consultancy VM Group predicts prices to top $10,000, but with volatility and potential for a correction if Chinese authorities are aggressive reining in money supply.
According to Goldman Sachs copper are even closer to a “structural bull market” than oil because of supply issues.
As base metals trading led by copper booms, the red metal is going to be hot favourite for investors, traders, manufacturers and commodity dealers around the world for the year 2011.
Trend: Bullish
Advice: Buy on dips
Short term target: $9800
