Copper edged up on Thursday supported by easing fears over potential Chinese monetary tightening and by buying from funds betting on a sustainable economic recovery.
Some investors have also been forced to reverse bets on price falls as this week's reweighting of commodity indexes has not weighed on metals as much as expected, traders said.
Anglo-Australian mining company Rio Tinto PLC (LON:RIO) said Thursday that demand for copper and gold rose strongly in the fourth quarter, but was cautious about the current year as governments wind down economic stimulus programs.
Rio Tinto said mined copper production rose 36 percent, refined copper output was up 15 percent and mined gold was up 141 percent at more than 1.1 million ounces.
Goldman Sachs (NYSE:GS) Thursday revised its 12-month copper forecasts, citing a combination of improving economic growth in developed markets and robust emerging markets growth. It raised its 12-month copper forecast to $7,855 a metric ton from its previous estimate of $7,755/ton.
Meanwhile, Codelco, the world’s biggest copper producer, plans to invest a record $2.3 billion this year as prices surge for the metal used in plumbing and wiring.
Chile’s state-owned copper company is increasing investments by 12 percent to tap new reserves at existing mines from last year’s $2.05 billion, Fernando Vivanco, vice president of projects,said.
Codelco boosted production by 15 percent in 2009, ending four years of declining output, Chief Executive Officer Jose Pablo Arellano said. Copper futures more than doubled last year as disruptions and demand from China, the world’s largest copper user, led to shortages of the metal. Source
Measured over the past 12 months, rolling stock price returns from listed mining specialists have been dominated by broadly-defined copper stocks. There are two main reasons explaining this phenomenon, starting with the sharp decline in most commodity prices between mid-2007 and mid-2008.
Copper, for one, fell from around USD 4.10/lb to USD 1.25/lb during the second half of 2008, but recovered sharply, in line with most commodities, during 2009, and is now trading up around USD 3.35/lb.
Even at the lowest levels seen during the closing months of 2008, few genuine copper miners across the world experienced cash losses. It was very different for a number of other miners, which crashed deep into negative cash loss territory, with nickel, aluminium and diamonds among the most aggravated cases.
