Thursday, April 8, 2010

China Driving Copper Demand

China and Copper Demand

The strength and weakness of copper demand rests solely on China, as everything else pales in reference to copper and price movements in the present and future.

Much of this is predicated upon the fact that the developed countries continue to struggle economically, and contrary to mainstream media reports, the economics of the developed world are far from being in a recovery, and in fact may have never left the recessionary period, as jobs reports and unemployment reveal.

What the means for copper is the only economy that can be counted on to drive demand is China at this time, so it narrows what needs to be watched closely going forward. This of course doesn't mean there won't be some copper demand in other parts of the, just that China is completely driving the demand, and the demand from other countries pale in comparison, and if they were to cut back on copper orders, it wouldn't have much effect on copper prices.

Anglo American (LSE:AAL) said today that because of this copper does have vulnerability, as if China falters so will copper demand and copper prices.

Basically what this means for copper is there will probably be huge swings as news from around the world affects the prices in the next 12 to 18 months.

Over the long term, copper prices will assuredly arise with demand, but there will be ups and downs along that path until things finally level off.

There are far too many economic uncertainties in the developed world, and to a lesser extent in emerging markets to be able to count on stability any time soon. Copper demand and prices will react accordingly.

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