Posted: 3/23/2007 10:19:06 AM EDT
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I got tagged at work with a project researching copper prices. Make a long story short my company is thinking about entering a contract being a supplier of finished good that are made from copper. A couple of things that I've found out this morning include. Much of the demand is coming from China; they are the world's largest consumer. Chinese Government regulators have tried to slow down the economy but it's still growing at a rate of 10%. U.S. is the second largest. Each new house that is built in the U.S. requires about 400 lbs of copper. It has really jumped in price over the last few years. Money managers suddenly realizing they were missing an important commodity in many portfolios have also fueled increased prices. At the very best a modest surplus is predicted for the second quarter of 07. That could be gone very easily if anything changed in Chile or China. Copper concentrate, used to smelt and refine into metal, will be in a shortage through 2009, extending a deficit that started last year. So will copper continue these dramatic increases or will is settle into a modest 3% to 4% increase every year like other commodities? |
