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Copper Prices Rise on Strong Asian Demand and Supply Constraints

Strategic Insights

— 1 min read

Asian demand for copper, combined with supply constraints and a healthy outlook for emerging markets, outweighed fading optimism about the euro zone's financial stability, causing copper prices to rise on Monday. The Comex December copper contract settled at $3.488 a pound, a 2.45-cent gain, as analysts at Goldman Sachs reiterated their bullish view on copper prices. Strong economic growth data from Japan and evidence of a strong demand outlook for the world's top consumer, China, further pushed prices higher.

Key Takeaways:

  • Copper futures rose 2.45 cents, or 0.7%, to settle at $3.488 a pound on the Comex division of the New York Mercantile Exchange.
  • Goldman Sachs analysts predicted higher copper prices in 2012 due to growth from emerging markets and supply constraints.
  • Strong economic growth data from Japan, with a 6% gross domestic product increase in the third quarter, helped push prices higher.
  • Codelco, the world's top copper miner, offered copper premiums for 2012 delivery to Chinese consumers at rates similar to this year, indicating a strong demand outlook.
  • Chile's state copper commission, Cochilco, published a poll showing that mining analysts expect copper prices to average $3.62 a pound next year.
  • Analysts incorporated the possibility of a recession in the euro zone and slower Chinese growth into their forecast, leading to a lower prices outlook.

Statistics:

  • Copper futures rose 2.45 cents, or 0.7%, to settle at $3.488 a pound.
  • Goldman Sachs analysts predicted higher copper prices in 2012 due to growth from emerging markets and supply constraints.
  • Japan's gross domestic product grew 6% during the third quarter.
  • Codelco offered copper premiums for 2012 delivery to Chinese consumers at rates similar to this year: 1,500,000.
  • Cochilco published a poll showing that mining analysts expect copper prices to average $3.62 a pound next year.

Sources:

  • Dow Jones Commodities News via Comtex, Nov 14, 2011.
  • Goldman Sachs analysts' note, Nov 2011.
  • Chile's state copper commission, Cochilco, poll, Nov 2011.
  • Dow Jones Newswires, Matt Day, Nov 14, 2011.

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