Strong demand for Copper 5+ years Copper, silver look for long term gains on Japan, China
TOKYO (Commodity Online) : Copper and silver marketsare all set to enter into a highly volatile arena as fresh Japanesedemand will conflict with that of already heightened Chinese demandapart from steady improvements in North America and Europe.
Analystssaid strong copper and silver demand from China and other emergingcountries and improved demand from North America and Europe have allresulted in a very tight global market for these commodities.
Japan,which is trying to recover from the devastated quake, will require hugequantities of copper for residential and commercial purposes apart fromits already high demand for manufacturing sector.
Japan isexpected to start recovery works soon and reconstruction andrefurbishing of damaged plants, buildings and infrastructure should leadto greater commodity consumption, particularly building materials,analysts added.
Japan needs to replace damaged power lines inquake hit regions and also needs transformer replacements for whichcopper and silver are to be used along aluminum, zinc and nickel.
Copperprices began moving upwards after initial demand drops pushed pricesdown. In London copper prices edged up 0.4 percent Monday, withinvestors wary of placing big bets after a weekend of airstrikes byWestern powers on Libya.
Japan may stop refined copper exportsto China following the quake and resultant high demand back home thoughMarch shipments have nearly been completed.
Japan might forcedto stop shipments for April though copper due to leave to China in Aprilhas been stored in warehouses in ports in western Japan which was notaffected by the quake and tsunami.
Japan last year supplied 253,157 tons of refined copper to China, the largest consumer, or 8.7 percent of Chinese imports.
China’stightening of monetary policies also helped copper to move up thoughprices in Shanghai fell 0.5 percent to 71,480 yuan a ton on Monday.
Silveron the other hand moved up along gold by safe-haven buying afterU.N.-backed attacks on Libyan military targets over the weekend.
Spot silver was tracking gold, at $35.70 an ounce, up 42 cents although an early attempt to breach $36 failed.
Analystssaid the extent of the military action appears to have taken somemarket participants by surprise but helped metals not only as a safehaven asset but also as an inflation hedge.
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The damage in Japan is mind numbing The rebuilding could last a long, long time( Warrren Buffet says 5 years), and the demand for copper is just beginning to take off.
The rebuilding of Japan will likely provide the stimulus to lift many economies around the world including the US, stimulating more demand for copper.
DM's share price will not remain under $3 for very long. IMHO