Cu, Ag Demand FutureCopper, silver look for long term gains on Japan, China
TOKYO (Commodity Online) :Copper and silver marketsare all set to enter into a highly volatilearena as fresh Japanesedemand will conflict with that of alreadyheightened Chinese demandapart from steady improvements in North Americaand Europe.
Analystssaid strong copper and silver demand fromChina and other emergingcountries and improved demand from North Americaand Europe have allresulted in a very tight global market for thesecommodities.
Japan,which is trying to recover from thedevastated quake, will require hugequantities of copper for residentialand commercial purposes apart fromits already high demand formanufacturing sector.
Japan isexpected to start recovery workssoon and reconstruction andrefurbishing of damaged plants, buildings andinfrastructure should leadto greater commodity consumption,particularly building materials,analysts added.
Japan needs toreplace damaged power lines inquake hit regions and also needstransformer replacements for whichcopper and silver are to be used alongaluminum, zinc and nickel.
Copperprices began moving upwardsafter initial demand drops pushed pricesdown. In London copper pricesedged up 0.4 percent Monday, withinvestors wary of placing big betsafter a weekend of airstrikes byWestern powers on Libya.
Japanmay stop refined copper exportsto China following the quake andresultant high demand back home thoughMarch shipments have nearly beencompleted.
Japan might forcedto stop shipments for April thoughcopper due to leave to China in Aprilhas been stored in warehouses inports 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’stighteningof monetary policies also helped copper to move up thoughprices inShanghai fell 0.5 percent to 71,480 yuan a ton on Monday.
Silveronthe other hand moved up along gold by safe-haven buyingafterU.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.
Analystssaidthe extent of the military action appears to have taken somemarketparticipants by surprise but helped metals not only as a safehaven assetbut also as an inflation hedge.
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Thedamage in Japan is mind numbing The rebuilding could last a long, longtime( Warrren Buffet says 5 years), and the demand for copper is justbeginning to take off.
The rebuilding of Japan will likely providethe stimulus to lift many economies around the world including the US,stimulating more demand for copper.