RE: Re SPCopper prices to average US$3/lb or better through 2009
Posted: January 22, 2008, 4:00 PM by Peter Koven
Mining
Copper prices have withstood the recent volatility in the financial markets better than other base metals, and Desjardins Securities analysts John Redstone and John Hughes expect the metal to continue to perform well. They are forecasting average copper prices of US$3 a pound or higher through 2009, which means strong earnings for copper-weighted companies.
The analysts are bullish on copper for a number of reasons: "critically low" inventories, China remaining a net importer, steady global demand growth, and the fact that mines will have to operate at maximum operating levels and new capacity will have to come onstream without delays in order to maintain a balanced market. And even if production forecasts are met, smelters will be hard-pressed to process all the output.
"We would argue that there is a substantial risk that the actual level of worldwide refined production is significantly below our forecast level," they wrote in a note to clients.
Given their bullish forecast on copper, it is no surprise Mr. Redstone and Mr. Hughes are also predicting good things for copper stocks. They have a "top pick" rating on HudBay Minerals Inc., and "buy" ratings on the other copper producers they cover: Freeport-McMoran Copper & Gold Inc., Inmet Mining Corp., First Quantum Minerals Ltd., Teck Cominco Ltd., and GobiMin Inc.
We are sitting on a deal of a life time. I know it sucks watching the share price sink like this, but it is very temporary in the grand scheme of things. Hold DRV long and be happy.
Cheers