Heffernan Capital Management Economist Shayne Heffernan takes
a look at Copper
Copper Remains Undervalued
While journalists beat up the China hard landing story and
Copper is trading very cheaply, many people have over looked the
real copper news.
Africa, South America, Australia and Asia are closing the door
on foreign ownership, introducing taxes and changing the future
cost base of Copper. At the same time demand for Copper is rising
Global growth may have slowed a touch but due to the continued
growth in emerging markets the consumption of commodities is
expanding faster than supply. Heffernan Capital Management and
Morgan Stanley predicts shortages in copper, palladium and iron
ore this year and Barclays anticipates the same thing for
China's economic growth will decelerate to around 8.1% this
year and edge up to 8.7% in 2013.
China's manufacturing activity is far from optimistic despite
the Country's Purchasing Managers Index (PMI) for the
manufacturing sector put in a predictable slow Q1.
China's economy expanded by 9.2% in 2011 from a year earlier
and 8.9% Y-Y in Q-4, according to the National Bureau of
). ASEAN, BRICS and other Emerging markets are also growing at a
solid rate, in short there are no real demand fears and the
numbers support that fact.
Increased net imports and higher domestic production pushed
implied consumption for refined copper in China, the world's top
consumer of the metal, up 20.8 percent month-on-month in
February, based on official customs data released on
Daily implied consumption of refined copper in China surged
44.7 percent from a year earlier, despite increased stocks in
warehouses monitored by the Shanghai Futures Exchange.
China's inflows of refined copper rose 12 percent
month-on-month in February to hit the third-highest level ever at
375,831 tonnes on delayed shipments from the holiday month of
January and as buyers stocked up on expectations of rising demand
during the peak March-May consumption period.
The imports rose 137.6 percent from a year earlier.
Shayne Heffernan oversees the management of funds for
institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with
him over 25 years of trading experience in Asia and hands on
experience in Venture Capital, he has been involved in several
start ups that have seen market capitalization over $500m and 1
that reach a peak market cap of $15b. He has managed and overseen
start ups in Mining, Shipping, Technology and Financial
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