Hot Chart: Copper a Buy

An image of stock prices rising and declining in value Credit: Shutterstock photo

Dwindling stockpiles at LME warehouses will also provide support for copper, she said. Prices may decline as low as $6,500 a ton with an average price of $7,950 for 2012, the bank said in a January note to clients.

Orders to draw copper from LME warehouses, or canceled warrants, gained 24 percent to 50,000 tons on an increase in New Orleans. Inventories of the metal slipped 0.3 percent to 364,250 tons, the lowest level since Dec. 22, 2010, according to exchange data yesterday.

Three-month copper on the London Metal Exchange rose 0.6 percent to $7,830 a ton at 3:43 p.m. Tokyo time. The metal declined 21 percent last year and averaged $8,164.50.

China's central bank may reduce reserve ratios in the first half, Helen Zhu, a strategist at Goldman Sachs Group Inc., said yesterday. China's copper imports rose to a record last month as Lunar New Year stockpiling and financing needs spurred buying.

The London Metal Exchange LMEX Index of six primary metals including copper and aluminum, fell 22 percent last year, the first drop in three years, as Europe's debt crisis widened. Yields on two-year Greek debt surged to 152 percent last month, compared with 0.29 percent for Treasuries of a similar maturity. China's inflation cooled to a 15-month low and producer-price gains were the smallest in two years in December, leaving the government more room to support growth.

Copper prices may gain as much as 20 percent in 2012 steady demand from ASEAN and China, the world's top consumer, amid tight supplies, according to Heffernan Capital Management.

In a note to traders today Shayne Heffernan said "Prices of the metal, used in pipes, tubes and wires, will climb to as high as $9,500 a metric ton from last year's close of $7,600, no doubt we will see a return to old highs in the next 24 months."

Heffernan Capital Management research indicates Copper is a viable inflation hedge and will have more upside than many other commodities.

Many people invest in precious metal commodities such as gold and silver but not everyone considers non-precious base metals like copper and nickel.

Unlike precious metals, the prices of base metals are more related to the health of an economy and currency than emotion or world events.

Copper will rally on fundamentals, the supply of copper is very tight across the world. Demand will exceed supply by significant margins within the next year, especially when massive reconstruction activities are proceeding in Japan and several infrastructure projects are progressing in developing regions like India, China and ASEAN.

Shayne Heffernan

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 Services.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.