LONDON (Commodity Online): On Tuesday, news agencies reported that London Metal Exchange copper rallied to a 20-month high above $8,000 a tonne. This rally is a hint for the things to come in the new financial year.
If you take note of the new trend in copper market, the metal has jumped 165% from its low during the bad days of late 2008 and early 2009. Along with that, lead and nickel also climbed 150%, and zinc has jumped 125% .
The key drives for this relatively robust outlook are the return of double-digit growth in China, synchronized global growth in the rest of the developing world as well as in the G7, and the need for sustentative restocking spurred on by low inventories.
Now, you take into consideration the copper production pattern in Chile, the biggest copper producer in the world, and other producers. Why all the copper producers are ramping up production is because, they have seen an opportunity now as the global industrial consumption is set to grow this year.
Chile produced 394,742 tonnes of copper in March, up 3.8 per cent from February 2009. This is despite the country was ravaged by an big earthquake.
Most of the increase was attributable to concentrated copper production, which rose 15.5 per cent on an annualized basis, while output of cathode fell 7.9 percent in February.
The magnitude-8.8 earthquake that rocked south-central Chile on February 27 caused only minor damage to copper mines, located in the northern part of the country, with production affected only by the power outages caused by the temblor.
Japan's two major copper smelters - Sumitomo Metal Mining Company Limited and Furukawa Company Limited - plan to boost production in the H1 of the financial year.
Consumption of copper, used in a wide range of goods including utensils, construction materials and computer chips, is often seen as a gauge of economic activity.
Japan's copper output has been slow to pick up, weighed down by strong deflationary pressure and sluggish demand by the construction sector, a major consumer of the metal. But, things are improving and the demand from China is also helping the Japanese firms to go for more production.
Japanese business morale improved in March for the fourth consecutive quarter, but the economic recovery could struggle to pick up pace as companies were cautious about spending due to excess capacity.