Economist Shayne Heffernan of has reissued a buy rating on Copper due to inflation as well as supply and demand factors, Copper has been over sold. Even though equity markets are questionable, Copper is worth buying now Heffernan said in a note to traders today.

Copper prices firmed on Tuesday, lifted as equities and the euro were buoyed by better-than-expected corporate earnings from Citigroup Inc and by hopes for progress in battling Europe’s debt concern. Three-month copper on the London Metal Exchange rose 0.6 % to $8,142.50 per tonne by 0115 GMT, after falling 0.4 % on Monday.

Heffernan Estimates Copper supply will outpace demand by 518,000 tonne in 2013 as miners in some countries will struggle to keep supply lines in tact, demand from China may drop slightly but this will be overshadowed by increased demand in South East Asia.

China and other emerging markets, especially in Asia, are driving the increasing demand where pricing is projected to average US$9200 per tonne in 2011 and US$10,000 in 2012. Asia currently accounts for 55% of total global demand.

Of all the base metals, copper has the most bullish outlook with tin a close second. Walter De Wet says, “If we look at the break-even copper price for the most marginal of mines, they’re all making good profits at the current level.

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The rising copper price is expected to parallel the growing commodity deficit, likely to reach a peak in 2011 during the second quarter with China in particular re-stocking, but with the most severely tight market occurring during 2012.

New copper projects are at various stages of development, but considering they take 3-4 years to come on stream, they will not alleviate the deficit or affect the copper price during the next two years. Many of these projects are in the major copper producing countries like Chile, Zambia, the Democratic Republic of Congo, Peru and China. There are also new projects in Papua New Guinea and Australia due to come on line, and major projects in Mongolia and the Philippines which could help ease the supply shortage.

Freeport CEO Doesn’t See Evidence of China Copper Demand Easing

Freeport-McMoRan Copper & Gold Inc., the biggest publicly traded copper producer, said demand in China is being sustained even amid concerns that purchases by the second-largest economy may be slowing.

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 reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service

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