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 beyond supply.
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 tin.
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 Statistics (NBS). 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 Wednesday.
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 Services.
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