We Need To Watch Copper

Copper `Not Supported' by China Power Grid Buying, Scotia Adviser Liu Says

Copper’s recent rally is “not fully supported” in the near term as demand from the power industry in China, the largest user, may fall short of expectations, said Na Liu, China strategy adviser to Scotia Capital.

China State Grid Corp., the nation’s largest operator of electricity networks, is planning an 11 percent increase in fixed-asset investment this year, the Beijing-based company said in a Jan. 10 statement. That is less than the 45 percent increase the market had been expecting, Liu said.

Expectations for supply to lag behind demand this year helped to drive copper to a record $9,754 a metric ton on Jan. 4. State Grid is the largest single user of copper in China, accounting for about 13 percent of total consumption, according to Beijing Capital Futures Co.’s analyst Xiao Jing.

“This report is a disappointment for the copper bulls” as the expectation has been priced into record price levels, Liu said. The market significantly underestimated China State’s capital expenditure in 2010’’ and this has resulted in lower investment growth this year, said Liu.


The price of copper is worth watching in my view.

If my deflationary scenario is correct, we can expect to see copper nose dive once the weakening demand fundamentals become apparent.

China, despite its rising economic status, is not just large enough to keep the global economy on an upward trajectory.

How many empty cities can one nation continue to build?


  1. PW,

    I wish you put this much efforts in plotting the charts, trends, technical analysis your portfolio would be doing much more better than it is currently. Last time you mentioned I need to see SPX go beyond 1250 et et, today it stands about ~1284. You are missing a good rally for the past 1.5 years.

    You are being stubborn not seeing both sides of the coin and loosing money on the table. Remember as I have always been telling you who cares what you or I think the market is going to do what its supposed to and currently the least resistance is up so giddy up! :-)


  2. Well Walter, you are right, I am stubborn. We have clear bullish signals now with the S&P. The market does not always do what we expect, it just does what it does. I am sticking with bullion, and looking for some well priced stocks now. So, my bullishness, although it may be temporary, might be a warning to bulls. How does the saying go - when the last bear becomes bullish the market crashes?

  3. PW,

    My stubborn meant in terms of getting emotional :-)

    >>How does the saying go - when the last bear becomes bullish the market crashes?

    Good one.. ROTFL...

  4. PW,

    What's your view on the price of gold relative to copper over the next 12 months?



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