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Bob Carey
Chief Market Strategist
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  China May Only Pose a Near-Term Challenge for Price of Copper
Posted Under: Commodities
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View from the Observation Deck

  1. China is the largest buyer of copper in the world. It accounts for roughly 40% of annual consumption. The U.S. accounts for about 10%. (Copperinvestingnews.com)
  2. While the chart shows a period from Q1'06-Q1'12, the price of copper closed on 4/26/12 at $3.78 per pound. The average price for the 6-year span in the chart was $3.27 per pound.
  3. There has been some concern of late that China's goal of tempering economic growth could lesson demand for copper. China is now targeting a GDP growth rate of 7.5% (see chart for perspective).
  4. One of the reasons why the price of copper remains elevated is that China has reportedly been steadily increasing its imports in recent months to stock its inventories.
  5. Stockpiling copper may or may not lead to a pullback at some point, but Garrett Nelson, analyst at BB&T Capital Markets, believes the demand for copper is on pace for a low-to-mid single digit rise in 2012. Demand was up approximately 3.0% in 2011.
Posted on Thursday, April 26, 2012 @ 4:36 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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