Copper May Fall 35% by 2007, Codelco’s Villarzu Says

Who can figure out copper prices these days? Copper (and also copper alloys Brass and BeCu) prices, are all over the map, the highest they’ve been in years.

But who can sort out the conflicting claims about what’s happening in that marketplace? Is it just demand? Is it sinister hording? If hoarding, the hoarders have to sell before supply catches up with demand, else why hoard? 300,000 tons estimated to be hoarded.

If my calculations are correct,
That would be 15,000 20 ton dump trucks. 5 loads a day hauling the stuff to a hoarding place. 3,000 driver days. Wouldn’t one of those drivers talk?

1.12 million cubic feet. The capacity of standard container in a 20′ is about 1,170 cu. ft. So that’s 960 containers (assuming you could fill them all the way, which I suspect isn’t true). Again, wouldn’t someone know that there was a hoard of almost a thousand containers of copper?

Copper prices will probably fall 35 percent to about $1 a pound in two years as miners produce more of the metal to meet Chinese demand, said Juan Villarzu, executive president of Codelco, the world’s No. 1 copper miner.

“It took some time to realize that demand from China was sustainable, but supply is adjusting and there will be more production,” Villarzu, 61, said in an interview today by telephone from Sydney. “All the data we have shows there is little stock. I don’t think there are hidden stocks.”

Copper futures in New York have risen 21 percent to $1.548 a pound in the past year. They reached $1.6040 a pound, a 16-year high, in June.

On the other hand,

Copper inventories monitored by exchanges have fallen to their lowest in three decades.

Villarzu’s comments contrast with those of […] other traders, who said this year’s surge in copper futures is due to “speculative hoarding” by hedge funds and other buyers.

Analysts such as Maqsood Ahmed and Nick Moore have pointed to the possibility that stockpiles are being kept off the market.

Prices remain near a record because “the metal is being hoarded” by speculative funds, said Ahmed, who has worked in the mining and metals industry since 1993. Holders will sell when prices are high enough. Some “bigger merchants and macro-hedge funds” may hold as much as 300,000 tons of copper worth about $1 billion that isn’t in warehouses registered with futures exchanges.

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