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A bull in a China shop

May 29, 2009 - 00:00 GMT

China has been supporting copper fundamentals single-handedly this year, mainly because of stockpiling by its government. But this seems likely to slow in the second half, reports Steve Karpel.

This reduction in costs was still not sufficient to compensate for the fall in prices of copper and various by-products over the last year, said Codelco ceo José Pablo Arellano. The average copper price in the first quarter was 56% down on a year earlier at 155.8 cents/lb, while molybdenum by-product – an important source of income for the company – was down 70% at $21.3/kg.

And yet, bearing in mind that copper’s major end-uses of construction, transportation and electricals have been badly hit by the worldwide recession, the red metal has been doing relatively well in terms of fundamentals and prices. From a plateau of over $8,000/tonne in the first half of 2008 (and a peak of nearly $9,000/tonne cash on July 3), the price plunged to under $2,800/tonne at the end of the year as an economic and financial crisis gripped the world....

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