Copper is a hot commodity in China. Chinese pig farmers are the newest speculators to enter the market. It is estimated that they hold about 50,000 metric tons. These supplies are off exchange purchases. Private investors are also holding 20,000 tons of nickel.
On the Shanghai Futures Exchange copper contracts tallied 97,396 tons, a two year high.
Why the rush to copper? The answer is that with China's $586 billion dollar stimulus program, demand has come in the construction and auto industries. China's imports of copper rose to a record 2.1 million tons in the first seven months. The State Reserve Bureau has contracted to take 300,000 to 400,000 tons of refined copper into its stockpiles from overseas. This estimate is from the Macquarie Group Ltd.
Goldwyn of Sucden Financial Ltd said: "Demand is back to pre-crash levels stimulated by government incentives, and will show significant year on year gains in the coming weeks and months."
Copper prices have more than doubled this year from about $1.25 per pound to nearly $3.00 per pound. Would you follow the Chinese pig farmers and buy copper at these levels?
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