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Gold/Mining/Energy : Copper - analysis
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To: tyc:> who wrote (146)7/10/2000 11:57:50 AM
From: Robert Douglas  Read Replies (1) of 2131
 
OK, so what about copper supply?

There clearly is a lot of capacity out there and if a lot of it wasn't idled the last 2 years, we would be looking at mountainous inventories and rock-bottom prices.

But fortunately, producers had the good sense to idle a substantial amount of this excess capacity and stabilize prices. As prices have risen, some of this capacity has come back on, but that which hasn't is mostly owned by companies that have shareholders to answer to and not government politicos. This means that it will only come back on the market when it is economically feasible to do so and will come back only when the market will bear it. This, in my opinion, is the seminal change in the copper market from the 1980's. The producers are controlling the flow of supply responsibly. It may not be OPEC, but the producers are not at the mercy of each other's whims.

I believe that it will take copper prices above $1.00 to bring this idled capacity onstream profitably. Hence, my prediction that copper prices will breach this level.
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