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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (1271)	8/12/2005 2:53:57 PM
From: Stephen O	Read Replies (1) \| Respond to of 2131

DJ Goldman Sachs Sees 2nd Chinese Metal Demand Growth Wave LONDON (Dow Jones)--A second wave of Chinese metal demand growth "is ready to take off" with the country's trend to urbanization likely to create "above trend" global demand especially for copper, iron ore and nickel, Goldman Sachs said Wednesday. Leaked details of a new five-year plan sees major support for inner province urbanization, Goldman Sachs said. Supply shortfalls are likely to persist as industry response lags behind on technical problems and capital expenditure overruns that may extend deficits and high prices. Copper consumption in China is likely to increase by 81% by 2014, nickel by 77% and iron ore use will rise by 31%, the research note said. Aluminum on the other hand will be dogged by a large overhang of idle production capacity likely to counteract the impact of stronger demand. As a result, the company favors for investment Brazil's Companhio Vale do Rio Doce (RIO) for iron ore, Canadian miner Inco Ltd. (N) for nickel and Freepor-McMoran Copper & Gold Inc. (FCX) with potential acquirers named as Xstrata PLC (XTA.LN), CVRD, Phelps Dodge Corp. (PD) and Anglo American PLC (AAUK). Most likely takeover targets are Inco, Antofagasta PLC (ANTO.LN) and Teck Cominco Ltd. (TEK.MV.A.T). "China is in chronic deficit of copper, iron ore, nickel and alumina," Goldman Sachs said, while it has sufficient capacity for aluminum, zinc and steel production. The first cycle of metal demand is set to run from 1998-2008 with the second from 2004-14 as the government's urbanization focus shifts to inland regions from coastal towns. "Real estate investment is one of the key drivers of China's metal consumption. China has a target to migrate another 15-20% of population from rural to urban areas in the next 15-20 years," the note said. "The second wave of urbanization is likely to be as important as the first for metal demand," it added. -By Elisabeth Behrmann; Dow Jones Newswires; (4420) 7842 9412; Elisabeth.behrmann@dowjones.com (END) Dow Jones Newswires 08-10-05 1238ET Copyright (c) 2005 Dow Jones & Company, Inc. End of News