Wednesday, May 5, 2010

Outlook For Copper

Now that the US is starting to increase demand for Copper, Stone Fox Capital is intrigued to see how the market handles strong demand from both China and the US. China has become the dominant copper user by far at 40% of the global market. The US, 2nd largest market at 10%, has been weak for the last couple of years at copper still surged to $3.5/lb recently. Maybe China does slowdown it's copper growth, but what if both markets are growing at the same time? The last time the US had a strong market was in 2006 and China was much smaller back then.

Interesting interview with Richard Adkerson, CEO of Freeport McMorran Copper (FCX) and Co-Chairman of McMoRan Exploration (MMR). A few interesting points:

  • FCX recently started up operations in Arizona to supply a growing US market
  • the proposed 40% mining tax in Australia will cause investment dislocations (to the advantage of FCX and other miner not in Australia)
  • MMR doesn't operate in the deep waters of the GOM though they do drill to very deep levels in the shallow waters. (stock has been hammered but is still uncertain whether their drilling will be impacted)












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