Thursday, October 14, 2010

China's Effect on Copper

Great summary information from the CEO of US Global Investors on the impact of China on Copper supplies. Copper is expected to be in shortage in 2011 due to the return of growth in the US and Europe plus the unsatiable demand in the emerging world.

Amount of copper used in common household items:

  • Average single family house - 439 pounds
  • Air conditioner -52
  • Refrigirator - 5
  • Automobile - 50
As can be seen, growing domestic demand in emerging markets for homes, air conditioners, and automobiles will strain the supply of copper. Supplies are already dropping even though home building in the US is near historical low levels. Imagine when the US begins even normal levels of construction come 2011 or 2012.

 Below is a chart from BMO Capital on the imports of copper from China. The numbers continue to surge making China by far the dominant influence on demand.















Lihua International (LIWA) remains incredibly placed to take advantage of the looming shortage of copper and demand in China. As a Chinese recycler of copper and maker of refined copper, this company should see soaring demand. Expectations are for over $2 in earnings next year yet the stock is trapped at $9. Load up on dips.

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