Copper may rise up to 50% on fund demand, Sucden says - Metals News - Metals Place: "Copper prices in London may increase by as much as 50 percent in the next year as global demand from hedge funds and cablemakers outstrips supply, according to Sucden U.K. Plc, which trades on the London Metal Exchange.
Prices of the metal have surged 87 percent this year, and reached a record $8,800 a ton on May 11, as hedge and pension funds poured money into commodities in pursuit of higher returns than those offered by stocks and bonds. Global supply may not rise quickly enough to meet demand, Jeremy Goldwyn, global head of industrial commodities at Sucden, said in Shanghai yesterday.
'Many pension and mutual funds see commodities as a natural home for three to five percent of their money,' Goldwyn told a futures conference. 'They have a massive influence on the price and use commodities as a hedge for their traditional investments' such as stocks and bonds. Sucden is one of 11 companies that trade on the floor of the London Metal Exchange, the world's biggest metals bourse.
Economic growth in the U.S. and Europe meant the high copper price hasn't eroded demand, he said. Cumerio, the copper producer spun off by Belgian metals producer Umicore SA, said last month first quarter deliveries of wire rods and shapes rose 10 percent in the first quarter.
'We don't feel there's a great deal of demand destruction' from the high prices, while copper miners haven't been able to increase output because of problems such as labor disputes, and a shortage of skilled engineers and mining equipment, Goldwyn said.
'We certainly would not be surprised to see copper at $9,000, $10,000 or $12,000 in the next six, nine or 12 months,' he said. Index-linked funds and other passive investors had placed $80 billion to"
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