Copper May Rise 15% by Year-End as China Buys, Macquarie Says

By Rebecca Keenan

Sept. 19 (Bloomberg) -- The price of copper, this year’s best commodity investment, may rise 15 percent by the end of the year as China buys more of the metal and mine supply is constrained, Macquarie Group Ltd. said.

Copper may cost $3.20 a pound in the last quarter of 2009, up from an earlier forecast of $1.70 a pound, Macquarie analysts led by Jim Lennon said in a report. It may average $3.20 a pound next year, up from an earlier forecast of $2.50.

Demand from China, the biggest user, increased after the government pledged 4 trillion yuan ($586 billion) to stimulate the economy and banks made loans of a record $1.1 trillion. There may be a small global deficit of copper next year, increasing in 2011, Macquarie said.

“Copper continues to present the most compelling bull case into a global economic recovery, entering the economic upturn with low stocks, limited idled capacity and a lack of committed new projects,” Lennon said. Copper is the only metal on which Macquarie is “outright bullish” relative to spot prices, he said.

The price of copper, used to make pipes and wires, has gained 93 percent to $2.78 a pound this year. The International Copper Study Group said July 10 that fewer mine expansions are planned for 2009 through 2011.

Factory output in China, the world’s fastest-growing major economy, climbed 12.3 percent from a year earlier last month, the most since August 2008, the statistics bureau said Sept. 11. Copper imports jumped 76 percent to 3 million metric tons in the first eight months, preliminary customs data show.

Commodity demand in China, the largest metals user, “is back on track in a very big way,” and copper and coking coal have the best prospects for price gains, CLSA Research Ltd. said Sept. 15

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