Copper demand is driven both by refined product and scrap available for recycling. New import rules in China state that importers of scrap have to be licensed to ensure that environmental waste is not entering the country. Stronger enforcement of these rules has caused bottlenecks in the scrap copper market. This will increase demand for refined copper. The market premium for refined copper in China is starting to firm even with a strong market decline in September.
China is the largest importer of copper but imports have fallen 4% from levels last Augst and are down 12% since July. Since the beginning of the year, copper demand is still up 7% which is consistent with China growth.
However the International Copper Study Group (ICSG) still estmates that demand will exceed supply in 2012 and that copper prices will firm if China continues to grow at its current pace. Information on copper can be found on the International Copper Association CopperInfo website. The demand for copper can remain strong because of growth in emerging markets, but it will still will have a strong cyclical compoent with the global business cycle.
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