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Top Analysts See Copper Rising Even as China Slows: Commodities

SOURCE: [Bloomberg, London] - The third consecutive annual copper shortage and accelerating U.S. growth will drive prices to the highest in a year in the next quarter, according to the most accurate forecasters. Supply will fall 278,000 metric tons short of demand in 2012, more than North America uses in a month, Barclays Capital estimates. Hedge funds, which were betting on lower prices as recently as January, are now the most bullish in eight months, Commodity Futures Trading Commission data show. The metal will average $9,000 a ton in the third quarter, 9.5 percent more than now, according to the median estimate of the top five analysts in Bloomberg Rankings in the past eight quarters.

Copper is rebounding from a 21 percent slump in 2011 as data showed a strengthening U.S. economy and as European leaders moved to contain the region’s debt crisis. North America and Europe account for 29 percent of demand, Barclays estimates. While China cut its growth target to the lowest in eight years last month, the world’s biggest copper buyer will still be expanding at more than twice the global pace predicted by the International Monetary Fund.

“The U.S. economy is pretty good,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $333 billion of assets. “Emerging markets should start to pick up. Some time by the end of the year we may look back at commodity prices in general and copper in particular and say this was a good time to buy.”

BHP Billiton

Copper rose 8.2 percent to $8,220 on the London Metal Exchange since the start of January, exceeding the 6.6 percent advance in the Standard & Poor’s GSCI gauge of 24 commodities. The predicted $9,000 average would be the most since the second quarter of last year. The MSCI All-Country World Index of equities advanced 9.1 percent this year as Treasuries lost 0.3 percent, a Bank of America Corp. index shows. Shares of Freeport-McMoRan Copper & Gold Inc., the biggest publicly owned copper producer, will gain 41 percent to $53.39 in the next 12 months, according to the average of 18 analyst estimates compiled by Bloomberg. Those of BHP Billiton Ltd. (BHP), the second largest, will advance 35 percent to A$45.88, the average of 13 predictions show.

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