Copper supplies have not materialised as expected

Copper supplies have not materialised as expected - David Shapiro, Sasfin

In an interview on CNBC Africa @ 12:30 on 8 April 2008

[miningmx.com] -- COPPER supplies widely expected to come to the market have failed to materialise, driving prices up, said David Shapiro from stockbrokers Sasfin.

The market has also been buoyed by metal outlooks from three banks, he said.

"Most analysts believed that the cycle would come down with the US slowing down, and it hasn't happened and that's why people are upgrading now," Shapiro said on Moneyweb Business.

"With the US slowing down particularly in metals like copper, big downgrades, with the US housing sector coming under severe pressure - one believed that the copper demand would reduce," he said.

"Instead what we found is copper stocks in the US and in China are under pressure. Now anybody who wants to secure copper ahead of this with low inventories started to buy up, so we see copper going up. And all of a sudden we haven't found the supply that everybody anticipated coming onto the market," he said.

"Now this is going to translate into heavy cash flows, much improved cash flows for a lot of the miners. I remain a commodity bull, simply that we haven't seen the supply coming on, even though we might see slightly lower demand in the market."

Goldman Sachs rerated European metal and mineral shares as attractive, and upgraded their target on Anglo American by 20%, Anglo Platinum by about 30%.

Citibank who raised their outlook for metals - aluminium, copper and nickel - so that gave materials strong gains in the United States.

Morgan Stanley upgraded US Steel, believing that steel would increase.