After falling for five consecutive days, copper exchange traded funds (ETFs) are back. But is the rally here to stay?
The principles of supply and demand suggest that it may well be.
Forecasts are that the copper market will have a copper shortfall this year and next. Where the prognosticators disagree is on how large the deficit will be. Andrea Hotter for The Wall Street Journal reports that the smallest deficit is estimated at 90,000 metric tons in 2011, while the largest estimate is a deficit of 825,000 tons. Quite a range, no? Only one renegade analyst said the market was in a surplus. [Brazil ETFs In 2011: More In Store for 2011.]
Whether the deficit shrinks or grows next year is also a matter of debate. [5 ETFs to Play Surging Copper Demand.]