Copper Shows its Mettle

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Source: CNBC
Added: 05-12-2011
Tags: Copper

a commodity selloff last week, fears of weak demand have spooked some imvesters but some argue metals and copper could move up to highs. he joins us along with our guest host this morning, richard, you are at a metals conference in barcelona. i know there's a satellite delay, so i'll keep the questions simple. was last week's action in some of these commodities something bigger? are we at the front end of a bear market? good morning. what we're seeing right now is just -- i don't think we're seeing a bear market situation. china's taking steps to respond to inflationary pressures and that's had an impact. today's commodity prices are jet fueled by movements of financial funds, and some of the effects in the oil markets, but the rest remain intact. what do we need to see for prices to continue going higher? i think we've got some industrial output number that suggests that it's softer than people thought. whether they tighten or the economy slows on its own, isn't it hard to build a case that some of these prices especially for copper are going to go much higher? well, you know, joe, $4 a pound is a great price for copper. this year our cost of producing copper will be about a dollar a pound and we'll sell 4 billion in copper. this is a very attractive price. china will continue to invest in its infrastructure. its internal economy continues to grow at a significant rate, even the slowdown. all of that will mean a demand for copper and it's in the face of a relatively weak economy. our markets are good. i feel very comfortable with it. does that lead the conversation? should it lead the conversation, or is it more about brazil? more about india and some of the markets we talk about but not to the degree we talk about china? china consumes about 35 to 40% of the copper. doug talked a few minutes ago about the desire for the rest of the developing world to have a standard of living. i think the long term picture carries over from china, into the rest of asia, in particular, asia and eastern europe. all around the world today, people see the lives we're living and want to achieve that standard of living, and that requires significant development. that's why we're so positive about our markets. and at the same time, the supply situation continues to be a challenge for the industry. good morning, richard, and great to see you again. i wanted to come back to the point you made a minute ago. that's the that's the long-term outlook for copper. one thing we track is a reinvestment price. we see a lot of up and down movement in mostly commodity prices. but we're really focused on the long-term view. could you comment on that? kind of comment on where you see that going down the road and what that could mean for us? in terms of skpamding new minds and expansion of minds, they result in production profiles that go out for decades. so clearly we have to take a longer rank view. we're not a trading company dwoechblt hedge our commodities, so these short-term movements which are important for some people are not the things that drive our decision-makers. i'm going to be chairing a meeting of the international council on metals and mining and a number of your major customers are here, and i can tell you we're all focused on what it will take to provide copper. it makes it great for ours by and for your business. that's a great thing. when you thing about what the world is going to need, we think the pressure is one way long term. that ecos what you're saying which i appreciate a lot, richard. also you guys are pretty good. we thank you for that very much. we've got a great partnership. we've got major projects going on now from indonesia to the chile, peru and the united states. we've got that going on. this world has emerged for copper and global growth ore the past eight years. it gives us exciting opportunities. we're glad to hear that and we' we're happy to be able to serve you. thank you so much. hope it's a beautiful day in barcelona, richard. don't go running with the bulls. richard adkerson with freeport-mcmoran. s a lot. let's go to kate kelly. she's on the squawk newsline and she has more of the details.

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