Lately I've been bullish about copper again, I have been investing into Freeport McMoRan (FCX) and Southern Copper (PCU) (they are two of the world's biggest copper miners), and had advised some of my friends to buy into First State Global Resources Fund.
Subprime issues in US has pushed copper price down from $8000/ton down to $6600/ton. But something that market is not awared is that: the biggest consumer of copper is not US, but its China.
One of the investment theme that I have been using for the past few years is that, 'buy what China is buying'. Metals like Aluminum, Copper, Zinc, Tin may look almost the same to most people, but they are found under the ground in different continents; Aluminum and zinc can be found in abundant in China, Copper is mainly found in South America, and Tin is mainly from Indonesia.
Hence I would avoid investing into Aluminum and Zinc companies since China has a lot of those minerals; but China is lacking in copper and tin.
Shanghai warehouse had reported huge decline in copper inventory consecutively for 3 weeks in a row, a sign that copper demand is not affected from subprime issue in US, and indicates that demand for copper in China is still strong.
Global economic growth will buoy the copper price, Richard Adkerson, chief executive officer of Freeport-McMoRan Copper & Gold Inc., said this week.
``Fundamentally, the world needs copper,'' Adkerson said. Freeport is the world's second-biggest producer of the metal after Chile's state-owned Codelco.