Dec. 13 (Bloomberg) -- John Stephenson, a fund manager at First Asset Investment Management Inc., talks about the outlook for commodities including copper, gold, corn and crude oil. He talks with Pimm Fox on Bloomberg Television's "Taking Stock."
Copper dropped for the first time in three days as some investors sold the metal to lock in gains following its climb to an all-time high. Zinc, tin, aluminum and nickel advanced.
Three-month copper on the London Metal Exchange fell as much as 0.6 percent to $9,166.75 a metric ton, and traded at $9,222 at 2:25 p.m. in Singapore. The contract reached a record $9,248 a ton yesterday after China refrained from raising interest rates, boosting the demand outlook in the biggest user.
"The potential for tightening in China will continue to hang over investors’ heads but everything the government has done so far has had little effect,” said Li Yaozhong, head of metals research at Yongan Futures Co. "We’ll get a little bit of profit-taking along the way but the uptrend remains intact.”
Copper surged yesterday after China, which on Dec. 10 raised reserve-requirement ratios for banks by half a percentage point, didn’t raise borrowing costs even as inflation jumped by the fastest pace in more than two years. The metal has gained 25 percent this year on stronger demand and declining stockpiles.
"The fundamentals are looking good, especially for copper,” Li said from Beijing. Until the Chinese government takes additional steps or "statistics start showing some slowdown, we’re going to see commodity prices move higher.”
The metal for March-delivery on the Shanghai Futures Exchange traded 0.5 percent higher at 69,090 yuan ($10,379) a ton, after gaining as much as 1 percent earlier. Futures on the Comex in New York dropped as much as 0.5 percent to $4.1850 a pound, after climbing to a 31-month high of $4.2225 yesterday.
"It’s probably going to be $5 a pound in a year’s time,” John Stephenson, a fund manager at First Asset Investment Management Inc., said in a Bloomberg Television interview. "It continues to be the most important industrial base metal and it will continue to be in demand, and there’s really no supply coming on till 2012, 2013 in an appreciable way. So I think it will be very tight in 2011, I think prices will continue to go higher.”
Aurubis AG, Europe’s largest copper smelter, said the "positive trend” in 2010 will continue in 2011, with copper demand growing further, "borne along by the global economic recovery.”
"In light of the expected high copper price, we believe global mining output will pick up further,” the company said in an e-mailed statement today. "This should lead to improved availability of copper concentrates in the medium term due to newly opened copper mines and thus a recovery of the treatment and refining charges.”
The fees to turn copper concentrate from mines into refined metal may rise for 2011 contracts to at least $60 a ton for treatment and 6 cents a pound for refining, compared with 2010 contract rates of $46.50 a ton for treatment and 4.65 cents a pound, according to Macquarie Group Ltd.
Aluminum in London rose 0.7 percent to $2,348 a ton, zinc gained 1 percent to $2,345 a ton and lead increased 0.6 percent to $2,454 a ton. Nickel climbed 0.5 percent to $24,660 a ton, and tin advanced 0.7 percent to $26,330 a ton.