From Bloomberg:
Red Kite Sees Copper Outlook Positive as Ore Swamps Smelters
Red Kite Group, whose metals fund returned more than 50 percent last year, said copper’s outlook has turned positive as refiners are swamped by supplies of mined ore amid prospects for global economies to strengthen.As an indication of how opaque the business is MetalBulletin reported in November:
Production from mines is exceeding output of refined metal and smelter bottlenecks are unlikely to ease for at least the next six months, according to David Lilley, co-founder of the asset manager, which oversees more than $2.3 billion. He also pointed to prospects for global economic growth to accelerate.
Premiums added to the price of copper on the London Metal Exchange were the highest in more than seven years in Europe in November and tripled in the past year in China, the biggest consumer of the metal, according to Metal Bulletin data. Copper stockpiles monitored by exchanges in London, Shanghai and New York are the lowest since October 2012.
“We haven’t seen the refined-copper market this tight since the 2005-06 period,” Lilley said yesterday by telephone from London. “Inventory is low, premiums are high, and there is difficulty in sourcing refined metal.”
The LME’s benchmark contract for delivery in three months fell 7.2 percent last year, the second annual retreat in three. Stocks of copper tracked by the bourse plunged 46 percent from the 2013 high in June by the end of the year. Global economic growth will accelerate to 2.8 percent this year, economist estimates compiled by Bloomberg show.
Copper Stockpiles
“There has been a three-year downtrend, which we believe is ending, and copper can start trending higher,” Lilley said. “All industrial metals benefit from good global growth. Copper is the one that has the least inventory, and therefore is the most vulnerable.”...MORE
Orion Mine Finance, the $1.1 billion mining equity fund spun out from metals trader and hedge fund Red Kite, took a 40% stake in warehouse company Scale Distribution around September....Previously:
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