Copper, silver look for long term gains on Japan, China

TOKYO (Commodity Online) : Copper and silver markets are all set to enter into a highly volatile arena as fresh Japanese demand will conflict with that of already heightened Chinese demand apart from steady improvements in North America and Europe.
Analysts said strong copper and silver demand from China and other emerging countries and improved demand from North America and Europe have all resulted in a very tight global market for these commodities.
Japan, which is trying to recover from the devastated quake, will require huge quantities of copper for residential and commercial purposes apart from its already high demand for manufacturing sector.
Japan is expected to start recovery works soon and reconstruction and refurbishing of damaged plants, buildings and infrastructure should lead to greater commodity consumption, particularly building materials, analysts added.
Japan needs to replace damaged power lines in quake hit regions and also needs transformer replacements for which copper and silver are to be used along aluminum, zinc and nickel.
Copper prices began moving upwards after initial demand drops pushed prices down. In London copper prices edged up 0.4 percent Monday, with investors wary of placing big bets after a weekend of airstrikes by Western powers on Libya.
Japan may stop refined copper exports to China following the quake and resultant high demand back home though March shipments have nearly been completed.
Japan might forced to stop shipments for April though copper due to leave to China in April has been stored in warehouses in ports in western Japan which was not affected by the quake and tsunami.
Japan last year supplied 253,157 tons of refined copper to China, the largest consumer, or 8.7 percent of Chinese imports.
China’s tightening of monetary policies also helped copper to move up though prices in Shanghai fell 0.5 percent to 71,480 yuan a ton on Monday.
Silver on the other hand moved up along gold by safe-haven buying after U.N.-backed attacks on Libyan military targets over the weekend.
Spot silver was tracking gold, at $35.70 an ounce, up 42 cents although an early attempt to breach $36 failed.
Analysts said the extent of the military action appears to have taken some market participants by surprise but helped metals not only as a safe haven asset but also as an inflation hedge.