BNP Paribas said that street fighting copper will not fade away. Global exchange warehouse stocks are up more than 60,000 tons in 2011 so far at least partly due to a decline in Chinese copper imports.

Mr Stephen Briggs senior metals strategist said that however this has been masked by hefty Chinese de stocking.

Shanghai Futures Exchange fell in the last two months and there are reports that bonded Shanghai warehouse stocks are also lower. The bank has raised its estimates for both production and consumption but retains its long standing forecast for a 2011 supply deficit of around 500,000 tonnes.

BNP said that copper currently faces a soft patch in global economic growth, monetary tightening in some regions and fiscal crises in others. However, the bank sees the metal caught between misleadingly poor demand signals from China and a large underlying deficit. The latter may largely explain the relative resilience of the copper price.

The stand off may continue for a while. Still, BNP Paribas sees a fair chance that copper will not only recover but also hit a new high of at least USD 11,000 per tonne in late 2011 or early 2012. It should also return to outperforming the sector. Copper looks especially attractive versus nickel.

(Sourced from www.commodityonline.com)