According to Mizuho Corporate Bank Ltd, copper prices may gain as much as 25% in the second half of this year on steady demand from China, the world’s top consumer, amid tight supplies.

Ms Yuka Kageyama a commodity derivatives analyst at the bank a unit of Mizuho Financial Group Inc of Japan’s second largest bank by assets said that prices of the metal, used in pipes, tubes and wires, will climb to as high as USD 9,500 a metric tonne from last year’s close of USD 7,600.

Ms Kageyama in an interview said that “The European debt crisis issues will be the key for most commodities this year. We expect that China may ease its monetary policies in the first half and Europe’s problems may recede later this year, paving the way for a rally among base metals as supplies will remain tight.”

The London Metal Exchange LMEX Index of six primary metals including copper and aluminum fell by 22% last year, the first drop in three years, as Europe’s debt crisis widened. Yields on two year Greek debt surged to 152% last month, compared with 0.29% for Treasuries of a similar maturity. China’s inflation cooled to a 15 month low and producer price gains were the smallest in two years in December, leaving the government more room to support growth.

She said that dwindling stockpiles at LME warehouses will also provide support for copper. Prices may decline as low as USD 6,500 a tonne with an average price of USD 7,950 for 2012.

Orders to draw copper from LME warehouses, or canceled warrants, gained 24% to 50,000 tonnes on an increase in New Orleans. Inventories of the metal slipped 0.3% to 364,250 tonnrs, the lowest level since December 22nd 2010.

(Sourced from Bloomberg)