The price of copper has risen almost 98 percent over the past year and currently trades above $3 a pound. David Threlkeld, president of Resolved Inc., discussed whether copper prices constitute a bubble about to burst—and threaten the global recovery.
“Copper is in overproduction,” Threlkeld told CNBC.
“Last year, consumption collapsed, so there was a huge increase in world inventories…and in order to keep the price going up, speculators have to buy more than the surplus of production.”
Copper prices have fallen 8 percent in the last month, and Threlkeld warned that the recent decline is just the beginning of a "massive correction."
“Demand has to pick up 10 to 15 percent on a global basis,” he said. “Consumption is running at 10 to 15 percent below production—and even this year, with a recovery in consumption in Europe, we’re still running at a massive surplus because production is going up.”
Threlkeld said two-thirds of the world’s consumption was down 20 percent last year, while China’s consumption was up 10 percent.
“China produces about 4 million tons and consumes about 5 million tons a year,” he explained. “So their import requirement is about 1 million but they imported 3 million tons.”
“So who owns that 2 million tons of copper that was accumulated last year and who will buy it this year?”
- Watch Threlkeld's Previous Appearance on CNBC (Feb. 9, 2010)
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CNBC Data Pages:
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CNBC Slideshows:
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Top Copper Firms:
Freeport McMoRan
Newmont Mining
Southern Copper
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Disclosures:
No immediate information was available for Threlkeld or his firm.
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