Copper prices have bottomed out and should be on their way up, according to the CEO of Minmetals Resources.
Demand for the metal, which is used mainly in electrical wires, roofing and plumbing, and industrial machinery, is still coming from China and the U.S., CEO Andrew Michelmore told CNBC Thursday.
"Some people project that this will keep going down," Michelmore said. "They look at the trend curve. The trend curve is going down so it must keep going down."
“We are actually seeing: no, it's the bottom. So from here, any of the signs means it's going up. So copper we are very positive about. The supply side for copper is very tight.”
Copper prices sank on Wall Street on Wednesday after disappointing durable goods orders for February sparked concerns about the health of the manufacturing sector. The May contract on the COMEX plunged 8.75 cents or 2.3 percent to settle at $3.7925 per pound, after dealing between $3.7825 and $3.87.
Copper prices, which slumped more than 20 percent in 2011, have been weighed by concerns over a slowdown in China's expansion and sluggish growth in the United States. Both countries are the world’s biggest consumers of the metal.
But Michelmore argued that it was only a matter of time before China’s blistering growth pace slows, and demand for metals will still be supported as Beijing shifts focus from manufacturing towards growing its domestic economy and consumption. “They're now focusing on housing, public transport and water management and control. So you're still going to need all the metals.”
Demand from the U.S. will be sustained by the need to supplant houses that get "burnt down, hit with tornadoes, or simply being replaced", he added.
According to Jonathan Barratt, CEO of BarrattsBulletin.com, China will continue to be dependent on copper imports because of its infrastructure projects, particularly in the power space.
"One interesting aspect is that 48 percent of copper is used in the power industry and China has committed $45 billion to upgrade the grid," Barratt said earlier this month.
Barratt, who holds a long position in copper, says the red metal at $3.70-$3.75 a pound offers a good buying opportunity.
Melbourne-based Minmetals, which is listed in Hong Kong, said Wednesday net profit for 2011 rose 32.1 percent to $540.9 million from 2010. It has operations in Australia, Laos and Democratic Republic of Congo that produce copper, gold and other base metals such as zinc.
Minmetals Resources is a subsidiary of China Minmetals Corporation, the largest iron and steel trader in China.