South Korea Buys up Copper and Aluminum Stocks

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There is a fine line between buying up commodities to help domestic producers stay afloat or shore up the price of metal as we have previously reported, and buying large strategic stockpiles to take advantage of historic low price levels. According to this Reuters article, South Korea intends to increase its aluminum reserves by 46% and its copper reserves by 23%. The article goes on to say that Korea has plans to reduce zinc and nickel reserves by up to 30% due to high inventory levels.Instead of buying up metals as an attempt to help boost domestic producers, the Korean government has made a strategic sourcing decision to buy now while these two metals have reached unprecedented price lows in anticipation of an economic recovery in 2010. It’s a good move because many of the base metals are skidding along the bottom now. Here are MetalMiner price predictions for copper and aluminum.Some believe China has also engaged in strategic buying of copper and aluminum as this post reports. It matters because these purchases provide clues as to what is happening from a demand perspective in other markets. If these purchases are upticks in demand (we wish that was the case) we could all get excited but if they are for stockpiling or re-stocking, we have a longer road to travel.Be it demand or for re-stocking, copper and aluminum represent good buys. Now is a good time to look at these two categories.–Lisa Reisman

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