MercoPress. South Atlantic News Agency

Good prospects for commodities, mainly copper

The current surge in prices of the main commodities is one of the strongest in the post second world war period only comparable to the seventies when the oil embargo, said Patricia Mohr Scotiabank Group expert in commodities and industrial markets.

Ms Mohr was the main speaker at the seminar "Commodity prices, currencies and global growth, prospects 2005/06" organized by the Chilean Pacific Foundation and Scotiabank South America in Santiago de Chile.

"The current expansion has been pushed by the rapid industrialization of China, insufficient investment in basic industries mainly metals, oil and gas during the nineties and to a lesser extent the relatively long period of low interest rates in United States, said Ms. Mohr.

Another factor which has also influenced has been the relative weakness of the US currency beginning February 2002 which boosted prices of commodities in US dollars.

As to prospects Ms Mohr said that it can be expected that copper prices and other commodities will experience a slight fall toward the end of 2005, beginning of 2006 as a result of a slower world expansion.

"However the current strength of the Asian demand, particularly from China and India, will keep supporting lucrative prices well into 2006/07".

Ms Mohr underlined that of the five main metals for industry, copper, nickel, zinc, aluminium and gold, copper with a record 1,72 US dollars the pound in August has experienced the most significant surge since the cyclical drop of October 2001, having advanced 176%.

Chile is the world's main exporter of copper and during the first half of 2005 profits in Codelco the government's main copper corporation reached a staggering 2,4 billion US dollars, the highest ever. By law the company's profits must be handed over to the Treasury.