SOURCE: The Bedford Report

The Bedford Report

February 24, 2011 11:25 ET

Producers Hedge Their Bets as Copper Pulls Back

The Bedford Report Provides Analyst Research on Southern Copper & Copper Mountain Mining

NEW YORK, NY--(Marketwire - February 24, 2011) - The price of copper slipped to its lowest price in a month yesterday as investors feared that surging energy prices may boost inflation growth and force the Chinese government to once again raise interest rates. China's copper demand has surged in recent years as the nation needs loads of the red metal to meet its modernization requirements for electricity and infrastructure. The Bedford Report examines the outlook for companies in the Copper Industry and provides research reports on Southern Copper Corporation (NYSE: SCCO) and Copper Mountain Mining Corporation (TSX: CUM). Access to the full company reports can be found at:

Despite slipping this week, copper prices remain near all-time highs. The metal used extensively in power and construction has surged approximately 50 percent since last June. Tight supply is the primary reason for the price escalation as output has failed to keep up with demand. Standard Bank predicts the copper deficit will grow to nearly 400,000 tonnes this year and more than 560,000 tonnes next year due to the rising demand of the metal.

Mining and metals consulting firm CRU estimates that China's copper consumption will almost double by the end of 2020, which would account for nearly 50 percent of world copper sales.

The Bedford Report releases regular market updates on the copper industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

Concerns that copper's price may finally be ready to peak has led to the possibility that hedging may soon return. John Meyer, an analyst at investment bank Fairfax, argues that "Copper hedging at these high levels gives companies security. Also if you are borrowing from banks, then hedging is often one of the conditions." Hedging programs allow producers to lock in current copper prices for future production, guarding against any potential price declines in the future.

When Southern Copper Corp reported fourth quarter net income of 58 cents a share earlier this month, the company said it hedged 58 percent of its fourth quarter copper production at $3.67 per pound. SCCO said it has hedged 28 percent of its 2011 copper output at $4 per pound.

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