Copper remains BlackRock's most favoured base metal

Speaking on Tuesday, Evy Hambro, manager of BlackRock's $17bn World Mining Trust said the demand and supply outlook for the metal look set to keep prices resiliently high

Posted: Wednesday , 30 Mar 2011

LONDON (Reuters)  - 

Copper is the most favoured base metal in BlackRock's $17 billion World Mining Trust, fund manager Evy Hambro said on Tuesday, with the demand and supply outlook keeping prices of the metal resiliently high.

At just under 20 percent, copper is the single largest weighting on a pure commodity basis in the fund, Hambro told an Association of Investment Companies roundtable in London.

"The fundamentals in copper are very supportive of today's pricing environment," he said.

"The margins available for the producers really are quite extraordinary today, with costs substantially lower than today's market prices, and as a result margins are incredibly high."

Three-month copper on the London Metal Exchange closed at $9,590 a tonne on Tuesday from $9,535 at the close on Monday, some way off a record high $10,190 it hit last month, but still around 20 percent higher since the end of March last year.

Hambro said the fund was significantly underweight in aluminium smelting.

"Although prices have increased, the majority of that price increase has come through as a result of rising costs, rather than a change in the profitability of those (aluminium smelting) companies," he said.

Three-month aluminium CMAL rose to its highest since September 2008 above $2,650, underpinned by unrest across oil producing nations which has inflated oil costs. Aluminium is one of the most energy-intensive metals to produce.

(Reporting by Sue Thomas; editing by Keiron Henderson)

© Thomson Reuters 2011 All rights reserved