Although improvements have been noted in copper consumption in early 2010, prices in late March and early April remain strong in spite of rather than because of the market’s immediate fundamentals, metals consultancy GFMS’ base metals managing director Neil Buxton told BNamericas.

The price has recovered strongly over the last 12 months and the speed of the recovery is unusual as prices are normally expected to remain near the bottom of the cycle for a longer period of time, Buxton said.

The key driver of this has been and continues to be demand from investors, who have been buying into the favorable outlook for copper’s fundamentals and thus bringing forward price increases that would have otherwise taken place later in the cycle, he added.

Buxton said investors will continue to be present in the market throughout the rest of the year and at least for the medium term. He said flows into copper positions from 2009 will most likely be repeated in 2010.

Investor flows into the red metal are part of a bigger commodity strategy, which pays less attention to fundamentals and focuses on a wider view of the raw materials sector, he said.

However, a large expansion in overall investor positions cannot be expected over the next few months, but rather active trading, as a great deal of money has already entered the market and copper’s price is no longer as attractive for investors as it was over much of 2009.

The next few months could be a period of consolidation in prices rather than one of gains. Moreover, high-field volatility will be maintained, according to Buxton.

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