Sector Snap: Copper Stocks Increase

The prospect of continued gains in the price of copper boosted shares Wednesday of several companies that mine the commodity.

Deutsche Bank-North America analyst Jorge Beristain, in a client note, raised his estimate for copper's average 2008 price by 5 percent to $3.41 per pound.

So far this year, the price of copper has ranged from a low of $3.05 per pound on Jan. 2 to a high of $3.99 per pound on March 5.

"We expect the copper market to remain tight over the next two years and note there is upside risk on account of supply disruptions and greater-than-expected demand," he wrote Wednesday in an analyst note, citing power supply constraints in Chile and inventory issues.

"Global inventories are again approaching critical levels as supply-side dynamics have thus far in the cycle failed to catch up with demand."

Beristain also said he expects that growing demand from emerging-market economies will offset reduced copper consumption in the U.S. and other industrialized nations.

"We note copper price realizations year-to-date are above our forecasts and imply potential upside to our estimates," he wrote.

As a result of his increased price forecast, the analyst raised his forecast for 2008 earnings for Southern Copper Corp. by 10 percent to $9.21 per share and by 8 percent to $10.03 for next year.

Analysts polled by Thomson Financial expect Southern Copper to earn, on average, $8.90 per share this year and $9.30 per share next year.

Beristain also raised his price target on the stock to $110 from $105, and raised his price target on Freeport-McMoRan Copper & Gold Inc. to $137 from $135.

In early afternoon trading, shares of Freeport-McMoRan Copper & Gold Inc. rose $1.16 to $108.81 and Lundin Mining Corp. gained 10 cents to $7.77.

Shares of Southern Copper Corp. fell 22 cents to $117.38, having reached a high of $120 earlier in the session.

Further, the Dow Jones-AIG U.S. Copper Index was up 2.3 percent to 455.90.