Copper price volatility seen high in 2008/09 - CPM

FORT LAUDERDALE, Fla., May 10 (Reuters) - The price outlook for copper in 2008/09 will remain volatile, as a myriad of macro- and microeconomic trends create a "tug of war" within the investment community, an industry analyst said at the American Copper Council's 2008 Copper College.

Heading a panel discussion called "Copper: A Turbulent Ride with More to Come," Catherine Virga, senior base metals analyst with New York-based CPM Group, said she believed those trends would keep the volatility high for the next couple of years.

Declining global economic growth was one negative macroeconomic influence governing future price direction, Virga told the gathering in Fort Lauderdale, Florida.

"We do see weaker import demand from the advanced economies weighing on the growth of the developing economies," she said.

According to the International Monetary Fund, world gross domestic product growth in 2008 is forecast to ease to 3.7 percent from 4.9 percent in 2007. But Virga said she thought changes in industrial production would be an even stronger factor weighing on the red metal's price potential.

"Industrial production is expected to have the same fate as GDP. This is definitely one of the stronger negative influences I see affecting copper prices in 2008/2009," she said.

Conversely, historically low inventory levels, supply shocks, a weaker U.S. dollar, and stronger investment fund money flows have all combined to create a bullish market.

Since 2006, the market has been buffeted by strikes in Peru, Mexico, and most recently, top supplier Chile.

Those shocks to the market's supply chain have been exacerbated by dwindling levels of stocks at warehouses monitored by the exchanges.