Mining and China: The Opportunity – Caterpillar Inc. (CAT), Deere & Company (DE), Joy Global Inc. (JOY)

Copper & Iron

Economic growth is expected to improve the demand for most metals in 2013. Two metals in particular have a direct impact on mining companies, copper and iron. China is the world’s largest consumer of these two metals.

Copper prices are on the rise since China came out and announced that economic growth will be maintained at around 7.5%. This will drive demand for copper, and since China accounts for over 40% of the world’s copper consumption, this is a huge positive for the industry. Copper has traded down about 2% this year, but is expected to rise steadily throughout the year.

Iron ore demand has been driven by the steel industry. Global steel production increase 3.5% in the fourth quarter of 2012 and is expected to grow further in 2013. Companies like BHP Billiton, a worldwide mining company, produced record volumes of iron ore in the second half of 2012 and all of it was sold by year end.

China imported over 70.9 million metric tons of iron ore in December, an all time record for one month. These import numbers can easily be surpassed in 2013 with the optimism China has shown.

The Foolish Bottom Line

A strong rebound in China would send shares of Caterpillar Inc. (NYSE:CAT), Joy Global Inc. (NYSE:JOY), and Deere & Company (NYSE:DE) higher. Growth is expected to increase substantially this year and continue over the next several years. Take a further look into these companies and see if they make sense for your portfolio. Caterpillar Inc. (NYSE:CAT), Joy Global Inc. (NYSE:JOY), and Deere & Company (NYSE:DE) are great long term investments.

The article Mining and China: The Opportunity originally appeared on Fool.com and is written by Joseph Solitro.

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