Freeport (NYSE:FCX), BHP (NYSE:BHP), Rio (NYSE:RIO) Up on Commodities Strength

Diversified major miners like Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) all ended Tuesday's session positive, as the broader commodity market, including copper, was able to overcome the relatively soft price of gold, which plunged on the day.

A number of commodities, including copper, are going to struggle to meet demand in 2011, and that bodes well for the commodity market, even if some of the individual commodities aren't in the same place.

Overall, it appears commodities are segmenting, and investors will have to pay closer attention to individual demand and weighing, rather than considering them as a whole, which has been working during the bull market.

Freeport closed Tuesday at $110.63, up $0.73, or 0.66 percent. BHP closed at $88.85, up $0.12, or 0.14. Rio reached $71.02, increasing $0.71, or 1.01 percent.

Copper Demand to Exceed Supply Through 2013 Says GFMS

A report from the GFMS entitled Quarterly Three-Year Copper Forecast, says the supply of copper won't be able to keep up with demand through 2013.

The report concludes copper prices will rise as the copper market continues to be tight throughout that period, although an expected slowdown in the first half of 2011 could result in a temporarily copper surplus.

While production would be expected to meet that growing demand because of plans to increase output, secondary factors such as labor problems, low-quality grades, political effects and other operational risks associated with the industry in general will probably temper the production growth and not allow it to reach desired levels.

Over the next three years refined production is estimated to increase by about 3.4 percent annually through 2013.

The result of all of this in relationship to copper price should be a continual rise in price, which could easily reach above $11,000 a ton in 2013, according to the report.

Even though China may cut back on commodity imports in general and copper imports specifically, they will still account for just under 66 percent of the increase in global copper consumption annually during the time period we're talking about.

Add to this this the growing interest by investors in copper and commodities, and there is sure to be an increased flow of money into the metal.

Bottom line is it seems copper producers and investors are in for a volatile but profitable ride over the next three years.