China is seen as a cushion for more moderate prices of copper
The general feeling in the market is that copper down slightly this year due to increased production, according to one analyst.
Copper prices-the primary industrial metal and a reference to measure the strength of the global economy, probably will moderate in the coming months as the expected output growth is above the expansion of consumption.
But any weakness could be cushioned by steady demand in China.
The price of the benchmark three-month contract on the London Metal Exchange (LME, its acronym in English) could average U.S. $ 7078 a ton this year, down 3.7% from 2013, according to a median estimate of 28 analysts surveyed by Bloomberg. Prices have fallen 16.7% over the past two years amid global economic weakness.
“The general feeling in the market is that copper down slightly this year due to increased production,” told to SCMP Jeremy East, global head of metals trading at Standard Chartered Bank. “Things might not be as bad as the market is thinking … we could see a slower growth in China, but is still above 7%. I see China buying more copper this year than last year, and the prices will also be supported by the economic recovery in the U.S. and Europe, “he added.
China accounts for about 44% of global copper consumption, according to estimates by British Bank Barclays. Copper is the most widely used industrial metal, found in products from car parts to appliances and electronics.
UBS Swiss Bank’s analysts said in a research report that supplies of copper ore and concentrate will grow in “high single-digit percentage” this year, resulting in a greater supply of refined copper and could see its price drop to $ 6,500 ton in the first half of the year.-
This is despite reports concerning the State monopoly power distributor Grip Crop-largest consumer of copper in China planned to increase their spending on new construction of power grid in 13% this year, a greater variation than expected
The inventory on the London Metal Exchange, where much of the world’s copper is traded, stood at 311,225 tons at the end of February 4, a decrease of 55.4% compared to June, accounting for about 1.5 % of global consumption. Ian Roper, CLSA’s raw materials strategist, said in a report that reducing the LME, with shares in the hold sanctioned Shanghai Futures Exchange in a minimum of one year, seemed to suggest that the supply has been absorbed by strong demand.
But he warned that the “invisible” inventories held outside the official wineries might have made it difficult to measure the strength of the actual demand
Source: El Diario Financiero
