On the markets it’s been a strong week for copper and aluminium with the USD Prices rising 4.2% and 6.1% respectively. There have been numerous explanations given, including prices been driven by speculation by the retail future traders (gamblers) and/or perceived improved world economic conditions.
An article by Bloomberg yesterday speculated that 70% of trading in Chinese iron ore and steel futures is by retail investors with turnover hitting 1 billion tonnes a day (more than the total iron ore imported by China each year)
Copper price rebound unlikely to stick: Barclays
Houston, 21 April (Argus) — The recent rebound in global copper prices is unlikely to hold as an estimated 1mn t of additional supply comes on line through 2017 and China’s recent economic stabilization is at risk of stalling, UK-based Barclays bank said in its latest forecast.
China’s economy has “recently outperformed relative to pessimistic expectations,” Barclays said. Still, the bank remains cautious because the turn in data “may prove to be unsustainable.”
The bank maintains its forecast for copper to average $4,420/t ($2.00/lb) on the London Metal Exchange in 2016. It forecasts the prices to edge lower to $4,189/t on the LME in 2017, then recovering to $6,063/t by 2020.
Cash copper settled at $5,025.4/t today on the LME, up by 16.7pc from its low for the year of $4,311/t on 15 January.
Total global refined copper production is estimated to grow by 2pc this year and by 2.1pc in 2017 to 23.8mn t next year from 22.8mn t in 2015.
Global demand growth is forecast at 2pc this year and 2.1pc to 23.5mn t in 2017 from 22.6mn t in 2015, Barclays said. The market is forecast to be in a surplus of 255,000t next year, from 250,000t this year.
Demand outside of China remains weak and a “modest wave” of additional primary copper supply is set to come on line in 2016-2017.
“This supply wave, coupled with a stalling of China’s stabilization, will combine to push prices lower by the end of the year,” Barclays said.
Key emerging markets, such as Brazil and Russia, “experienced a collapse in copper consumption” last year. Brazil’s demand fell by 17pc and Russia’s declined by 47pc from the prior year.
Barclays expects demand in emerging markets to “grow modestly” this year.