In Commodity News 15/04/2015
Copper prices have fallen YTD, despite significant production disruptions. This suggests that the commodity is on track to move into surplus and BofAML see prices fall below $5,000/t ($2.26/lb) next year.
Copper has been the underperformer in the base metals complex since the beginning of 2014. This is heavily influenced by an unfolding switch in market balances from deficits to surpluses.
The challenging fundamental backdrop has also been reflected YTD, with copper falling by around 5% in 1Q15, despite close to 500kt of supply disruptions, equivalent to what we had allowed for the entire first half of 2015.
“A stabilisation of economic activity in China may support prices in the coming weeks, but a rally is unlikely to be sustained, reflected in our average forecast of $4,969/t ($2.25/lb) in 2016.”
Having said that, a lack of mine investment and supply growth should push the market back into deficit by 2017, the bank said.
China’s copper demand has been slowing. Weak demand growth is so critical for the global copper market because China remains a substantial net importer.
