China Demand to Draw Copper Prices

Published Date : Apr 16, 2015

There is widespread speculation for copper prices. As per analysts at the World Copper Conference recently, the majority had the view copper prices to drop its five-year low whereas the remaining opine worst for copper prices is over. 

Societe Generale and Goldman Sachs Group opined copper prices to have a 9% drop in the last year, whereas CitiGroup and Macquarie Group predict a price rebound. As per expert view, the market is split owing to unclear needs of China and the speed with which its economy is slowing leaves room for prices for the metal.

As per another expert comment who has worked in the metal industry for over 5 decades, this part of the world is opaque in terms of information that is provided which leaves scope for divergence of views.

Although copper has rebounded almost 18% from its five year low this January, prices are still as much as 5.5% low in the year 2015. As per the current scenario, the next move in the market hinges on data from China for the second quarter which is usually the time of high demand for the product. If the purchases are not made, prices are expected to surge due to accumulation of metal in the warehouses.

Almost every year, demand from China surges after the Lunar New Year holidays which did not happen this year. In the London Metal Exchange, there is surplus of copper since last August. In spite of unhealthy market conditions, analysts speculate demand for copper globally is strong enough to support high prices, which if complemented with decline in mine supply will help recover prices this year.