Copper: Forecast to September 2013

Copper is currently on the rebound, on the back of its third bearish cycle from February to April. Shanghai Cifco Futures Co. expects prices to climb until the end of June before pulling back to $6,037.50 per tonne by September.

Copper prices are up slightly in London, after inventories dropped to a seven-month low in China, the world’s biggest consumer of industrial metal, while U.S. consumer confidence rose to the highest since 2007. Three-month copper climbed 1.1 percent on Thursday to sit at $7,279 per tonne. Copper was seeing resistance at the $7.240 per tonne, but the day’s climb seems to have broken that barrier. Over in New York, copper futures were behaving much the same. Copper for July was up 0.9 percent at $3.2945 a pound.

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Base metals caught up in the turmoil

Industrial metals prices trading on the London Metal Exchange were shaken this week by an unexpected slowdown in Chinese growth, followed by gloomy indicators in the United States, which cast doubt on global growth strength.

Like oil and gold, base metals were taken Monday in a huge selloff movement affecting all commodities: speculative investors were rushing to withdraw from the market.

“The week started quietly in Asian trade … until China published macroeconomic statistics that totally reversed the trend“, said Edward Meir, analyst at broker INTL FCStone.

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Copper: biggest weekly drop since 2011

After a decade during which large copper companies have struggled to follow a demand driven by Chinese consumption, new projects are finally coming to life. Unfortunately, this increase in supply meets a slowdown in demand.

Benchmark three-month copper was down more than 2 percent at $6,909.50 a tonne from $7,088 at the close on Thursday. It hit a 1-1/2 year low of $6,800 during the last session, and is on track for its biggest weekly fall since late 2011.

A selloff in gold futures, which posted a record two-day slide earlier this week, has percolated into the copper market, traders and analysts said. Copper is often traded as part of a wider commodities basket such as an index-linked fund, and investors wishing to limit losses on one component of the basket must sell the entire group.

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Fear of copper supply disruptions to come

Copper prices have fallen since February amid expectations of a supply glut, but buyers say they are starting to pay hefty fees to get metal when they need it—on top of the actual price of copper—because so much is being diverted into warehouses.

Two major commodities-trading firms have amassed much of the world’s copper supplies in their warehouses, partly by paying to divert shipments away from other storage hubs, traders and analysts say.

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Copper Settles at Seven-Week High

Copper prices shot to their highest settlement in seven weeks as a batch of better-than-expected economic data from China had traders betting the world’s top industrial-metal consumer was turning the corner.

The news was enough to push up copper and other base metals in thin trade. Copper for March delivery, the most actively traded contract, rose 4.30 cents, or 1.2%, to settle at $3.7060 a pound on the Comex division of the New York Mercantile Exchange on Monday. This was the highest settlement since $3.7500 a pound set Oct. 18.

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Copper Climbs on Improving Demand

Copper‘s 2.9% rise this week reflected the market’s belief that “demand is going to be significantly improved in 2013,” said Bill O’Neill, a principal with commodities trading and consulting firm Logic Advisors.

The Chicago Business Barometer on Friday provided the latest indication of expanding industrial appetite in the U.S. by returning to growth mode, only two months after hitting its lowest level in three years.

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Copper: the end of a cycle?

Copper prices have so far resisted the sharp fall in other metals prices since the outbreak of the crisis in the euro zone last year. But they are now below the $8,000 per tonne threshold. The copper cycle, which lasted for more than ten years now, might have reached its end.

Usually October is the beginning of a good period for purchases of copper in China, which typically continues throughout the fourth quarter. But this is not the case this year. Physical demand is low, to the point that the copper spot price in Chinese ports is less than the copper price in Shanghai, a very rare phenomenon. The Chinese industry – China represents 40% of world consumption – is not buying anymore and is just using its current copper stocks. In the USA, the recovery is very slow and in Europe, there is virtually no transaction…

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Copper: Global Market Deficit

Refined copper market remained in deficit during the first half of 2012, show the latest figures published by the International Copper Study Group (ISCG). For the first half of the year, the deficit was 473 000 tonnes, after seasonal adjustment, 292 000 tonnes. In June, preliminary data show a copper deficit of 36 000 tonnes. However, taking into account seasonal variations, the market shows a surplus of 19,000 tons.

The apparent refined copper balance for the first half 2012, including revisions to data previously presented, indicates a production deficit of 473,000 t (a seasonally adjusted deficit of 292,000 t). This compares with a production deficit of 131,000 t (a seasonally adjusted surplus of 56,000 t) in the same period of 2011.

In the first half of 2012, world mine production increased by 2.4% and world refined production increased by 3.8% compared with the same period of 2011.

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Indonesia: more mining export permits issued

As we were mentioning in Aluminum: China is running out of bauxite, in May, Indonesia asked all mining companies to either build their own processing capabilities locally or partner with companies able to do so, knowing that by 2014, exports of raw minerals, including bauxite, would be forbidden. Indonesia‘s goal is to derive more revenue from its mining sector.

As of late June, only 13 firms had been approved which triggered panic buying by customers in Japan and China.

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Summary of UBS Forecasts for Metals in 2012

UBS AG said aluminium will average $1.01 a pound this year and $1.15 a pound next year, with demand growing faster than supply next year.

Copper’s average will fall from $3.60 a pound this year to $3.20 a pound next year when supply and demand will be in balance after a shortage this year, Peter Hickson, an analyst at the bank, said in a report dated today. Nickel will strengthen throughout 2012 and average $8.98 while zinc falls from $1.03 a pound this year to $1 a pound next year, according to the report.

via UBS Forecasts Aluminum at $1.01 a Pound in 2012, $1.15 Next Year – Businessweek.