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Global copper market to see 200,000-ton surplus in 2008
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Hangzhou. March 12. INTERFAX-CHINA - The global refined copper market will see a surplus of 200,000 tons in 2008, despite predictions that China's apparent refined copper consumption will grow 12-15 percent this year, a Macquarie commodity analyst said at the Metalease 2008 Copper Industry Forum in Hangzhou today.
Although China's copper consumption will maintain strong momentum this year, copper consumption in Western countries will be pulled down by bearish economic sentiment led by a U.S. recession, and this will cause the global copper market to shift from a shortage last year to a small surplus this year, said Bonnie Liu, a commodity analyst with Macquarie Securities (Australia) Ltd.'s Shanghai representative office.
Since the fourth quarter of 2007, a large number of index funds have quit the sluggish stock and bond market due to a weak U.S. economy, and have turned to the commodities market as a safe haven.
Liu said this growing fund investment has been the main driving force behind the expansion of global commodity prices since the beginning of the year, with industrial metals prices already up 30 percent from January. Metals commodities prices, especially copper, are due to continue their upward movement in the second quarter on the back of fund investment and the coming peak consumption season.
"Downstream users will just have to accept higher copper prices in the following months, as they have to keep production at normal levels," Liu added.
Power shortages following unseasonal snowstorms in southern China earlier in the year lowered the country's expected copper consumption in the first quarter. Moreover, in order to help restore power supplies to snow-hit areas, many companies including copper users have been operating under restricted power supplies since early in the year, something which usually only happens in the third quarter, a traditional slack copper consumption season.
"We therefore expect more sluggish copper consumption in China in the third quarter this year compared to previous years. Copper prices are due to see a correction in the second half of this year, as copper prices are currently nearly double the production cost of between $4,400 per ton and $4,500 per ton, and this is really too high," Liu said.
The average copper price in 2008 will be $3.15 per pound [$6,944.55 per ton], while the average copper price in 2010 will lie between $2.2 per pound [$4,850.16 per ton] and $2.5 per pound [$5,511.55 per ton], Liu predicted.
Global copper consumption inched up only 4 percent year-on-year in 2007, with China's copper consumption soaring 25 percent over the year, and U.S. copper consumption plummeting by 20 percent.
The three-month copper price on the London Metal Exchange closed at $8,275 per ton yesterday, down 0.6 percent from the previous trading day as funds quit on profit-taking. Impacted by a correction in LME, the most-traded May 2008 copper contract on the Shanghai Futures Exchange closed at RMB 66,580 ($9,368.36) per ton today, down 1.41 percent from the previous trading day.
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Although China's copper consumption will maintain strong momentum this year, copper consumption in Western countries will be pulled down by bearish economic sentiment led by a U.S. recession, and this will cause the global copper market to shift from a shortage last year to a small surplus this year, said Bonnie Liu, a commodity analyst with Macquarie Securities (Australia) Ltd.'s Shanghai representative office.
Since the fourth quarter of 2007, a large number of index funds have quit the sluggish stock and bond market due to a weak U.S. economy, and have turned to the commodities market as a safe haven.
Liu said this growing fund investment has been the main driving force behind the expansion of global commodity prices since the beginning of the year, with industrial metals prices already up 30 percent from January. Metals commodities prices, especially copper, are due to continue their upward movement in the second quarter on the back of fund investment and the coming peak consumption season.
"Downstream users will just have to accept higher copper prices in the following months, as they have to keep production at normal levels," Liu added.
Power shortages following unseasonal snowstorms in southern China earlier in the year lowered the country's expected copper consumption in the first quarter. Moreover, in order to help restore power supplies to snow-hit areas, many companies including copper users have been operating under restricted power supplies since early in the year, something which usually only happens in the third quarter, a traditional slack copper consumption season.
"We therefore expect more sluggish copper consumption in China in the third quarter this year compared to previous years. Copper prices are due to see a correction in the second half of this year, as copper prices are currently nearly double the production cost of between $4,400 per ton and $4,500 per ton, and this is really too high," Liu said.
The average copper price in 2008 will be $3.15 per pound [$6,944.55 per ton], while the average copper price in 2010 will lie between $2.2 per pound [$4,850.16 per ton] and $2.5 per pound [$5,511.55 per ton], Liu predicted.
Global copper consumption inched up only 4 percent year-on-year in 2007, with China's copper consumption soaring 25 percent over the year, and U.S. copper consumption plummeting by 20 percent.
The three-month copper price on the London Metal Exchange closed at $8,275 per ton yesterday, down 0.6 percent from the previous trading day as funds quit on profit-taking. Impacted by a correction in LME, the most-traded May 2008 copper contract on the Shanghai Futures Exchange closed at RMB 66,580 ($9,368.36) per ton today, down 1.41 percent from the previous trading day.
Please send us your needs, and we will reply to you within one business day, thanks!
