Copper Seen Rising 17% to Record as Shortages Overcome Weaker China Demand
Copper’s worst start in a decade may extend into this quarter as stockpiles expand, Chinese imports plunge and Japan reels from its nuclear disaster, before rebounding to a record when shortages take hold.
The metal may drop as low as $8,500 a metric ton, or 10 percent from $9,440 at 11:15 a.m. in London, before rebounding to $11,000 by Dec. 31, 17 percent more than now, according to the median estimates in a Bloomberg survey of 24 analysts and traders. The shortages will be the biggest since 2004, when prices jumped 37 percent, the survey showed.
Stockpiles tracked by the Shanghai Futures Exchange rose 85 percent since the end of September, deterring imports. Analysts expect a drop in purchases by Japan after the earthquake and tsunami on March 11 closed factories and caused the worst nuclear accident in a quarter century. That trend should reverse because the country, the fourth-biggest copper user, will need to rebuild, draining inventories as growth in mine output slows.
“We see renewed strength in the second half and you’ve got to be bullish copper for the next few years,” said Christin Tuxen, the analyst at Danske Bank A/S in Copenhagen ranked by Bloomberg as the most accurate industrial-metal forecaster over two years. “The global recovery is becoming more broad-based and you’re not going to see any new mines coming on stream for at least this year.”....MORE