Magazine article Modern Trader

Heavy Metals

Magazine article Modern Trader

Heavy Metals

Article excerpt

Copper prices bottomed in June because of a de-stocking cycle in China when inven. tones were cut. "The path of least resistance is for these copper prices to move higher because the de-stocking has already priced in weakness in China," David Abramson, managing editor of the commodity and energy service at BCA Research, says. "China has accounted for more than 100% of the change in copper demand in the last eight years."

Catherine Virga, director of research at CPM Group, says that prices for copper could actually go lower. "We've seen concern about whether demand will hold up over the second half of the year given economic forecasts. We're going to see a return in Chinese buying," she says, adding that we could see a bigger correction in terms of demand. "The consensus in the market is that copper is going to be in balance this year. Prices could fall as low as $5,800" per ton, or $2.90 per pound, by year end.

Abramson disagrees about the supply picture. "[This could] be the year with copper where you get the supply everyone expects instead of disappointing] to the downside. As long as it keeps disappointing to the downside, there's going to be difficulty for copper prices to fall even if you [are] worried about Chinese growth on the supply side," he says. He expects copper to remain flat or move moderately higher for the rest of 2010, to $7,000-9,000 per ton, or $3,50 to $4.50 per pound.

Rich llczyszyn, senior market strategist at Lind Waldock, expects copper to go to $3. …

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