Chinese consumption surprise sees copper price come roaring back
Copper snapped a losing streak and recovered from a sharp drop in New York on Wednesday with traders betting that supply will remain tight in the near term.
Earlier on Thursday Goldman Sachs came out with a report showing Chinese copper usage in April came in at the second highest run rate on record while world number one producer Codelco said its output fell 10% in the first quarter.
Copper for July delivery was trading at $3.43 a pound in late dealings on the Comex in New York, down from a day high of just under $3.45.
Bloomberg quotes Matthew Zeman, a strategist at Kingsview Financial in Chicago: “We’re seeing a respite from selling across the board. The thinking is that China will continue to ease, and that’s helping buoy markets. Output and inventory issues are also going to help keep a floor under copper prices.”
Prices slid 2.5% on Wednesday with the red metal falling to a fresh 4-month following a a broad commodities sell-off over mounting worries about the global macro-economic outlook.
The copper price remains more than 10% weaker than a month ago and today's price also represents a 23% pullback from historic highs hit at the end of July last year of a shade under $4.50 a pound (more than $10,000 a tonne).
While supply remains constrained near term a slew of new mines are coming on stream next year and in 2014 which according to analysts at Wood Mackenzie translates into great supply growth than in 1998–2011 put together.
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