The surge in the copper price to near 18-month highs following Donald Trump’s win in the US presidential election came as a surprise to an industry under pressure since 2011 over growing supply.
The bullishness about the impact of Trump’s $500 billion infrastructure plans and solid growth in top consumer China on demand for the bellwether metal has cooled down considerably.
After a brief surge to within sight of the post November 8 highs last week, bears were firmly back in control on Tuesday .
In afternoon trade on Tuesday copper for delivery in March traded more than 3% lower at $2.6045 per pound ($5,742 a tonne) in New York.
The decline came despite a plunge in the value of the US dollar which usually moves in the opposite direction of commodity prices following comments by president elect Trump questioning Washington’s decades old strong dollar policy.
According to a survey of 22 investment banks and other commodity research institutions released by FocusEconomics on Tuesday analysts and investors are far from sanguine about the prospects for the metal over the rest of the year.
Despite 13 of the analysts polled raising their previous forecasts for the copper price by the end of this year, of those polled only a handful sees copper averaging the final quarter of 2017 above the current spot price. Despite predictions of an improving price environment over the course of 2017, the median estimate for the average price in Q4 2017 is more than 9% below today’s ruling price.
The consensus forecast for the average over the whole of 2017 is $2.37 a pound ($5,234 a tonne) rising only marginally in 2018. At $2.21 ($4,871) 2016 was the fifth year in a row that the copper price averaged below the previous year.
The most bullish institution is Unicredit which sees copper averaging 2017 around $2.77 ($6,100) while JP Morgan forecast is decidedly negative – the bank see copper falling to $2.13 ($4,700) by the end of the year with an average below $5,000 in 2017.
I take great pleasure seeing what the experts predict prices are for the various commodities, at the beginning of the year. I note them in my diary and at the end of December see what I had written down in january
Normally come the end of the year I see what the “experts” predicated compared to the actual price I have a good laugh.
Hell I could do this!
Frik’s going bananas again………..with his bombastic ‘click bait’ headline.
Copper supply growth is leveling off, and will be half to a third of the rate of 2016.
Codelco has problems brewing in Chile regarding forward output….it’s shrinking.
China seems to be buying lots of the red metal, with no economic crash on the horizon.
Copper fundamentals are better now than at any point in the last two years.
Dane Davis (Barclay’s) is a silly child, and Goldman criminals have finally figured it out.
If China keeps growing it’s economy, copper will defy the “experts”.
All bets are off if a worldwide recession occurs, and I only see that if somebody does something stupid (somebody starts a war). Better relations w. Putin’s Russia – good for world economy. China won’t flinch against US (or else), and Iran will be running scared.
Copper will be in deficit for 2016 and 2017 (per Int’l Copper Study Group – even though they don’t know it yet). Really big deficits kick in starting in 2018-2022.
Copper is a good long-term buy, as are the companies that mine the stuff.