Copper price fell sharply in early trading only to bounce back on Wednesday as investors digested US Federal Reserve statements about a faster pace for winding down its asset purchases and likely earlier interest rate rises.
March delivery contracts were exchanging hands for $4.12 a pound ($9,070 a tonne) by midday on the Comex market in New York, down 3.1% compared to Tuesday’s closing. It was the the lowest price for the bellwether metal since early October, but by the end of regular trading had pared all its losses to trade at $4.25 a pound.
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“Prices of copper are likely to remain supported as China speeds up fiscal stimulus and ease monetary conditions, while interest rate hikes in the United States would be slow with the Fed still believing inflation to be transitory,” a Singapore-based trader said, requesting anonymity.
Fastmarkets expects copper prices to perform well in the months ahead.
According to the agency, the deficit in the global refined copper market is set to prevail in 2022.
“Total world copper mine production growth could surge to 7% in 2022 from just 2% in 2021. Such strong growth will bring the global concentrate market back to balance in 2022 after two deep deficit years. However, we expect a higher rate of supply disruptions next year given so much new and expanded capacity due to come online or ramp up,” said Fastmarkets in a note.
The agency expects a bigger deficit of refined copper of 571,000 tonnes for 2021 as a whole, assuming 2.2% growth in refined output and 2.5% growth in refined usage.
“Even though the Omicron variant constitutes a potential bearish risk to our overall copper outlook, we continue to think that the bull market is not over yet.”
(With files from Reuters)