A tight offer implies that the sharp rebound in global prices may continue. copper in the second half of 2020, but downside risks are also growing, speakers at the HKEX Commodities Forum said.
Benchmark three-month copper on the London Metal Exchange hit a 25-month high at $ 6,633 a ton this week, erasing all losses caused jointly by the pandemic of the coronavirus and the prolonged trade war between the United States and China.
Prices have been underpinned by a recovery in China, the world’s largest consumer of the metal, lower supplies and cheap and plentiful liquidity fueled by global stimulus programs.
“In the third quarter, we believe that copper prices will peak at around $ 7,000,” said Yang Changhua, a copper expert at research firm Antaike.
“But when prices rise a lot, the accumulated risks also increase. After the pandemic is under control in producing countries, the comeback will be contained and prices will gradually fall,” Yang added.
A survey carried out in the forum showed that 58% of the participants chose copper as the metal with the highest upside potential in the second half of 2020. Only 16% chose aluminum and 11% opted for nickel, while that lead, zinc and tin were below 10%.
“Anyone with physical copper inventories today should certainly keep them,” said Ian Roper, a general manager at the Shanghai Metals Market.
“But we are not quite sure how much of that visible decline in inventories was driven by end users. If macro confidence becomes pessimistic, prices (could) reverse as fast as they have risen,” he added.
Meanwhile, analyst Sifang Liu of consultancy Wood Mackenzie said that the growth of copper mines in the coming years “will be abundant.”
The concentrate supply will return to normal levels by the end of the year, said Harry Jiang, operations manager at Jinchuanmaike Metal Resources Co. Ltd.
“We see the price level of copper at US $ 6,000-US $ 6,500, unless there are major disruptions to supplies,” he said.
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