Market and product
Copper recovers from bear-grip as supplies squeeze
NEW YORK (Commodity Online): The industrial metals have exhibited subdued sentiment over the past several trading sessions. Copper, which was expected to hover in the range of $ 3.25-3.5 per pound has been struggling hard to keep its $3 levels.
However, with supply concerns gripping the international traders, copper prices recovered a bit and traded above $ 3.14 in the futures trade on Comex in New York on Wednesday.
In this interview with The Gold Report Stefan Ioannou of Haywood Securities maintained that happened on the back of Federal Reserve Chairman Ben Bernanke's hints that quantitative easing in the United States may end in mid-2014, raising concerns that U.S. demand for raw goods will decline. Because copper goes into a lot of raw goods, that supposes less demand.
Also, China being the largest consumer, has indicated sings of slowdown in industrial production. In addition, copper inventories are well over 600,000 tons, which is high on a historic basis.
China’s manufacturing numbers are weakening, which may create stockpiles of copper, thereby further pressurizing the prices. People are worried that China, which really drives a lot of the metal stories, is not growing as fast as expected.
Haywood Securities had forecast a copper price above $3.60/pound ($3.60/lb) for the remainder of 2013. Six months later, copper is struggling to remain above $3/lb. The analyst firm, in early June lowered copper's average price for 2013 to $3.35/lb. Year to date, the average copper price is $3.43/lb.
On Monday, copper gained on London Metal Exchange as traders closed out bets on lower prices amid concern about supply.
Also, the interruptions in the output in recent months are believed to be affecting physical supply of copper. Copper prices had reached the lowest level since 2010 last week.
Copper for delivery in three months climbed 0.3% to $6,933 a metric ton by 12:48 p.m. on the LME. Metal for immediate delivery was at a $1.50-a-ton premium to the three-month contract, closing from as much as $18 yesterday, the widest backwardation in a year. Copper for delivery in September was little changed at $3.1435 a pound on the Comex in New York, Bloomberg reported.
“The narrowing spreads should also prove supportive,” Michael Turek, a senior director at Newedge Group SA in New York, said by e-mail today. “Looks like there could be more short-covering” this week, he said.
Freeport-McMoRan Copper & Gold Inc. is awaiting approval to restart underground mining at Grasberg in Indonesia, the world’s second-biggest copper mine, after a deadly accident in May. A landslide in April reduced production at Rio Tinto Group (RIO)’s Bingham Canyon mine in Utah.
China’s State Reserve Bureau was buying aluminum, Goldman Sachs Group Inc. said in a report yesterday. Speculation that the stockpiling agency was purchasing copper supported the market, according to James Marks, a co-head of global metals at Xconnect Trading Ltd., a London-based interdealer broker.
