Shanghai copper hit its highest in around seven weeks on Monday, underpinned by steady consumer demand and after London prices logged the biggest weekly rise in 11 months last week. Copper prices are slowly recovering from near two-month lows hit mid-month, but given differing expectations of supply this year, analysts are mixed as to where prices will go from here.
Mine supply is broadly expected to grow this year, but as miners dig deeper to obtain ore, supply tends to become more problematic and frequently falls short of expectations. "We're bearish copper," said Mark Keenan, analyst at Societe Generale in Singapore. "Based on supply growth, we see copper down at $6,500 at the end of the year."
The London Metal Exchange is closed for a bank holiday on Monday. Benchmark copper on the London Metal Exchange (LME) hit its highest since August 5 on Friday and climbed by 3 percent for the week, its biggest weekly gain since September 20, 2013 when it climbed 3.4 percent. The most-traded October copper contract on the Shanghai Futures Exchange edged up 0.3 percent to 50,720 yuan ($8,244) a tonne. It earlier touched 50,960 yuan, its highest since July 9.
Domestic copper premiums in China last week hit the loftiest in almost two months at 420 yuan over the front month ShFE futures contract, which last week was close to its lowest in nearly two months, signalling consumers restocked. Investors have in general taken heart from improving US economic signals such as brightening housing data, which have offset concerns that the Federal Reserve will soon raise rates, turning off the tap of cheap funds that have lubricated metals demand.
Pressure is building within the Federal Reserve for officials to move as early as next month to more clearly acknowledge improvements in the US economy and lay the groundwork for the central bank's first interest rate hike in nearly a decade. "Supply disruptions and better-than-expected demand are keeping the supply and demand balance tight. In our view, consensus is too bearish if current market conditions are sustained," Morgan Stanley said in a research note on Monday. But reflecting market uncertainties, hedge funds and money managers decreased their bullish futures and option bets across the board in copper markets in the week to August 19, the Commodity Futures Trading Commission said on Friday.
Comments
Comments are closed.