Copper prices face pressure next year due to a growing global surplus, as tepid demand from top consumer China fails to soak up surging supply from new and existing mines, a Reuters poll showed. The average forecast for 2015 cash copper prices from 25 market participants was $6,724.03 a tonne, down 0.5 percent from a similar forecast in July.
For 2014, analysts expect prices to average $6,887.60 a tonne, down 0.2 percent from a previous forecast and almost 6 percent lower compared with average prices in 2013. The outlook for copper prices has worsened due to expectations of an increasing market surplus. Analysts predict this year's surplus will be in the region of 94,300 tonnes, before ballooning to 350,000 tonnes in 2015.
"We see a looser market in the second half of the year as we expect a lower level of Chinese imports and mine supply will be growing strongly," said Caroline Bain, senior commodities economist at Capital Economics.
Mining company Glencore in August posted a 13 percent increase in first-half copper output. Adding to the view of more supplies entering the market is a resumption of raw material exports from major exporter Indonesia after a months long hiatus. Doubts also remain about the outlook for copper demand from China, which accounts for as much as 40 percent of global copper consumption, given a slowdown in the country's property sector - a major consumer of the metal used in power and construction, and tightening credit conditions.
"Chinese demand conditions should improve on a seasonal basis in Q4 although the property sector will continue to be a drag for some metals...as we head into 2015," Nicholas Snowdon, a metals analyst at Standard Chartered, said. In contrast to copper, the aluminium market is expected to tighten significantly next year to show a 102,500 tonne deficit, from an earlier prediction of a 4,444 tonne deficit.
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