Business

Analysts predict rise in copper price

MINERS processing copper at one of the mines on the Copperbelt.

KALONDE NYATI, Lusaka
The price of copper declined on Friday as investors took profits on long positions ahead of the Christmas break that fell yesterday, on growing doubts about demand growth by China.
According to Reuters, the copper price on the London Metal Exchange reduced by 0.9 percentage points to trade at US$5,469 a tonne as growing doubts about demand growth in top consumer China reinforced the idea that recent gains were overdone.
Reuters, however, says the metal, which is Zambia’s top export earner, is on track for its largest annual rise since 2010, although analysts note that prices have come from a low base.
So far this year, copper is up around 16 percent, with much of that rise coming after Donald Trump won the US presidential election.
“US copper demand hardly matters on a global scale – it’s about 1.8 million tonnes in a 22 million tonne market. Even if there is a push on US infrastructure, how is copper needed if you are talking about bridges and roads? It’s not a game-changer,” said Julius Baer analyst Carsten Menke.
“Some China data has been better of late, but look at the property market … weekly volumes sales are reported to have turned negative in some cities.”
Last week, China said it would strictly limit credit flowing into speculative property buying in 2017.
Analysts also doubt China, which accounts for nearly half of global copper consumption, will stimulate growth and demand next year, to the extent it did this year.
“China’s economy is currently reaping the benefits of earlier policy loosening, but with no new stimulus on the cards and steps being taken to rein in credit growth, activity looks set to slow next year,” Capital Economics said in a note.
“As such, we think prices of industrial metals may ease back as optimism fades. However, mine supply of a number of metals, including lead and zinc, is now falling, following years of underinvestment in the sector.”

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