According to analysts at NAB, Chinese copper demand has proven resilient and is still expected to grow, albeit at a slower rate.
Key Quotes
“We forecast Chinese GDP growth at 6.5% and 6.25% for 2018 and 2019 respectively, however the economy will continue its transition towards consumption-led growth. Industrial production grew by 6.6% yoy in September and the manufacturing PMIs remained at expansionary levels. However, new construction starts have slowed in recent months and are well off the peaks recorded in June, and house sales have also softened. The demand from housing construction is likely to weaken over time but copper will remain in demand for many other aspects of modern life while infrastructure investment in India and the US should also support copper demand.”
“The outlook for concentrates supply is looking better for 2018 compared to a disruption-impacted 2017. Output should recover as labour disputes have been resolved, while restarts in the Democratic Republic of Congo and Zambia and to a lesser extent additional output from new projects/expansions should see world mine production increase.”
“While treatment and refining charges (TC/RC) remain subdued, the latest guidelines set by the China Smelter Purchase Team for December has been raised from September levels, indicating improved concentrates supply. Historically China has increased scrap imports when concentrates supply was tight, but recent restrictions on scrap imports on environmental grounds have seen scrap imports levels subdued.”
“Overall, the expected surplus in 2017 did not eventuate and the International Copper Study Group forecasts a global refined deficit of 151k tonnes in 2017 and a smaller deficit of 104k in 2018. We expect some pullback in prices in early 2018 from current high levels, with investors likely becoming less bullish, USD appreciation putting downward pressure on copper prices, and as industrial demand from China continues to moderate.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.