Copper to struggle at current levels, waiting for strong catalysts – ING

After hitting a peak of $10,460/t in early May this year, copper has since been range-bound between $9,000/t to $10,000/t. If stronger demand were to materialise amid low inventory levels, this may offer some upside in the short-term as the Fed does not seem to be in any hurry to taper. However, it may be hard to sustain copper prices at current levels, economists at ING report.

Copper may still be stuck in a twilight zone for a while

“The real demand pick-up remains to be seen. However, September and October usually see stronger metals demand from the China market (also called the 'golden season'). This compounded with exceptional low stocks may pose some upside risk in the short-term, should further physical indicators validate the demand narrative.”

“Any upside flare may not be sustainable as Fed tapering is approaching, and our economists think November looks like a decent date for an announcement.”

“On the anticipated tapering side, we think current copper prices have not fully priced in the risks ahead.”

“Meanwhile, the red metal could still turn to the east to find some support from China, as China is looking to stabilise credit growth for the remainder of the year. Should China accelerate special purpose bond issuances and divert additional funds into more copper-intensive projects, that may help to limit downside.”