Salient to Investors:
Copper shortages will extend into half1 2013 due to an accelerating China more than doubling the pace of growth in global consumption even as mines extract a record amount of metal.
Barclays predicts demand will outpace supply in half 1 2013 by more than all copper in LME warehouses, before a surplus emerges in half2 2013. The International Copper Study Group says production has lagged behind consumption since 2010. The median analyst predicts copper will rise 6.4 percent in Q2 2013.
Dominic Schnider at UBS says US growth will be moderate, Europe is stabilizing, so economic activity doesn’t have to be that strong in China for inventories to fall producing a rally in half1 2013, before mine supply comes in strong in half2.
Beijing Antaike Information Development says China’s copper demand may rise 5.5 percent in 2013 versus a gain of 4.8 percent in 2012.
The median economist expects China to rebound in Q4 and accelerate through at least mid-2013. Economists expect Japan to fall into recession in Q4 2012.
Hedge funds et al held a net-short position in futures and options last week after turning negative the week before for the first time since August.
Goldman Sachs said stockpiles monitored by the LME fell 33 percent this year, but those in bonded warehouses in China reached a record.
Andrew Shaw at Credit Suisse said the improvement in demand will probably be capped out by the ability of supply to keep up.
Jeremy Goldwyn at Sucden Financial said 2013 will be slightly more positive than 2012, primarily on an improving China, marginally better US and the same in Europe.
Macquarie Group said expectations for next year’s global supply are too optimistic, and a significant copper surplus remains unlikely. Macquarie said rising costs from labor to energy and ore yields 19 percent lower than in 2000.
Nick Trevethan at Australia & NZ Banking is positive on copper with China and the US economies recovering, and Europe written off – China is more and more about China and less and less about the rest of the world.