LONDON/BENGALURU: Copper prices are expected to retreat in the coming months as demand in top consumer China declines and supplies increase, a Reuters poll showed on Wednesday.
Benchmark copper surged 26% last year as China’s spending on metal-intensive infrastructure helped its economy to recover from the impact of COVID-19.
Copper hit a near eight-year high in January, but China is likely to gradually withdraw stimulus and trim debt levels - triggering a pullback, analysts say.
“As China’s economy is already back to pre-crisis levels, its transition from investment-driven to consumption-driven growth should resume, implying that last year’s metal demand dynamics should not be sustained,” Julius Baer analyst Carsten Menke said.
LME cash copper is expected to average $7,600 a tonne this year, a median forecast of 29 analysts showed, down 5% from Tuesday’s closing price.
Analysts raised full-year 2021 forecasts for the metal by 12% from the previous poll, conducted three months ago.
Prices were supported last year by worries about potential mine disruptions and strikes, but the supply outlook has improved.
The consensus market balance forecast flipped to a surplus of 31,000 tonnes this year from a deficit of 205,000 tonnes previously.—Reuters