Commodity Strategists: Copper to Fall, Canaccord Says
2005-07-19 04:53 (New York)
By Christopher Donville and Claudia Carpenter
July 19 (Bloomberg) -- Copper prices will fall less than
previously expected next year because some smelters have yet to
increase output and demand for the metal remains ``strong'' in
China, Canaccord Capital Inc. analyst Greg Barnes said.
Copper will fall 17 percent to $1.20 a pound ($2,646 a
metric ton) on average next year, compared with an earlier
estimate of $1.15, Barnes said. Canaccord, Canada's largest
independent stock brokerage, expects prices on average will be
$1.44 in 2005, up from an earlier forecast of $1.33.
``A lack of significant inventory build, combined with
relatively robust demand, led by copper consumption in China,
will lead to a soft landing rather than an abrupt correction,''
Barnes, 41, said in an interview yesterday from Toronto.
Copper prices, which reached a 16-year high of $1.61 on June
17, will remain above $1 a pound on average through 2007, said
Barnes, who was rated the top metals and mining analyst in Canada
this year in a survey by research company Brendan Wood
International. Copper averaged less than $1 from 1998 to 2002.
Prices have surprised many analysts, Barnes said in a July 8
report to clients that included his new forecasts.
Samsung Corp. lost $80 million in metals futures trading,
and an unnamed ``metal trader'' may have lost $30 million betting
against copper, said Barnes, who graduated in 1986 from Queen's
University in Kingston, Ontario, with a degree in geology.
Copper's Rally
Copper for delivery in three months fell $6, or 0.2 percent,
to $3,357 a metric ton as of 9:49 a.m. on the London Metal
Exchange today. The metal has averaged $3,183.90 ($1.444 a pound)
on the LME this year.
Prices rose 41 percent last year as consumption in China,
the world's largest buyer of the metal, climbed, leaving a supply
shortage of 755,000 metric tons, according to estimates from the
Lisbon-based International Copper Study Group.
Metals demand outside China is in the midst of ``seasonal
weakness,'' causing prices to decline from highs earlier this
year, Barnes said. ``The copper price has withstood weakness in
other metals by virtue of exceptionally low inventories combined
with production disruptions.''
China's economy will probably grow 9 percent this year and
8.5 percent next year, JPMorgan Chase & Co. economist Frank Gong
said in Hong Kong on July 13. China's industrial production rose
17 percent in May to a record $69 billion, the Beijing-based
National Statistics Bureau said on June 15.
Global copper demand exceeded supply by 59,000 tons in the
first three months this year, compared with a deficit of 452,000
tons a year earlier, according to the International Copper Study
Group. The gap is narrowing as mining companies increase
production.
Copper for delivery in three months has declined from a
record $3,435 a ton on the London Metal Exchange on June 20 and a
16-year high of $1.61 a pound on the Comex division of the New
York Mercantile Exchange on June 17.
--Editors: Stroth, White, Carrigan. |
