CBA sees copper prices down 30% in Q4 07
Source: International Herald Tribune
Copper prices may drop about 30 % to $5,500 a ton by December '07 and average $6,220 a ton this year as demand lags behind supply following a slowdown in the U.S. housing sector, according to the Commonwealth Bank of Australia.
Copper for delivery in three months on the London Metal Exchange climbed 6.7% over the last week to close at $8,320 a ton Friday, the highest in more than seven months.
Copper prices climbed to a record $8,800 a ton a year ago on supply disruptions and demand from China, the world's largest consumer of the metal.
"The copper price is already at high levels and, in our assessment, current pricing already embodies favorable assumptions on the demand side," David Moore, commodity strategist at the bank, said. "Just as the copper price moved quickly higher, the risk of a sharp adjustment lower should not be ignored."
Credit Suisse cut its 2007 copper price forecast by 13 percent to $2.84 a pound, or $6,261 a ton, in February and said supply would exceed demand this year, reversing a prediction for a deficit. The bank previously forecast that copper would average $3.25 a pound this year.
Commonwealth Bank, which is based in Sydney, expects copper consumption to rise more than 4 percent this year because global economic growth was "very supportive" for metal demand. Demand for copper in China, where economic growth accelerated to 11.1 percent in the first quarter, will remain strong, it said.
Still, it may weaken in the United States, the world's second-largest user, because of a slowdown in the housing sector, the bank said.
"We have long held the view that the supply-demand balance for copper is unlikely to be sufficiently tight over the course of 2007 and into 2008 to sustain copper prices at around $8,000 a ton," Moore added. |
