>>I am encouraged by the bearish articles.<<
You take it as encouragement I consider it to be a red flag.
SHANGHAI, April 20 (Reuters) - Copper prices are facing a last chance to rally before a surplus hits the market and pushes prices down for the medium term, Asian traders said on Monday.
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The copper industry was seen producing a surplus of 360,000 tonnes in 1998, according to forecasts made early this month by Metal Bulletin Research.
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''It is the last chance for copper for a couple of years. Once the extra supply comes on stream, I see prices at $1,700 and down,'' he said.
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The spike up from $1,825 to the day's highs above $1,860 was indicative of the nervousness of the market, traders said.
They said that some chartists pointed to an inverted head-and-shoulders pattern that could see prices as high as $2,100 in the current rally, traders said.
But traders and analysts were mostly bearish on the medium term.
The current strength in the market had been driven by fund short-covering and heavy forward selling, they said. The forward activity indicated producers did not see these prices lasting.
''The heavy forward selling we have seen is indicative of the lack of confidence,'' said another broker in the region.
''The question is when will the rot set in?. The strength since mid-February has been based on that fickle thing called sentiment, driven by speculative activity, mostly from the funds,'' he said.
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''ll it takes is for demand to level a little bit for cathode in Europe and America, as well as the rumblings out of Asia, for the copper price to move into the 1600s,'' said another Western broker in the region.
''Sooner or later, the market will realise that supply will outstrip demand pretty soon,'' he said. |
