Connect with us
  • tg

Commodities

Analysts are out with their updated copper prices forecast for 2024 

letizo News

Published

on

Following the recent rally, the spotlight is on , and analysts have been busy assessing their forecasts for copper prices, reflecting a complex set of factors from supply constraints and geopolitical factors to evolving demand trends in various sectors.

Copper prices rally

While copper prices slumped on Wednesday, the metal has experienced a significant rally over the past couple of months, with prices hitting record highs on Monday this week. 

Copper, which is a vital industrial metal whose price movements have significant implications for global markets and industries, hit an intraday record of  $5.1990 a pound or $11,460 a tonne. This year, copper is up 27%. 

The rally was fueled in part by traders betting on a soft supply of the metal in the coming months as miners’ production cuts began to take effect. 

Copper prices forecast for 2024

Despite the rally, analysts at Citi believe the price of copper is set to consolidate over the next three to six months.

The bank’s forecast for a stabilisation in prices comes with LME prices currently trading close to their zero to three-month point price target of $10,500 a ton after reaching their six to 12-month target of $11k a ton last week.

Citi believes “investors have been right to push copper up from $8-8.5k/t to $10.5k/t over the past 3-4 months.”

However, they explained they think machines are likely a large share of the ~$30bn of copper fund length additions this year. 

“In the coming months, some of this length is likely to turn over to consumer hedgers, along with macro and commodity-specific hedge funds, for whom we consider sub-$10k/t as inexpensive,” said Citi.”Indeed, physical indicators (such as visible inventories, spreads and premiums) aren’t going to look great for some time as China semi-fabricators de-stock refined metal and as global scrap dealers de-stock scrap.”

The current price levels are seen as sufficient to avoid huge deficits in the copper market this year as the scrap market responds.

Meanwhile, JPMorgan analysts believe pricing expectations are overshooting the fundamentals while copper stocks are currently trading at fair value. 

“Copper has been on a tear thus far this year, rising 27% YTD amid what we view as relatively overdone refined supply-side concerns,” said JPMorgan. “This has translated into strong re-rating for copper-levered stocks FCX (+20% YTD) and TECK (+24%) with near-term investor sentiment now seemingly more bearish relative to the start of the year.”

“Pricing sentiment appears to have overshot underlying fundamentals, which are more sound than recent pricing momentum infers, largely driven by resilient China refined supply and seemingly elastic demand,” they add.

The bank also notes that the latest copper forward curve now exceeds both their base case and JPM’s Commodities team’s copper price forecast through the remainder of the year and into next year, suggesting further upside potential should bullish expectations materialize.

Commodities

Oil edges up as summer demand hopes offset downbeat China data

letizo News

Published

on

By Alex Lawler

LONDON (Reuters) -Oil edged higher on Monday as hopes for a boost to demand from the summer driving season in the northern hemisphere offset Chinese data that underscored a bumpy recovery for the world’s biggest crude importer.

Apart from retail sales that beat forecasts due to a holiday boost, the flurry of Chinese data on Monday was largely downbeat. The data followed a survey on Friday showing U.S. consumer sentiment fell to a seven-month low in June.

Global benchmark futures were up 33 cents, or 0.4%, to $82.95 a barrel at 1212 GMT. U.S. West Texas Intermediate crude futures gained 25 cents, or 0.3%, to $78.70.

Last week, both benchmarks posted their first weekly gain in four weeks on elevated confidence that oil inventories are set to plunge as the summer season gets under way in the northern hemisphere amid continued OPEC+ supply cuts.

“The market initially responded negatively to mixed data from China,” said Ole Hansen of Saxo Bank.

“But the outlook for strong fuel demand into the coming quarter and Saudi reassurance about the October hike being subject to prevailing conditions and added focus on quota breakers to bring production down and into line all seems to be supporting.”

Saudi Arabia has said OPEC+’s planned fourth-quarter increase in output can be can paused or reversed if needed. Russia and Iraq, which have been pumping more than their OPEC+ quotas, pledged last week to meet their obligations.

Reports from OPEC and the International Energy Agency last week, although differing on the strength of oil demand growth this year, had supported confidence that inventories would be drawn down in the second half.

Still, BofA analysts said in a report that while the market consensus is for higher oil prices in the third quarter, there is a risk to prices if weak supply and demand balances persist.

© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

“It is not yet clear whether balances will firm enough in the third quarter to tip the market from a large apparent surplus into a deficit that can lift prices,” BofA analysts including Francisco Blanch wrote.

On the geopolitical front, concerns of a wider Middle East war lingered after the Israeli military said on Sunday that intensified cross-border fire from Lebanon’s Hezbollah movement into Israel could trigger serious escalation.

Continue Reading

Commodities

Record copper prices likely to pause U.S. scrap shipments to China

letizo News

Published

on

By Pratima Desai and Julian Luk

LONDON (Reuters) – China’s scrap imports have soared due to shortages of concentrate that is processed into refined metal used in the power and construction industries, but record high prices mean U.S. shipments are likely to pause.

Smelters in top copper consumer China have faced concentrate shortages since last year when First Quantum (NASDAQ:) lost the right to operate its Cobre mine in Panama, which accounted for 1% of global mined supply in 2022.

China’s copper waste and scrap imports overall climbed 25% to 783,004 tonnes in the first four months of this year compared to the same period in 2023, according to Trade Data Monitor (TDM).

TDM data also shows China’s scrap imports from the United States jumped 37% to 153,059 tonnes in January to April this year from the same period last year.

Copper scrap from the U.S. is priced at a discount to the CME price, which hit a record $5.1985 a lb or $11,460 a tonne on May 20 due to parties which had sold futures being forced to buy them back or roll over positions.

“Chinese buyers are deferring U.S. copper scrap shipments,” a source at a Chinese trading firm said, adding that China’s top scrap supplier was the United States.

The source said some Chinese buyers were looking to price U.S. scrap against copper on the London Metal Exchange (LME), trading at a discount to CME prices.

Deteriorating production at other mines, many in Latin America, has exacerbated concentrate shortages and Chinese smelters have imported more copper scrap to feed their furnaces and protect their margins.

China is home to half of the world’s copper smelters and the largest buyer of raw materials including concentrates and scrap.

Scrap typically accounts for about 9 million tonnes or roughly 30% of global copper supplies annually.

“Due to concentrate tightness copper smelters are processing more scrap and blister,” said Macquarie analyst Alice Fox.

© Reuters. FILE PHOTO: A worker loads copper cathodes into a warehouse near Yangshan Deep Water Port, south of Shanghai March 23, 2012. REUTERS/Carlos Barria/ File Photo

“Given the cost of physical collection and processing – during periods of significant price movement, scrap tonnages on a contained copper basis can move by up to one million tonnes per annum, effectively rebalancing the market during periods of high or low prices.”

Macquarie expects the gap between copper supply and demand to widen to 1.6 million tonnes in 2030 from a deficit around 86,000 tonnes this year.

Continue Reading

Commodities

Crude oil edges higher; tone constructive despite weak Chinese data

letizo News

Published

on

Investing.com — Oil prices edged higher Monday, continuing the previous week’s upbeat note despite some bumpy data out of China, the world’s biggest importer. 

By 08:35 ET (12.35 GMT), the futures traded 0.5% higher at $78.41 a barrel and the contract climbed 0.4% to $82.97 a barrel. 

Gains follow a winning week

The crude benchmarks recorded a winning week last week, their first in four weeks, buoyed by expectations that the Northern Hemisphere summer vacation season will boost fuel demand this summer. 

The monthly reports by both the and the , released last week, had pointed to inventories being drawn down in the second half of the year, even as they differed about the level of demand growth.

China data largely disappoints

That said, this positive tone has been tested by uneven economic data out of China, pointing to a stuttering recovery in the second largest economy in the world.

came in ahead of expectations in May, helped by a holiday boost, but May grew 5.6% from a year earlier, slowing from the 6.7% pace in April and below expectations for a 6.0% increase.

Additionally, crude oil refinery output in China fell 1.8% year-on-year in May, primarily due to planned/unplanned maintenance outages and curtailed processing rates on account of higher crude oil prices and lower margins. 

Middle East tensions provide support

Providing a degree of support were the continued concerns of a wider Middle East war, after the Israeli military said on Sunday that intensified cross-border fire from Lebanon’s Hezbollah movement into Israel could trigger serious escalation.

Additionally, weekly data from showed that U.S. oil rigs fell by four rigs for a third straight week over the last week, with the total oil rig count reaching 488 for the week ended 14 June 2024. 

“This is the lowest number of active oil rigs since the first week of January 2022, and is down by 64 rigs from a year ago,” analysts at ING said, in a note, pointing to weaker supply going forward.

There is little on the energy calendar this week – just the usual weekly U.S. inventory reports from the and the .

Traders are also likely to pay attention to speeches from a number of Federal Reserve officials as they try to judge the likely path of U.S. interest rates this year, given the likely impact of this on activity in the world’s largest economy.

 

Continue Reading

Trending

©2021-2024 Letizo All Rights Reserved