Bloomberg News

Copper to Surge to Record on Chinese Demand, Barclays Says

June 08, 2011

(Adds analyst comment starting in second paragraph.)

June 8 (Bloomberg) -- Copper prices will rise to a record $12,000 a metric ton by the end of the year as China’s imports rebound, said Nicholas Snowdon, an analyst at Barclays Capital in London.

“The Chinese market is awakening from the destocking cycle that lasted nine months,” Snowdon said today at a Metal Bulletin conference in New York. “Their backyard inventories have been completely depleted. By July, we will begin to see a steady increase in imports.”

Copper has almost tripled since the end of 2008, reaching an all-time high of $10,190 on Feb. 15 in London as mining companies struggled to keep pace with rising consumption. Inventories monitored by the Shanghai Futures Exchange have plunged 51 percent since mid-March. Stockpiles on the London Metal Exchange have jumped 37 percent from a 14-month low in December.

An increase in Chinese imports “should be enough to push down LME stocks on an aggressive basis,” Snowdon said. Global inventories will fall to “all-time low later this year” as mine output is projected to be “more or less flat,” he said.

On the LME, copper prices have dropped 11 percent from the record after manufacturing slowed in China, the world’s top consumer of industrial metals, and the U.S.

“The macro data really offers a false signal in terms of where we are headed in the next quarter,” Snowdon said. “Certainly, tighter credit is a very serious issue in China, and fabricators and manufacturers are operating in a very tepid hand-to-mouth fashion, but even that is enough to drive imports higher.”

Chinese imports in June may jump 25 percent from April as consumption and investment demand rise, Jesse Jiang, the manager of copper research at state-owned Beijing Antaike Information Development Co., said yesterday in an interview.

Copper for delivery in three months fell $84, or 0.9 percent, to $9,056 at 5:46 p.m. in London.

--Editors: Patrick McKiernan, Millie Munshi

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.


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