Goldman Sachs Group Inc. said that the selloff in copper was “overdone” and it remains bullish on the metal at a lower price.
The bank cut its three-month estimate to $7,500 a metric ton from $8,000, lowered its six-month prediction to $8,000 from $9,000, and the 12-month forecast fell to $7,000 from $8,000, Goldman analysts including London-based Max Layton and Hong Kong-based Roger Yuan said in a report dated today. Copper for three-month delivery traded at $6,905 today.
The metal has lost 13 percent this year and slumped into a bear market as Europe struggled with its debt crisis and growth slowed in China, the biggest metals consumer. Europe and China account for about 60 percent of world consumption. Inventories tracked by the London Metal Exchange almost doubled in 2013.
The forecasts have been downgraded “to acknowledge the increasing willingness of the market to price future surplus ahead of time” and the risks to growth in the broader emerging market, the report said.
While prices have suffered on concerns China’s economy may slow, the bank said the country’s “underlying cyclical growth is likely stronger than the headline figures suggest.”
Copper in warehouses monitored by the Shanghai Futures Exchange is being drawn down, it said. The bank estimated bonded stockpiles at 510,000 tons from 715,000 tons in early March and noted that futures in Shanghai are in backwardation.
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