Copper bears cede to bulls as economy seen gaining

Industrial Metals

Codelco, the world’s largest copper producer, expects a recovery in demand for commodities because of the stimulus in China, Chief Executive Officer Thomas Keller said in an Oct. 16 interview. China’s economic growth has started to stabilize, Premier Wen Jiabao said in remarks published Oct. 17 by the official Xinhua News agency.

The nation will be a “voracious” buyer of industrial metals even if growth slows, Cengiz Y. Belentepe, the head of industrial and precious metals trading at Barclays, said in an interview Oct. 10. The bank expects demand to beat supply by 41,000 tons next year, the fourth consecutive annual shortage.

Chinese officials will begin a once-a-decade leadership transition next month. The new government may change policies on infrastructure spending and that would raise questions about industrial-metals demand, Ray Key, global head of metals at Deutsche Bank AG, said in an interview Oct. 8.

Monetary Fund

The International Monetary Fund cut its 2012 global growth forecast to 3.3 percent last week, compared with a July prediction of 3.5 percent, and expects the euro area to contract 0.4 percent this year. Europe accounts for 18 percent of copper usage, Barclays estimates. Codelco cut the premium charged to European copper buyers next year by $5 to $85 a ton, two people with direct knowledge of the matter said.

Goldman Sachs Group Inc. lowered its 12-month price estimate 11 percent to $8,000 on Oct. 15 as weakening demand in Europe, Brazil and India, combined with growth in mine supply, may mean a return to a glut from the second half of 2013. The bank still expects prices to be at $9,000 in six months.

Speculators’ wagers on a rally were the highest since August 2011 in the week ended Oct. 2, CFTC data show. They had bet on price declines from May to August and held a net-long position of 23,448 futures and options by Oct. 9, data show.

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