Copper prices continue to bounce back and forth within the confines of a relatively narrow range, seeking direction (Chart 1). Production growth has been strong, but demand has been as well – mainly in China, where it counts.
The worldwide glut of copper supply is poised to almost triple in 2014, driving prices to the lowest in at least three years at a time when the International Monetary Fund says economic growth will be weaker than forecast.
Base metals may advance through the end of the year on increased demand in China, the world’s largest user, while oil will probably see little change over the final quarter, Deutsche Bank AG estimates.
Back in June, copper prices were poised to crack the $3-per-pound level. The market bounced sharply – by close to 15% – but has since retraced a sizable chunk of that rally. Was the rally warranted or just a due-course correction?