On Tuesday, Goldman Sachs increased its three-month forecast for copper by five percent. Forecasting copper prices to reach $8,400 per metric ton during this period, the bank noted several factors supporting its view. Included were moderate economic growth within the U.S., easing of the monetary policy within China, and Chinese social housing construction.
As of late February, Goldman Sachs was forecasting copper prices of $8,000 per ton over a three-month period. Though it increased this forecast, it left the six and 12-month estimates untouched at $9,000 per ton. Premiums indicate that inventories in the U.S. and Europe are smaller than those in China. During March and April, this is expected to create an increase in Chinese exports of the metal and a significant decline in imports, reported Goldman Sachs analyst Max Layton.
According to the institution, aside from inventories monitored by the Shanghai Futures Exchange, China may be holding 500,000 metric tons of the base metal within bonded warehouses. In a report dated on Tuesday, Mr. Layton noted that total inventories may have increased 450,000 tons since November 2011. With such a large stockpile, China should not need to import large quantities of the metal in the near future.
All eyes have been on China when it comes to copper prices today. Monday marked the first decline in four days for copper prices today. Signs regarding slowdown in China, the second largest economy and major consumer of the metal moderated demand forecasts for this and other industrial metals. However, the metal is not doing poorly by any indicators.
The volume of Chinese imports of the metal for the first two months of this year was nearly 50 percent higher year-over-year. According to Capital Economics commodities economist Ross Strachan, Chinese firms increased their stockpiles when copper prices were low. As the price climbs, this demand source may not be as strong.
I'll Personally Email You
For just 15 minutes a week, I'll teach you everything there is to know about investing in mining companies. Plus, I'll include free guides on building a passive income, preparing for inflation, getting out of debt fast, and finding real financial security.
Plus, if you ever want to talk or ask any questions, I'll respond personally -- usually within an hour. Oh, and all of this is free. Just sign up right now:Copper Mining