The New Year 2015 so far has been far from friendly to copper even as huge sell-off and languishing prices have become the defining feature. From $ 6,355 a tonne (LME cash) on December 31, copper prices collapsed by mid-January to fall below the psychological level of $ 6,000/t on January 14. Prices were down 6.5 percent week-ending January 16. A week later, on January 21, the metal traded at $ 5,722/t.

Many explanations are given for the price performance. With tepid global economic growth – Europe and Japan struggling and China slowing – funds have turned wary. If anything, macro funds are turning away from commodities. There is also talk that copper could be the new crude.

It now emerges that the bear raid was organised by Chinese funds that are seen as key drivers for shorting the market. Ahead of the Chinese Lunar New Year, funds have struck to pull prices own on basis of growth concerns and tepid demand.

Where would copper go from here? Experts believe that for 2015, the world copper market is fairly balanced and surplus, if any, could be a modest quantum , possibly less than 100,000 tonnes. At the same time, production costs are seen rising, accompanied by grade declines in ores.

If Chinese funds triggered a sell-off in copper, Chinese government has stepped in to support the base metal. Recent announcement by China’s State Grid that in 2015 an estimated $ 65 Billion would be spent on power grids and electricity lines is seen as shot in the arm for the beleaguered metal.

Related Topics
comment COMMENT NOW