BEIJING, Nov. 16 -- Copper prices in China are likely to face a break point after a steady rise in the past months, mainly due to persistent rise of copper stocks as well as lackluster copper consumption in the second half of this year.
Recently, futures copper prices have been going up unexpectedly, deviating from market fundamentals. The copper futures traded on the Shanghai Futures Exchange fluctuated this week, with benchmark 1002 contract ending 220 yuan higher at 51,300 yuan/ton on Thursday.
Wang Guoqing, an analyst with Triumph Futures Co., noted that copper stocks in the world futures exchanges increased by 56,000 tons in September, with LME copper inventory growing by 46,000 tons. On November 11, LME copper stocks rose by 4,675 tons, which had made the total top 390,000 tons.
Data from the General administration of Customs show that China imported 263,109 tons of copper in October, up 13.8 percent year on year but down 34 percent from September. Its copper imports in the January-October period climbed by 70.2 percent year on year to 3.63 million tons. Meanwhile, the country's copper output in the first 10 months of this year almost approached the total in last year.
The sharp month-on-month fall of copper imports last month indicates ample supply on the domestic market. BMO Capital Market, a leading North American financial services provider, forecasts that China will import one million tons more than it needs this year.
The London-based CRU (Commodities Research Unit) predicted that the world refined copper output would reach 17.26 million tons this year, higher than the estimated consumption of 16.2 million tons. Research data from the China Metals Bulletin show that the global copper output have presented strong growth momentum this year.
However, copper consumption hasn't yet sent out rebound signals. According to a survey by the CRU on European and Asian markets, copper consumption in the third quarter failed to bottom out, and high copper prices also dampened consumers' willingness of restocking in the fourth quarter.
Some futures analysts say that the depreciation of the U.S. dollar and China's prosperous economic outlook are favorable factors to boost copper market. However, industrial insiders generally hold that copper prices lack drives for persistent rise and may correct in the following period.