Aug. 5 (Bloomberg) –Copper may fall "well below" $9,000 a metric ton on concern about a slowing global economy and rising supply of the metal, Societe Generale SA said.
"It doesn't seem impossible for copper to reach $8,000 if macroeconomic data remain weak," London-based analyst Jesper Dannesboe said today in an e-mailed report. Service industries in the U.S., the largest part of the nation's economy, expanded in July at the slowest pace in 17 months and European services and manufacturing growth eased last month to the slowest pace in almost two years, reports showed yesterday.
Production of copper from mines will increase 5 percent this year and 7 percent in 2012, the bank estimates. The metal for three-month delivery fell $185, or 1.9 percent, to $9,350 a ton by 5:25 p.m. on the London Metal Exchange.
"We feel increasingly confident that copper is mispriced and exposed to a major selloff," Dannesboe said. "The market is in the process of discounting a higher probability of a significant slowdown in the world economy" and has "yet to take into account this, by copper standards, major supply increase," he said.
World demand for the metal is set to exceed output by 377,000 tons this year, according to the International Copper Study Group. Analysts at Barclays Capital predict a 670,000-ton shortfall.
Societe Generale disagrees with the view that copper will remain scarce even in the face of a weaker world economy, Dannesboe said.