SINGAPORE, Sep 29, 2011 (Dow Jones) -- Copper prices could bottom out around $6,600 a metric ton in the fourth quarter of 2011 as Chinese buyers start to replenish their stocks, according to a senior Deutsche Bank analyst.
The red metal has shed more than 20% since the start of this month, due to escalating concerns over the health of the global economy and the effects of slowing global growth on demand for industrial commodities. Copper opened at $6,925/ton Thursday compared with its Sept. 1 open at $9,257.50/ton.
Copper has dropped sharply due to "massive derisking", Deutsche Bank Asia head of commodities research Soozhana Choi said at a media briefing in Singapore Thursday, but told Dow Jones Newswires that prices could find a bottom before the end of the year.
Although "a lot depends on the macroeconomic situation," Choi said copper will take some support towards the end of the year from stronger Chinese buying activity.
"What our models show is that they [Chinese market participants] have destocked as much as they're going to and they will be moving towards restocking," she said.
The physical market could feel the effects of the increased Chinese buying by the end of this year, she said, although import data is unlikely to show the stronger consumption before the start of 2012.
China's refined copper imports in August rose 21% from a month earlier to 235,509 metric tons, albeit a decline of 12% from a year earlier, the General Administration of Customs said Sept. 21.
While she's expecting copper imports to rise further towards the end of the year, Choi warned that the level of Chinese demand is still closely connected to tight credit conditions in the country. Deutsche Bank economists think Beijing will bring inflation under control in the fourth quarter, and that this may lead to looser credit conditions that would encourage copper restocking, she said.
"We believe they want to loosen up credit conditions," she said.