Copper may turn red hot during latter half of 2014

27 Jan 2014 Last updated at 02:04:55 GMT

BEIJING (Scrap Monster): A demand recovery during the second half of 2014, may lead to strong recovery in copper prices. The booming US housing market and the proposed spending increase in Chinese power sector are likely to limit the downside to copper prices.

The international copper market witnessed huge surplus in 2013, bringing the prices down by nearly 28% from the highs recorded in 2011.Since 2008, it was only in 2010 that copper supply didn’t exceed demand.

The recent study report published by the International Copper study Group (ICSG) predicts global refined copper surplus to grow by 60% to 632,000 tonnes in 2014. According to ICSG, the global copper demand is expected to grow by 4.5% in 2014.

ICSG indicates that global refined copper output is expected to grow by nearly 4% to 20.9 million tonnes this year. With more projects expected to go online, the global copper mine production is expected to grow significantly during 2014 and 2015.

However, the promising prospects from the US and China may change the picture. The US housing market has begun showing signs of improvement. According to December data, the housing starts climbed to 9,86,000 units during the month. A higher consumption in China’s power sector could drive the prices higher. Incidentally, China and the US accounts for nearly 52% of the world’s total copper consumption.

Author: Paul Ploumis