UNITED KINGDOM March 14 2014 5:15 PM
LONDON (Scrap Register): BNP Paribas is reiterating its position favoring lead, tin and zinc over copper in the base-metals complex.
The bank points out copper fell to its forecast of $6,500 as metric ton even sooner than it expected.
BNP Paribas said it still looks for the copper market to move into a material but far from catastrophic supply surplus in 2014-15. The bank said it still has a positive view on demand, looking for growth of more than 10% over the next two years.
However, the bank also looks for world mine production to rise by about 10% over 2014-15, with refined production outpacing mine output. The bank says a copper rally above $7,000 likely would present a selling opportunity.
“But we do not believe the fundamentals warrant a decline below $6,000/t, either in the short term or in 2015, when the market will begin to look to the increasingly positive medium-term story,” said metals strategist Stephen Briggs, via Kitco News.
“Our preferred trading recommendation remains: short copper versus long a basket of lead, tin and zinc. The price ratios have already come a long way, but we expect copper/zinc and copper/lead both to eventually reach 2.5:1, with tin/copper at 4:1,” Briggs added.