UNITED KINGDOM June 03 2014 1:31 PM

LONDON (Scrap Register): Bank of America Merrill Lynch lists average copper forecasts of $6,750 and $7,000 a metric ton for the third and fourth quarters.

Copper has drawn some support as-expected supply surpluses have not yet materialized, yet Bank of America Merrill Lynch said it would still sell the peaks in prices.

Copper has rebounded in recent weeks as fundamentals strengthened in China, with commercial buyers increasing purchases and the government’s stockpiling agency buying some 300,000 metric tons of existing inventories from the private sector.

Deficits on the global copper market have subsided on rising mine supply and a structural slowdown of China's economy. This suggests that sustained rallies are unlikely.

Nevertheless, the surpluses market participants have been anticipating have so far not been forthcoming, which is a key reason, the metal continues to trade in a range around $7,000 a ton or $3.18/lb.

However, copper has been volatile and Bank of America said that it is concerned that ongoing reforms by China’s government will impact growth at the same time authorities are unwilling to push through meaningful monetary and fiscal stimulus. This may reduce commercial buying.

Bank of America said that near-term, we would sell the peaks in copper, in contrast to nickel, lead and zinc, where we would buy the troughs.