Copper prices to slide on weak demand from Chinese property market, says Goldman Sachs

According to Goldman Sachs, nearly 61% of Chinese copper demand comes from housing and property sector. Out of which 49% accounts for housing needs including local power infrastructure, telecommunications and lighting. The balance 12% copper demand comes from installation of home appliances after property sales. It also noted that the power grid infrastructure projects accounts for only 13% of the country’s total copper demand.

 

The property inventories in China are already at its peak. New starts are expected to slow down during H2 2014, as property prices continue to remain weak. The copper demand becomes high when the project reached its completion stage when internal and external copper wirings are installed. The construction completion cycle is expected to remain subdued in the medium term.

 

GS forecasts the global copper market to end the year at a 385,000 mt surplus, with prices averaging $6,778/mt in London and 307 cents/lb ($6,768/mt) in New York.