Price rebound in Copper unlikely to sustain, says analyst

CANTERBURY (Scrap Monster): According to latest research note published by analysts at VTB Capital, the outlook for Copper looks unconvincing. Further, the recent price rebound is not likely to sustain.

The LME open interest has waned significantly, noted Andrey Kryuchenkov in his research note. The speculative positioning on the COMEX has also turned negative. The total LME copper stocks rose during the month of August. However, the copper stocks remain at lower levels when compared with end-2013 levels.

The disappointing macroeconomic data has weighed largely on the red metal prices. Copper witnessed huge selling pressure this week. The prices plummeted to August lows after showing signs of strength during early-September. The geopolitical crisis and concerns over Chinese consumption are likely to determine short term price movements, the research note stated.

However, the report foresees some pick up in fabricator demand, especially in Asian countries. Spot Shanghai premiums managed to gain slightly and domestic stockpiles contracted, which are early positive signs. The Chinese copper stocks in Shanghai Futures Exchange has recorded fifth straight week of fall, which indicates recovery in demand.