Monday, December 29, 2014

What Are Major Factors to Affect Copper Prices in 2015?

What Are Major Factors to Affect Copper Prices in 2015?
Copper prices posted sharp declines in 2015, with Shanghai Futures Exchange (SHFE) copper falling by 12.92% as of December 26, and copper London Metal Exchange (LME) down by 14.58%. What will be the main factors to affect 2015’s copper prices?
Growing Copper Supply
Most of Chinese futures analysts interviewed by SMM still consider market fundamentals the key factor to impact copper price trends in 2015.
“The oversupply pressure in copper concentrate market will pass on to refined copper market with copper smelters expanding capacity, so we expect a more than 4% increase in copper supply in 2015,” analyst from BOC International Futures told SMM, “while copper consumption growth is expected at only 3.3%.”
Analyst from Minmetals Futures agreed and noted that global copper supply will grow faster than 2014 next year, and the increase in demand will slow down, boding ill for copper price outlook.
Monetary Policies
“On the macroeconomic front, monetary policies in the US and China will garner much attention,” said an analyst from the CIFCO. “Although the timing of the Fed’s first interest rate since QE was not decided yet, market prediction is for the Fed to raise interest rate in mid-2015, and the rate hike is bound to bolster the US dollar index, affecting commodity market,” the analyst added.
“China’s central bank may employ relatively loose monetary policies and pro-growth measures to help with its housing market which experienced a downturn in 2015,” analyst from Jinrui Futures told SMM. The analyst considers it a positive factor for copper market.
Crude Oil
“Copper prices have been largely hit by slumping crude oil prices in late 2014 and any rebound in copper in 2015 will be subject to a bottom-out in crude oil,” said an analyst from Dayou Futures.
China’s Copper Stockpiling
“We expect a 370,000-tonne surplus in global copper market in 2015, but China’s potential copper stockpiling will help ease the glut,” analyst from Galaxy Futures said in an SMM interview lately. An analyst from BOC International Futures expressed his agreement, explaining that the possible copper purchases by China’s State Reserve Bureau will be a wild card.
Other Uncertainties 
Analysts interviewed by SMM also listed a number of uncertain factors, such as volatile yuan’s spot exchange rate arising from any change in China’s foreign exchange policies, possible strikes at copper mines, and the potential El Nino conditions.

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