The head of China’s second-largest copper refiner is sounding a bearish note on the red metal, even as the country is targetting higher economic growth.
Interviewed by Bloomberg on Sunday, Jiangxi Copper Co. Chairman Li Baomin predicted copper will average 45,000 (US$6,524) to 46,000 (US$6,673) Chinese yuan per ton in 2017, down from an average 47,513 yuan (US$6,892), year to date. Chairman Li cited worries over the raising of U.S. interest rates, which would increase the cost of financing major infrastructure projects, along with unclear U.S. policies and uncertainties over upcoming European elections. “There are things worrying us,” he told Bloomberg.
On the brighter side, he said global copper demand is set to exceed production, noting China is predicted to grow at 6% this year versus 5.8% last year, along with greater demand for copper used particularly in power grids and electric vehicles. For its part, Jiangxi Copper is planning on cranking out the tonnage, from 1.2 million tons last year to its maximum capacity of 1.36 MT, said Li.
Last week copper for delivery in May gained for the fourth day in a row, jumping 2% to hit a day high of $2.7685 per pound or $6,103 a tonne as a return to production at two top mines – combined responsible for some 8% of global output – looked increasingly doubtful in the near term.
Today on the Comex, copper for May delivery, the most active futures contract, was down by 4 cents, to close at $2.6520 a pound.
Chairman Li’s remarks temper what analysts said about copper in December, with several forecasting a banner year for the red metal, based on increased demand from China leaving the market in a tighter supply situation. Although, even if copper in Chinese yuan drops to 45,000 (US$6,524), that is still higher than the price forecast by Goldman Sachs. The influential bank was the most bullish of five analysts quoted by MINING.com in January, predicting copper could go to $6,200 during the first half of 2017.
