Last Updated : 02 July 2009 at 18:35 IST

Copper prices all set to soar by year-end

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Commodity Online
BEIJING: A single nation which is powering the commodity prices, especially metals, is China now.

According to market analysts across the globe, China has breathed life back into commodity prices.

Scotiabank’s Patricia Mohr said she expects Copper imports to decline in the summer and rebound late this year and early 2010. As imports of refined copper and Iron Ore achieved records during the first four months of this year, Scotiabank economist Patricia Mohr noted in an analysis published recently that China’s copper imports will fall back in late summer, which is a normal seasonal event. She noted prices edged down to $2.31 late this month.

Nevertheless, Mohr predicts, “China’s copper imports will rebound again in late 2009 and early 2010-driving prices forward”.

Mohr forecasts Chinese production of copper will likely expand by 10% next year although more will be met by scrap rather than primary metal. This development, combined with the gradual return of shutdown mines, will check Copper prices from time-to-time in 2010. However, a pick-up in US motor vehicle production in the second half of 2009 and improving global economic conditions should underpin prices.

The copper price forecast has been revised up to $1.90 for 2009 and $2.30 for 2010, with tight market conditions expected medium-term.

In her analysis, Mohr noted that potash markets now await news on contract settlement with India where potash demand is still strong. Buyers are awaiting news on annual contract negotiations between BPC (Belarusian Potash Company) & then Canpotex (representing Western Canada’s three producers) and India likely to settle before China, where contract negotiations are expected to be protracted.

Potash demand is strong in India and inventories relatively low at an estimated 05.-0.6 million tonnes, she said.

Mohr forecasts that while potash prices are likely to decline over the summer, she expects a big rebound in prices in 2010, given this year’s marked deferral in world fertilizer application.