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According to ICSG projections for 2013, world production of refined copper is expected to exceed demand for refined copper by about 390,000 tons as demand will lag behind the growth in production. In 2014, consumption..

13 Nov 2013

SHANGHAI/LONDON (Commodity Online):Copper market could be in for a bear run if increased China production in the past two months and surplus refined copper forecast for 2013-14 by International Copper Study Group (ICSG) is any indication. US Copper futures has fallen to the lowest level since August at $3.191 a pound, a fall of 1.35% on Wednesday.

According to National Bureau of Statistics, China production of refined copper rose 2.9% month-on-month to a second straight monthly record and year-on-year gain of 22.9%. Refined copper production in October was 637,958 tons while in September it was 620,086 tons.

According to ICSG projections for 2013, world production of refined copper is expected to exceed demand for refined copper by about 390,000 tons as demand will lag behind the growth in production. In 2014, consumption may increase but a higher surplus is expected with increased output from new and existing mines.

Although markets could be expecting a bearish trend in copper to continue despite uptick in China industrial growth and positive trends in US economy, there are others who believe that moderate global suprlus won't cause an impact on the market.

Thomas Keller, CEO of Chile's Codelco, World's largest producer of copper said that a modest surplus will not cause fall in copper prices.

LME Copper has traded from $7000 to $7420 levels in the past three months due to higher supplies and slower demand growth in China.

China economy is expected to maintain a 7-8% growth in GDP in the coming years but lower than the two-digit growth rates witnessed earlier. This in turn could have some support for copper prices in the medium term.

US Copper futures for December delivery is weak at $3.2 per pound, MACD is negative while an RSI of 37.64 is quite bearish for the commodity, according to Sreekumar Raghavan, Chief Strategist at Commodity Online Group.

Investing.com has recommended strong sell for US copper in the near term as bearish trend is expected to continue. "Copper prices were likely to find support at USD3.174 a pound, the low from August 8 and resistance at USD3.258 a pound, the high from November 12. Copper traders were disappointed with the lack of concrete details on policy reforms announced at China's Third Plenum meeting, which concluded on Tuesday."

Saxo Bank view on Copper:
Copper in the firing line after sell stops were triggered below 318 cents/lb. It is the potential for an earlier than expected taper that seem to have spooked the market following several months of range bound trading between 320 and 340 cents/lb.We are currently testing the 61.8 pct Fibonacci level at 315.3 which so far has provided support while resistance now should be found at 320 cents/lb, according to Ole S Hansen, Head of Commodity Strategy at Saxo Bank.

India Copper futures
India copper futures at Multi Commodity Exchange continue to weaken tracking global cues although an increase in index of industrial production (IIP) augurs well for metals complex. Higher cement and steel production could be an indicator of more construction activity which should provide support for copper and other metals, Sreekumar Raghavan said. Among the industry products that showed growth in production in September on an annualised basis were copper at 26.5% and steel hot rolled coils at 23.4%
 


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