The outlook for copper isn’t very bright, with analysts expecting prices for the metal to fall this year.
Goldman Sachs analysts on Tuesday said they expects copper prices on the London Metal Exchange to average $6,850 per metric tons, or about $3.11 a pound this year. That’s down from an estimated average of $7,328 per metric ton, or $3.32 a pound in 2013.
The analysts see a surplus of 385,000 metric tons in 2014. “This reflects the strong growth in supply following a decade of mining capital expenditure, together with an anticipated strong ramp up in smelter output in 2014 and 2015.”
For 2015, they see a further price decline to an average $6,600 per metric ton.
On the LME, cash prices traded around $7,335. March copper HGH4 +0.02% traded on the Comex division of the New York Mercantile Exchange settled at $3.35 a pound,up less than a penny Tuesday.
When the U.S. Federal Reserve stops printing $80 billion a month to buy bonds, interest rates may jump, and that may stop the improvement in the U.S. housing industry and perhaps even trigger a recession, said Jeffery Born, a professor of finance at the D’Amore McKim School of Business at Northeastern University.
“This fear has pushed all but the most flush or optimistic corporations to sidelines, suggesting weak growth (if any) in manufacturing output for 2014, even if the end of QE isn’t announced this year,” he said.
“In this environment, my outlook for copper is pretty gloomy: sideways to downward price trends for the upcoming calendar year,” said Born.
Prices of base metals are seemed very less volatile, however, this can happen this year.
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