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China’s copper surplus irks some metals analysts

April 7, 2016
A recent Reuters report said China is sitting on an enormous stockpile of refined copper stock estimated at over 1 million tonnes, and some analysts think the country could flood metals markets with copper because a dearth of new building activity has slashed domestic demand for the red metal.

The welcome rise in copper prices in 1Q 2016 may have some electrical distributors, manufacturers and reps breathing a sigh of relief, but metals analysts are offering three words of caution: Not so fast. A recent Reuters report said China is sitting on an enormous stockpile of refined copper stock estimated at over 1 million tonnes, and some analysts think the country could flood metals markets with copper because a dearth of new building activity has slashed domestic demand for the red metal.

Copper analyst John Gross, publisher of The Copper Journal, said that although 2016’s first quarter saw a 7.7% increase in copper prices, some of the most recent pricing data points to a market encountering headwinds and overhead resistance. He urged “caution, not undiluted optimism” in his most recent note to Copper Journal subscribers.  It may be a while before copper heads see any big boost in demand. Copper Investing News said in a recent post about the new Thomson Reuters GFMS annual copper survey that although pricing appears to be better so far this year, the forecasting firm still sees a surplus in copper for 2016 and that “expectations for a tighter copper market have been pushed out to around 2020.”