Archie Hunter, Base Metals Editor at Fastmarkets, stated purchasing in copper on-demand pick-up expectations.
In an interview with CNBC-TV18, he said that we had China markets come back last week and noticed an enormous thirst for purchasing futures based on what we perceive as low stocks and expectations that demand will pick up. Demand for consumer goods, electronics, and housing in the US are essential factors increasing expectations for copper demand growth at the moment, and supply is trying to keep up. It continually develops as prices come up, but there is a delay.
He stated that reports of Chinese smelters preparing to cut copper production and bullish positioning in the options market have also improved fuel the rally.
On the demand-supply deficit, he replied that our channels at Fastmarkets are forecasting a deficiency in the developed market of 575,000 tonnes for 2021.
the strong dollar and fruition of demand are hazards for Copper rally
That is rising in the second quarter, where they predict that around 4% of refined consumption globally, there will be a shortage there.
As stated by Hunter, the strong dollar and fruition of demand are hazards for the metal rally. He considers the dollar is an essential factor – whether we get a more powerful dollar. But he thinks more urgent is demand. People are speculating about spending big on things when they get out of lockdown, but will it be products, or will it be endured? If we were bullish copper, that would have him staying at home and buying a new microwave every 5 minutes.
This is one of the issues. Can that unique electronic demand sustain? And we are speaking about years here, and people are noticing supercycles. So can that be supported in the future is the real problem.
He replied that many prominent industry analysts had updated their price targets higher. Nevertheless, Fastmarkets is more careful and anticipates an LME copper price of $9,600 per tonne in Q2CY21.