SG:Copper eyes 2012 record on taut supply - Trafigura
Reuters reported that copper is set to print new records as soon as the Q2 of 2012 as top consumer China restocks more than making up for softening demand from struggling economies in the West.
Mr Simon Collins director at commodities heavyweight Trafigura said that "I'm still a believer in the commodities supercycle. I don't think that story has changed. The fundamentals of markets where raw material supply are constrained are good and that in 2012 that is primarily coming in copper and nickel.”
The trading house, one of the world's biggest commodity companies, registered USD 79 billion turnover in 2010, mostly from its holdings in metals and energy. It bought metals warehousing and logistics firm NEMS in March 2010.
While copper has been a top pick for investors because of its tight supply pipeline, worsening economic indicators in the euro zone and United States, and signs of decelerating Chinese growth have increasingly made many review their stance.
At least nine banks have either cut their copper price forecasts or warned of downside price risks, since the most recent Reuters commodity price poll in July showed a median of analysts expected LME cash copper to average at USD 9,995 per tonne next year.
Mr Collins said that a 33% correction in the copper price this year from February's record highs of USD 10,190 per tonne to USD 6,800 per tonne has enticed Chinese copper consumers back to the market. It traded at USD 6,990 per tonne at 1130 GMT.
He said that as soon as we see prices coming down then the raw materials side of the business show itself as being very tight. I think we could reach historical highs again in the second quarter, traditionally seen as peak demand.
Mr Collins said that we're seeing that the scrap spreads are narrowing quite a bit. The Chinese are buying more concentrate. They are coming back to the market. They have been trying to hold back for some time, but eventually they have had to buy.
He said that European copper scrap is trading at 1% discount from 3% a few month ago as material is drawn to the Far East where premiums for refined copper have jumped to more than USD 150 per tonne.
