Copper may fall on concern demand will weaken as stockpiles increase and China, the world’s biggest consumer of the metal, moves to curb inflation, a survey showed.
Seven of 14 analysts, investors and traders surveyed by Bloomberg, or 50 percent, said prices will drop next week. Five predicted a gain and two forecast little change. Copper for three-month delivery was down 5.5 percent for this week at $8,812 a metric ton by 4:30 p.m. yesterday on the London Metal Exchange after reaching the lowest price since Dec. 8.
Copper inventories tracked by the LME are up 34 percent from the 2010 low to the highest level since last June. Taming inflation is its top priority, the People’s Bank of China, which has raised interest rates four times since October to slow price growth running above the government’s target, said this week.
“Given the glut of metal that needs to be absorbed and the impact that Chinese tightening measures appear to be having on sentiment and economic activity, copper’s short-term prospects continue to look poor,” Leon Westgate, an analyst at Standard Bank Plc in London, said yesterday in a report.
Inflation in China rose an annual 5.4 percent in March, exceeding the government’s 4 percent full-year target for a third month.
The red bars on the attached chart are derived by subtracting bearish forecasts from bullish estimates, with readings below zero signaling the majority of respondents expect a decline. The green line shows the copper price. The survey data shown are as of April 28.
The weekly copper survey has forecast prices accurately in 65 of the past 135 weeks, or 48 percent of the time.
