MARCH 10, 2020 / 7:47 AM / 11 DAYS AGO Column: Amid market turmoil, Doctor Copper isn’t panicking… yet
“That’s not to say copper and the other base metals couldn’t tumble further in price. China’s full economic recovery is going to take time. Citi, for example, expects “economic stagnation” in the first quarter, “some improvement” in the second and a “much stronger” second half prompted by stimulus. The country’s internal metal dynamics have been massively disrupted and short-term stresses are clear. Producers have largely managed to keep operating over the last month even while many downstream manufacturers have remained closed. This has led to ballooning inventories of metal and calls for government help. Physical supply-chain dislocation could yet bite copper if China’s import flows are redirected towards LME warehouses, even if briefly. Citi analysts think copper could lurch lower to $5,200 over the next couple of months before a China-led recovery picks up steam in the second half of the year. That’s a relatively benign bear forecast relative to what’s just happened to the oil price and stock markets. Each of those had its own specific drivers. China is copper’s driver right now, and the good “Doctor” seems to be hopeful about the country’s recovery prospects.”
