China’s copper surplus irks some metals analysts

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.”