Base metal: Further recovery of prices is taking its time – Commerzbank

Dr Jörg Krämer, Chief Economist at Commerzbank, suggests that the price of copper is trading well under $5000 per ton again while the uncertainty about China‘s medium-term copper demand is causing considerable price volatility.

Key Quotes

“At the same time, many experts believe the supply outlook has brightened: the risk of huge production cuts is considered to be lower due to cost savings and higher prices again recently.

Even so, we remain skeptical about production: in the current year, supply is unlikely to cover demand in our view. Copper could therefore rise in price on a lasting basis over the year and should cost 5200 USD a ton at the end of 2016.

In contrast, the situation on the aluminium market remains relaxed. In China, producers have been making a profit again so production was strongly expanded again in March. And production outside China has risen to a 5-year high.

The aluminium market continues to show a clear oversupply. Consequently, the price of aluminium should not lastingly rise above $1550 a ton by the end of 2016.”