Global copper markets will be oversupplied for at least two years, executives at some of the world’s major producers of the metal and traders said on Wednesday, casting doubt on the chances of a prolonged rally in prices.
That tempered assessment of the market at an industry conference in Shanghai came after benchmark copper prices last week recorded their biggest weekly gain since 2011, largely fuelled by U.S. President-elect Donald Trump’s promises of infrastructure spending.
“In 2017, it will still be a relatively oversupplied market. In 2018 it will not be better than 2017,” said Yuneng Wu, vice president of Jiangxi Copper Co, China’s largest copper producer. Global markets for the metal, used in everything from wiring to construction, have been burdened by oversupply as mines ramp up output in places such as Chile and Zambia.
Some bullish traders and analysts had embraced last week’s rally as the first sign the market was poised for a prolonged bull run, ending a years-long rout that saw prices fall more than a third since July 2014 as demand growth in China faded.
But while prices may have bottomed out for now, they will not trade beyond $5,000-6,000 per tonne going into 2017, said Jinbi He, founder and president of Maike Metals Group, one of China’s top metals traders. Prices stood around $5,500 on Wednesday.
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