Copper Prices Rise as Tighter Market is Forecast
October 07 2015 - 11:47AM
Dow Jones News
By Ira Iosebashvili
Copper prices rose to their highest level in more than two weeks
Wednesday, pushed higher by supply concerns and a jump in oil
prices.
Copper for December delivery, the most actively traded contract,
was recently up 1.7% at $2.3950 a pound, the highest price since
Sept. 21.
The global copper market will be tighter than previously
forecast this year thanks to production cuts in mines around the
world, the International Copper Study Group, or ICSG, said at the
conclusion of its Oct. 6 meeting. Supply and demand will likely be
balanced this year, the Institute said in a press release, revising
a previous forecast of 360,000 ton surplus. Next year will see a
deficit of 130,000 tons, compared with prior expectations of a
230,000 ton supply glut.
"The appraisal of the ICSG would justify significantly higher
copper prices," analysts at Commerzbank said in a note to
clients.
Chile's Collahuasi mine, the world's largest copper mine by
output, said last week that it will reduce production by 30,000
metric tons a year in response to low prices. The mine accounted
for 6% of global production in 2014. Last month, embattled mining
giant Glencore said it would shut two of its African mines in a bid
to slash its debt, taking an additional 400,000 metric tons out of
the copper market over the next 18 months.
The supply cuts have helped lift prices for the industrial metal
from more than six-year lows reached on worries about demand from
China, the world's largest copper consumer.
Copper prices were also boosted Wednesday by a surge in prices
for oil, which gained Wednesday after an industry trade group
reported an unexpected drop in U.S. crude supplies and government
forecasters called for stronger global demand growth.
Crude oil prices climbed have been climbing on signs of ebbing
U.S. production and increasing willingness among the major oil
producers to collectively jump-start the market amid the prolonged
price slump. Many investors trade copper and oil as part of a
broader commodities basket, with oil making up the largest part of
the basket.
Write to Ira Iosebashvili at Ira.Iosebashvili@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 07, 2015 11:32 ET (15:32 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.