18 Feb 2015
Copper discount short-lived? - TDS
FXStreet (Guatemala) - Analysts at TD Securities explained copper would be wise to consider the impact of BHP reductions and rising risk of PBoC cuts.
Key Quotes:
"Copper markets did not respond positively to the announcement that BHP Billiton Ltd's Olympic Dam mine may lose as much as 70k tonnes of production this year due to repairs to the largest of three processing mills."
"Similarly, there was not sustained rally after the PBoC cut the RRR ratio by 50bps to 19.5% last week. We think the current sentiment may lift into Q2, as the high surplus estimates are revised down."
"Indeed, lower-than-expected copper output at mines around the world combined with more consumption in China resulting from monetary stimulus, along with better prospects in Europe and a strong US, may leave this market relatively balanced in 2015. As such, the current discount on copper may not last for long, with prices moving north of $6,300/t (+12%) in Q3-2015."
Key Quotes:
"Copper markets did not respond positively to the announcement that BHP Billiton Ltd's Olympic Dam mine may lose as much as 70k tonnes of production this year due to repairs to the largest of three processing mills."
"Similarly, there was not sustained rally after the PBoC cut the RRR ratio by 50bps to 19.5% last week. We think the current sentiment may lift into Q2, as the high surplus estimates are revised down."
"Indeed, lower-than-expected copper output at mines around the world combined with more consumption in China resulting from monetary stimulus, along with better prospects in Europe and a strong US, may leave this market relatively balanced in 2015. As such, the current discount on copper may not last for long, with prices moving north of $6,300/t (+12%) in Q3-2015."