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Prices of the red metal continues to fall

26 November 2014

According to recent studies, which were published by «CRU Group», for the next one and a half or two years the price of copper will continue to decline. According to preliminary estimates of the cost of the red metal will recover only in 2019, when consumption begins to exceed supply. According to the predictions of analysts, the fall in the value of copper is still in progress — likely, the cost of the red metal on the London Stock Exchange next year will drop to the level of 6750 USD / ton, and in 2016 reached the level of 6300−6400 USD / ton.

The main negative factor pulling down the price of copper, a weakened demand from China, in the 2015−2016 year will be slightly better demand in the North American region, but this is hardly enough to compensate for the slowdown in Chinese consumption. Given that the financing agreements has steadily decreased, and imports down tends red metal — a significant reduction planned for the first half of 2015. Another contributing factor — the construction industry is also expected to slow next year.

At the same time, the supply from the copper mines to increase by 5.7% over 2015, as the decline will be observed in 2017, together with the depletion of some deposits. Also it will be possible to observe the complexity of the completion of ongoing projects due to lack of investment at this point. Copper market expects a deficit of 400 000 tonnes by 2019, respectively, the price of copper will soar to the level of 8000−9000 USD / ton.

In October, the analysts «Morgan Stanley» forecast a decline in 2015 of 3% to the level of 7176 USD / ton in the current year, the price reached the level of 6939 USD / ton, confirming predictions made earlier. Despite the decline in the production of copper concentrate at the mine in the current year, from the PRC increased consumption. In recent years, increasing the smelting of refined copper, in spite of the weak construction sector in the PRC. Meanwhile, the August statistics Japan increases the release of electrolytic copper — an increase of 7% compared to August last year. This release of copper increases 7 months in a row, and will not stop in the second half of the fiscal year, from October 2014 to March 2015. In particular, from 8 companies producing copper, about 6 increase metal production by 2.7% compared to the same period last year, amounting to 772,439 tons.

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