Copper prices, which more than doubled last year, are set to plunge as speculators unwind positions and global inventories expand, according to David Threlkeld, president of metals trader Resolved Inc.
“We’re going to see a catastrophe in the market,” said Mr Threlkeld, who estimates that prices may fall to less than $2205 a ton, around 67 percent less than today’s levels.
Mr Threlkeld said that some 90 percent of buying “has been from speculators,”.
“Whether they are exchange-traded fund speculators or China pig farmer speculators it doesn’t really matter, because that buying is going to come back to the market,” he said.
Three-month copper futures on the London Metal Exchange, which surged 140 percent last year after national governments spent billions of dollars to lift their economies out of recession, trades at around $6,750 a ton. China, the world’s largest user, imported a record 3.2 million tons in 2009, up 119 percent over the previous year.
Mr Threlkeld estimates that there are about 3 million tons of unreported inventories in China. The forecast for a slump may be driven by higher interest rates in China and the U.S., he said. The prediction reiterates an earlier call and didn’t come with a timeframe.
Stockpiles monitored by the Shanghai Futures Exchange totalled 101,210 tons last week, more than three times the level a year ago.
Output exceeded demand by 191,000 tons in the 11 months to November 2009, the World Bureau of Metal Statistics said on Jan. 20. Inventories monitored by the London Metal Exchange grew about 48 percent last year and stood at a one-year high of 543,525 tons yesterday.
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