Copper is having a steadier new year after finishing 2017 with a strong rally.
s hopes for synchronised economic growth in the year ahead rise, there is a brighter outlook for industrial demand for base metals. That will be one of the main reasons why copper will continue to shine, according to analysis from Bank of America Merril Lynch.
It has introduced a $7,700 a tonne price target on copper for the middle of 2018. That comes with the red metal trading at about $7,115. BofA argues that demand from China is set to remain strong, while that from the rest of the world will also gather pace.
“The Asian nation is no longer the sole marginal driver of the industrial metals,” says Michael Widmer, metals strategist. “With US and global growth holding up, the industrial metals will in all likelihood remain supported.”
On the supply side, he also points to contract negotiations at mines in Chile and Peru, “which may not go smoothly” and so could support prices.
BNP Paribas also points to trends that sound supportive for base metals prices. It notes a need for infrastructure spending, and not just in industrialising nations.
“There are enormous renovation needs in developed countries,” says the French bank in analysis looking at the top 10 investment themes for 2018. Meanwhile, “in emerging markets, infrastructure and urbanisation are essential for reaching the next stage in their expansion”.
Source: FT.com
