Intl. FC Stone sees grim times for copper in 2016

Miners left in ‘shell-shock’ by the slide in copper prices will need to shake it off quickly and start cutting output much more deeply as consumption of the metal in Asia’s largest economy stops growing.

“It’s grim-to-bleak, so the onus is on the supply side. The market needs to transition to a lower price point to force more cuts,” International FC Stone analyst Ed Meir told Bloomberg on the sidelines of an industry conference in Shanghai.

The analysts from the commodities broker predicted the price of the industrial metal – often regarded as a good barometer of global economic activity – would fall 17% to $3,800 per metric tonne in 2015 following a drop of 27% this year.

The stronger US dollar would also weigh on its price, Meir said.

As of 15:58 three-month copper futures were retreating by 1.3% to hit $4,599.50 per metric tonne on the LME.

That compared to a forecast from Goldman Sachs calling for a retreat in prices to $4,500 per metric tonne by the end of 2016. Analysts at Macquarie were less bearish, reportedly telling the conference the current price was already unsustainably low.

“There may be a lot of cuts coming, but the market isn’t sure if they are permanent in nature, or if they are enough to make up for the slowing demand. China’s industrial sector appears to be in a recession,” Meir told the Wall Street Journal on 12 November.