NEW YORK Copper and steel
prices should rise over the course of 2013 as Chinese demand
rebounds following the countrys leadership transition,
according to VTB Capital Plc.
Chinese demand for industrial
metals is poised to bounce back over the next six to 12 months
after having "bottomed out" during the third quarter of 2012,
Wiktor Bielski, the Moscow-based companys global head of
commodities research, said at the VTB Capital Investment Forum
in New York.
"The underlying data is
beginning to look encouraging, particularly an enormous
increase in liquidity," he said. "We have the conditions for
Bielski said that uncertainty
related to the Chinese leadership transition delayed some
large-scale investment projects, but it was unlikely to be an
"While there will be a shift
towards more consumption-driven policies, they still need more
investment in the short term to support urbanization," he
However, a pickup in demand will
only highlight the lack of readily available material at London
Metal Exchange warehouses, with up to 85 percent of metal
locked up in financing deals or stuck in queues.
"There will be very little float
available when demand picks up again," Bielski said. "So, yes,
China will have an impact (on prices) as demand picks up, but
thats when these financing deals will start to become
He said that LME warehousing
rules are unlikely to change to suit metal consumers, despite
the recent purchase of the exchange by Hong Kong Exchanges
& Clearing Ltd. (
amm.com, Dec. 6). "The problem is (that) the LME
is still controlled by producers. There are no consumers on the
LME board and nothing in the LME remit to make it do anything
friendly to consumers," Bielski said. "No one has broken any
rules. There have been opportunities to change the rules ...
but nothing has ever happened. So I dont see how this
situation is going to change."