NEW YORK Comex copper prices continued their downward slide April 22 due to weaker-than-expected demand from China coupled with an earthquake that rattled the Sichuan province April 20.
The most actively traded May copper contract closed April 22 at $3.131 per pound, down 0.6 percent from $3.1485 at the end of last week and 16 percent below $3.72 per pound at the start of the year.
Market participants said that ongoing struggles in Europe, weaker-than-expected demand from China and the April 20 earthquake have all contributed to the recent decline in Comex prices.
"I think China had a little bit of a time-out during the transition period from one political leadership to another, and everyone is still marking time before the infrastructure projects start to get the green light again," one trader told AMM.
Chinas refined copper imports declined to 218,823 tonnes in March, down 1.8 percent from February and 36.7 percent below March 2012 levels (amm.com, April 22).
The lower-than-expected demand from China comes at a time when analysts are forecasting the global copper market will be in a supply surplus over the next few years.
"Supply of the metal will exceed demand by 341,000 tonnes this year, more than last years 238,000 tonnes, and the market will be in a surplus through 2017," RJ OBrien Metals Research Groups managing director of metals, Janet Mirasola, said in an April 22 research note.
The expectation of a surplus encouraged Goldman Sachs to lower its 12-month copper price forecast to $7,000 per tonne ($3.175 per pound) April 22 from $8,000 per tonne ($3.629 per pound) previously.
Citi Research Group earlier this month also lowered its forecast for the 2013 average price to $3.41 per pound from $3.61 previously.
"Coppers issues are very plain. Demand is down and supply is up," an analyst said, although he noted that the wall slide at Kennecott Utah Coppers Bingham Canyon Mine April 10 will help alleviate the oversupply problems. "The tragic pit slide at Kennecott makes the imbalance less severe than it would have been. That takes away 20,000 tonnes a month."
Kennecott Utah Copper, a division of London-based Rio Tinto Plc, declared force majeure April 16 (amm.com, April 16).
Copper stocks in global London Metal Exchange-approved warehouses totaled 614,350 tonnes as of April 18, nearly double stocks of 320,000 tonnes at the beginning of the year. Inventories in New Orleans warehouses alone totaled 176,550 tonnes April 18, up from 75,775 tonnes in the same comparison.