Although the fundamentals of the copper market are supportive over the long term, we see only limited upward pressure for the remainder of Q2. This is principally owing to a weaker-than-expected seasonal rebound in Chinas copper demand ahead of what is usually a quiet period in the summer.
The lack of major mine supply disruptions is not helping the short-term bull case for copper either. At the macro level, the current short-covering rally in the dollar is a cap on coppers upside too.
Hence our Q2 base-case LME cash price forecast is at $6,980 per tonne, which is up 2% from the quarter-to-date average, at the time of writing, of $6,833 per tonne. We are more constructive towards copper for H2 2018, in part reflecting a tighter concentrate market, stronger global growth dynamics, growing inflation pressure, and the likelihood of renewed weakness in the dollar. Our H2 base-case LME cash price forecast is at $7,250 per tonne, up 6% from price levels now.
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