Copper squeeze likely as stocks drop ahead of smelter supply

jueves 13 de febrero de 2014 12:31 GYT
 

* Copper market backwardation could spike

* Large copper stocks position returns to LME

* Available LME copper stocks down 75 pct since March

By Eric Onstad

LONDON, Feb 13 (Reuters) - A short, sharp squeeze could be on the cards for physical copper markets as inventories fall and healthy demand outpaces expected new material from smelters.

Analysts expect the market to be weighed down by a surplus later this year due to rising mine output, but for now availability of refined copper is tight.

"There is clearly a substantial risk that the copper market could invert more aggressively during the early part of the year before higher refined output finally pushes the market into surplus," said Nic Brown, head of commodities research at Natixis.

"If anything were to occur which might impact supply unexpectedly ... then the market might find itself staring at the prospect of a brief but very painful shortage of metal."

The shortages are showing up in copper on the London Metal Exchange (LME), which has been in backwardation for over a month - a situation in which the nearby price is higher than the forward price due to strong immediate demand.   Continuación...