Investing.com — Copper prices are facing downward pressure as slowing demand growth is outpaced by resilient supply, BCA Research said in a note this week.
BCA warned that metals market fundamentals indicate prices will be vulnerable over the next six months.
“Investor copper purchases have supported prices, even as demand growth has slowed and fallen below the pace of supply growth,” BCA said.
The research agency expects this dynamic to shift further towards oversupply, creating downward pressure on prices.
Weaker Chinese demand is also cited as a major headwind. BCA emphasized that even if Beijing implements meaningful stimulus measures to stimulate the Chinese economy, “it will likely take at least six months before the rise in copper prices begins in earnest.”
Until then, sluggish demand from China will weigh on the market. The outlook for copper demand outside China is also bleak.
“Investors should not bet on an acceleration in copper consumption from China as global manufacturing and industrial cycles teeter on the brink of another contraction,” BCA warned.
In the short term, BCA sees few reasons for optimism. “It is premature to bet on an acceleration in copper demand in the coming months,” the report emphasizes.
Instead, BCA suggests that the better opportunity to take a bullish stance on copper and related mining stocks will occur “over the next six to nine months” as market conditions potentially stabilize.
For now, the research firm cautions investors against expecting a recovery in copper prices in the near term, citing the combination of oversupply and weak demand as lingering obstacles.
