Dr. Copper Unable Yet To Clearly Diagnose Its Own Health In 2020

 | Dec 20, 2019 00:42

From New York to London to Beijing, there is less fear of a recession in 2020, as the U.S. economic juggernaut aligns with a tentative trade deal for China and a smoother path for Brexit. Looking at the expectations for copper, the No.1 metal for the economy, however, might make you disbelieve that.

Varying price forecasts over the next three years are making investors wonder who has the right call now on the red metal.

h2 Once In Lockstep With Economy, Copper Now Out Of Touch /h2

Called “Dr. Copper” by the greatest of economists during an era when the metal’s prices were in lockstep with the global economy, copper has increasingly been out of touch with its ability to foretell world growth. That will change next year, when low inventories, high short positions, supply constraints and better demand make 2020 the year for copper , say the cream of Wall Street banks, including Goldman Sachs, Morgan Stanley, Bank of America, Citigroup and Jefferies.

Yet, the more conservative but equally respected Fitch Solutions — a unit of global ratings agency Fitch — thinks copper will not have its renaissance till 2022 at least.

h2 Contrasting Outlooks, Price Gains/h2

Confused by the different outlooks?

Don’t be. The International Copper Study market update itself notes copper’s confusion this year, as the price remains trapped between macroeconomic negativity and bullish micro supply-chain dynamics, Reuters commodities commentator Andy Hall wrote in a recent column.

With less than two weeks left to 2019, even copper’s two benchmark exchanges, one in London and the other in New York, are showing contrasting gains for the metal while each trades near seven-month highs.

Three-month copper futures on the London Metal Exchange (LME) are up just over 3% on the year, hovering at $6,171 a tonne.