Copper prices could soon see significant pressure due to what many are calling ‘a wall of supply.”
A recent report from CNBC, citing commodity analysts at Goldman Sachs, reveals a supply glut could translate to reduced copper prices for the foreseeable future. In fact, the weakness of copper (in addition to the strength of zinc) has been one of Goldman Sachs’ focal points this year.
Jeffrey Currie of Goldman Sachs (NYSE:GS) and his team of analysts said in a note,
Over the next three to six months we believe that copper will continue to underperform zinc, with copper about to hit a wall of supply, while the zinc concentrate market continues to tighten.
This week, three-month copper on the London Metal Exchange slipped following weak export data from China. The metal recently reached a two-month high as recently as the end of September, the news source stated.
In copper, we expect the main catalyst for the downside will be accelerating oversupply, but we are also conscious that we are entering a weak seasonal period for demand during which period inventories tend to build and prices often come under pressure...In zinc, the catalyst for further upside is that we expect a further substantial tightening of the concentrate market over the winter, which should result in zinc smelter production curtailments in China.