A 10% crash in copper prices in the new year was not meant to happen, as prospects for 2015 had been seen as bright. Copper is the commodity the big miners thought they could rely on. While oil, iron ore and coal have plunged in price, copper was viewed as a haven, relatively speaking. True, copper prices fell 14% last year, but prospects were seen as brighter for 2015. Levels of oversupply are said to be modest because many new projects have already been cancelled. A 10% crash in prices in the first fortnight of the new year was not meant to happen. Take your pick from a variety of explanations. Was it the World Bank’s downgrade of its global growth forecasts, from 3.4% to 3% for 2015, that did the damage? Have investors been scared by weak-looking Chinese industrial production figures? Or did a bunch of commodity speculators, perhaps burned by losses on oil, dump their copper positions in a hurry? What’s not in doubt is the potential of lower commodity prices to whack big miners’ earnings. It’s like 2008-09 all over again as analysts struggle to keep pace with the action. In an eye-catching research note Bank of … continue reading
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Source: CTRM Center