While Copper prices have retreated slightly from their recent record highs, analysts at Commerzbank believe it is still too early to expect a major correction. According to Thu Lan Nguyen, Head of FX and Commodity Research, and Volkmar Baur, FX Analyst at Commerzbank, ongoing supply constraints are likely to support the metal in the near term.
Copper Pullback Limited by Ongoing Supply Issues
Commerzbank noted that while China’s purchasing managers’ indices (PMIs) continue to show weakness in the manufacturing and construction sectors, industrial production has remained surprisingly resilient in recent months. The analysts also pointed out that the 10-percentage-point reduction in US tariffs on Chinese imports, announced on Thursday, has not yet been reflected in the PMI data and could provide some future demand support.
On the supply side, Chile’s statistics agency reported a further decline in copper mine production for September, while metal output growth also came in below expectations, according to a Reuters survey.
“Supply concerns are therefore likely to persist and limit Copper’s downside potential in the short term,” Commerzbank’s analysts concluded.
