Copper looks overvalued, prices to come under pressure – ANZ

Copper has been one of the best performers in the commodity market. Nevertheless, strategists at ANZ Bank see risks skewed to the downside for copper prices. The economic backdrop remains weak, demand will fall 4% in 2020 with supply issues driving concerns of tightness.

Key quotes

“We see continued strength in Chinese copper demand failing to offset the weakness in the rest of the world for a while yet. We forecast demand will fall 4% in 2020, with growth remaining subdued in 2021.”

“We forecast the copper market to move into a surplus of 565kt in late 2020, as the economic backdrop inhibits demand growth. This compares with a deficit of 100kt last year. This would be the largest surplus in the copper market since 2012.”

“We reiterate our three-month target price of $6,000/oz.”