Friday , December 3 2021

Copper is the best bet for 2019 thanks to China and lower supply


If China goes on, even metals of the industry.

It is the message of troubled investors who leave an irregular 2018, when Trump's trade tensions, the Federal Reserve's increase in tax rates, the strengthening of the dollar and the economic slowdown in China were combined to increase the stock index. Metals from London to its first annual loss since 2015. Five metals dropped 13% or more, led by zinc, which lost more than 20%.

The bull market is aiming for the reduction in deliveries to increase prices after one year as described by broker Marex Spectron as "terrible", and hope that China will support stimulus measures early next year. But others are not so convinced of the weak imports of the Asian giant in November.

"Base metals will keep pace with China, and I want the story to get better," said Rob Haworth, who helps oversee approximately $ 164 billion in US Bank Wealth Management in Seattle. "Growth slows down and it is likely to continue that way. The warning would be if China dissociates from the Fed's adjustment and engages in significant stimulus."

The best bet for 2019 is copper, says Hui Shan, a strategist at Goldman Sachs.

The decline in China's visible copper reserves this year indicates that demand for China's crude metal has risen from five to 6% in 2018, according to JPMorgan Chase Bank's estimates. It is over consensus at the beginning of the year for a result of two to three percent.

"Chinese copper needs are not as bad as people think," said Natasha Kaneva, head of metal strategy at the global commodity group at JPMorgan. In general, the bank maintained an upward trend in the base metal complex until the end of 2018 and the first half of 2019.

Société Générale estimates that global copper breakdown production will increase 1.6% next year, below average 3.4% for 10 years, saying that the lack of sufficient investment would lead to a delay in supply by 2018/2019 and the future.

The International Monetary Fund encourages growth of 3.7% of the world's gross domestic product this year and the next, including slower growth for the United States. (2.5%) and China (6.2%) in 2019, while India will expand 7.4%.

"We hope that the current pessimism that weighs on metals, whether it's the trade war, the dollar's strength or concerns about the strong slowdown in China's growth, will be easing next year," said Shan.

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