Pessimistic global outlook for copper does not put Indian producers in a happy state of mind, but importers may reap benefits of falling prices.
The outlook for global copper for 2014 by sector analysts, financial institutions and copper producers almost mirrors the outlook forecast for 2013. At a micro level, the same is true for India, one of the top 20 global copper producers.
In a market surplus situation, there’s talk of more supply coming in next year, which predictably is being handed out as the prime reason for price levels likely to remain subdued in 2014. The global copper glut is poised to almost triple in 2014, and some say, this could drive prices down to the lowest in least three years.
However, as MetalMiner’s Stuart Burns noted in his copper price outlook earlier this week, how much can we count on a surplus?
PwC, the latest agency to join in this year-end ritual, has introduced a cautionary note in its forecast, saying the challenges affecting this metal were not over yet.
The price of copper, the forecast pointed out, had fallen from the US $3.70 per pound at the start of the year to the present US $3 currently. PwC said in its latest report that against the backdrop of write-downs, price drops and lower revenues, gold, silver and copper were the hardest hit metals of 2013, and will continue to struggle in 2014.
Goldman Sachs Group Inc had earlier forecast that copper will probably drop by at least 15 percent next year as commodities face increased downside risks while the US economy growth accelerates.
So where does all this leave India?
Typically, like with other commodities, the country’s copper rates, too, are linked to the London Metals Exchange (LME) price list, and the Indian rupee-US dollar exchange rates. As long as India was a net importer of copper, the falling global prices were certainly in its interests.