Shilling: Copper’s Fall Will Continue As Producers Won’t Cut Output

by on

A. Gary Shilling writes that copper’s fall will continue because producers have a great incentive to increase output despite low market prices.

Free Download: Cut Costs on International Shipping

In his Bloomberg View piece, Investment and Money Manager Shilling blames the commodity boom of the early 2000s that led to massive building and expansion in China.

“It’s not economical to suspend some of these projects due to high sunk costs and shutdown expenses,” Shilling writes. “Some producers, moreover, may not be free to slash output as prices swoon, especially if they’re government-controlled and need foreign exchange to service sovereign debts.”

Copper is produced mainly in the developing countries of Chile, Peru, Congo, Zambia and Russia. China is a net exporter of aluminum but an importer of copper. The International Copper Study Group, made up of copper-producing and consuming countries, says demand will rise just 1.1% this year while output jumps 4.3%.

 

{Comments Off on Shilling: Copper’s Fall Will Continue As Producers Won’t Cut Output Comments Off on Shilling: Copper’s Fall Will Continue As Producers Won’t Cut Output}