BMO: Average Copper Prices To Slide To $2.90/Lb. In 2016

                                
                              BMO looks for average copper prices to fall back to around $2.90 a pound in 2016, before recovering to longer-term levels around $3. The red metal has pulled back from recent highs above $3.25. BMO says those highs were driven by China’s Purchasing Managers Index and gross domestic product data, but could would be sustained only if lingering concerns such as China’s property sector improved. “Thus far, housing starts remain down in H1/14, with June recently reported at minus 9% year-on-year,” BMO says. “Further, while new yuan loans increased 26% in June following a ‘mini stimulus’ program easing credit restrictions for certain sectors, BMO Research understands that the vast majority of new loans were short term in nature and government-led.” On the supply side, mining companies reporting second-quarter and first-half copper output figures thus far have either met or beat BMO expectations, with guidance either flat or increased for this year, the firm continues. “This continues to point to strong supply growth near term, and the risk that, like 2013, this year’s ‘supply disruption’ could be lower than the historical average of 5% and consensus supply revised upward,” BMO says. - Kitco