The expectations are on that the copper supply may exceed the current demand in 2013 for the first time since the last four years as the output from the mine has increased. A senior executive officer in a Japanese copper factory mentioned that the supply will for sure exceed demand by 199,000 metric tons compared to the deficit of 95,000 tons in 2012 and 132,000 tons in 2011. Since long, copper was following a modest kind of trend but this year, the expectation of the current surplus demand looks like modifying the trend and this may lead to bitter trading options for some traders.

China is the biggest user of the metal in the world. Presently, most of the industries across the world are concentrated in China because of the cheaper labor and the trader-welfare economy in the country. But, copper lost 2.8 percent last year, though it is excessively used in the electronics and automobiles industries, because of the debt crisis in Europe and the economic slowdown in China. Now, there are anticipations that this surplus may actually limit the price gains and also cutting the costs for many of the top manufacturers in the world. Now, experts also claim that the market will have to remain constricted as the stock-to-consumption ratio is expected to remain low due to the labor disputes at few of the mines.

Regarding the growth in the supplies, experts claim that the global output will increase by 6.8 percent reaching 21.1 million metric tons in 2013 whereas the demand will only increase by 5.3 percent reaching 20.9 million metric tons. Thus the surplus supply remains at 0.2 million metric tons and this will certainly affect the price scenario. This excess supply will be seen in contrast to a deficit of 320,000 tons in 2012. Moreover, the supply growth from the mine is expected to increase by more than 8 percent which has not been witnessed for more than a decade. Specifically, from China the supply is expected to increase by 12 percent to 6.3 million tons whereas demand rising by 5.7 percent to 8.5 million tons.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.