Goldman predicts a surplus of copper in the market and a decline in prices to $ 6,200 per ton

Goldman Sachs, in its most recent commodities analysis, reports that the global copper market will experience a surplus of around 350,000 to 500,000 tonnes during 2014-2015. In addition, copper prices are likely to drop to a low of $ 6,200 per tonne within twelve months.

The copper market is likely to remain in surplus in 2014 and 2015, according to Goldman Sachs. This is despite strong growth in demand from global markets and expected reductions in the capacity of copper smelters around the world. Copper prices are expected to drop to $ 6,600 per tonne over the next three months. Prices could drop further to $ 6,400 per tonne over a six month period. Over the next 12 months, prices could reach $ 6,200 per tonne.

Investment banks notes that there are several negative factors that are weighing on the copper industry. One of these factors is the excessive amount of goods in the Chinese property market. Banks expect the Chinese real estate market to remain bearish in 2014 and 2015. The lagging dynamics in the real estate market could keep the prices of copper goods.

Secondly, there are a lot of goods in customs warehouses in China. It may take at least 6 to 12 months for the situation to resolve. Consequently, the forecast for the average copper price for 2015 has already been reduced from $ 6,600 to $ 6,400 per tonne and that for 2016 has now been reduced from $ 7,000 to $ 6,600 per tonne.