Copper to Suffer From China Demand Problems: Shover

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Jan. 7 (Bloomberg) -- Bloomberg’s Julie Hyman and Larry Shover, CIO at SFG Alternatives, look at the copper market on today’s “Futures In Focus” on Bloomberg Television's "In The Loop."

I think it's pretty serious.

Let's keep in mind that concentrated copper is still in surplus.

It is the refined copper that is being squeezed.

With any movement in pmi, all eyes are on that, this is the first drop we have seen since july.

There is a great divergence between brics and other countries.

Does that mean we will continue to see declines in copper prices?

Right now, we are in a broad- based bottoming pattern.

There is so many mixed signals.

When you look at supply, this is something we have not heard in so long, chilean copper output in november was 7.5% better year-over-year.

On top of that, there is also supply of supply and if i had a dollar for every time i heard this is better than last year, i would be wealthy.

It is hard to say.

Concentrate is in surplus.

Stocks are being drawn down on the refined and as judged by shanghai, london, and new york but there is still a lot of unrefined copper behind that to fill the gap.

At best, i think prices will be stable.

Price action will be hard, maybe partially stable at best.

In december we saw a little pickup in copper prices but many people said that was due to short covering.

Do you think there is any more steam left in a short covering rally?

I think any kind of rally above 345 in the march contract, we will start seeing selling.

I think the shorts have all been squeezed out by the reports i have seen.

It seems like a mixed-signal right now technical trade, not a whole lot of short covering right now.

Let's look further out this year because you say there is a gap between so-called developed nations and the bric countries and growth in the u.s. is estimated to pick up this year.

If you look more over the past two months but look out further, do you see some better fundamentals for copper prices because of a better global economic picture?

Yes, 3-6 months poor to stable and i think prices will get better after that.

The price cannot be good enough for refineries to refine the copper.

We will see a vast amount of surplus in the concentrate and it will take time for that to be refined to get to market.

A year or three years out, price action will resume but right now, i don't see it getting much above $350 at best between now and six months.

Not a very good prescription.

Thank you so much.

We will be "on the markets" once again in 30 minutes.


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