London copper stocks reach nearly 10-year high

The London Metal Exchange (LME) announced on March 22 that copper stocks registered by the LME delivery warehouse reached a peak of 562,200 tons in recent 10 years, which is more than double the low point reached in October last year. More and more market analysts expect that the copper market will have an oversupply situation in 2013.

According to data released by the International Copper Research Group last Thursday, in the whole year of 2012, the global copper market suffered a supply shortage of 340,000 tons. The reason for such a large supply gap in 2012 was mainly due to the constraint on the growth of refined copper production, and China’s copper demand has increased significantly. However, the supply and demand situation may appear to be changing. Copper supply was oversupply in October, November and December of last year. The situation of tight market supply was concentrated in the first three quarters of last year. In December last year, the market had a surplus of 169,000 tons, and the surplus was more than six times last November.

The International Copper Research Group stated that the evidence in the first half of 2012 and the higher import volume showed that the undeclared copper inventory in China's bonded warehouses increased significantly in 2012. From this point of view, the actual consumption of copper in China may be significantly lower than the estimated consumption of copper stocks that were only released according to the customs bonded warehouse.

Macquarie analysts said that an important factor affecting the price of copper in the near future is China's macroeconomic data. The market will judge whether China's copper consumption can keep pace with the increasing supply.