Well, that rally didn’t last long. BMO Capital Markets analyst Jessica Fung pointed out on Tuesday that copper prices have given back all of their gains so far from 2016. Prices rose as much as 7.5 per cent before they started to slip in March.
And Fung said further declines are a strong possibility in the short term. She noted that June is typically a weak month for copper prices, the U.S. dollar could rally on expectations of a summer rate hike by the U.S. Federal Reserve, and copper restocking has gone “just fine” this year. Plus, there are just few signs of demand strength.
That said, she does think better days could be ahead for copper investors as global mine supply growth should “slow significantly” in a couple of years, and “slow and steady” demand growth should continue.
“We can’t be ‘copper bears’ forever, and we are starting to think about the approaching market deficit in a few years,” Fung said in a note.