10/05/2024
US MONETARY POLICY NAD SPECULATIVE INTERESTS TO DRIVE COPPER TREND IN Q2: SUCDEN
Expected interest rate cuts from the US Federal Reserve and speculative interests will have a strong impact on the outlook for base metals in the second quarter of 2024, Daria Efanova, head of research at UK-based service provider Sucden Financial, said .
All eyes are on the US Federal Reserve while markets expect long-awaited interest rate cuts. Sucden predicts that the Fed will cut rates at least twice in 2024, with the first being in June or July.
Also, she noted the US election in November could create a gap between rate cuts due to potential inflationary pressure, pushing the rate cut further into the year or into early 2025.
In Europe, Sucden predicts that the European Central Bank will cut rates by 25 basis points in June due to the “orderly softening of inflation.”
For the second quarter, Sucden predicts that COPPER will maintain its elevated price level due to both solid fundamentals and easing monetary policy conditions.
In the long term, Sucden predicts that this will be the last year of a global copper surplus and expects market tightness to continue for the rest of the decade.
There’s a lot of mine closures and operational issues that have prevailed over the last couple of years.
She also noted the impact of falling treatment charges (TCs), making profit levels unsustainable for many Chinese smelters and contributing to the tightness in the concentrate market.
Sucden predicts that TCs will remain low.
In the long term, however, Sucden remains bullish on copper and expects more strength for the metal in the coming years due to its increasing use in electric vehicles (EVs).