By Shihoko Goto — Exclusive to Copper Investing News
A slew of major copper producers released their latest production results this week, mo st of which were lackluster. Looking ahead, many companies are cautiously optimistic about global demand, and the recent surge in the overall US stock market is raising hopes that its appetite for the red metal will increase. Worries about Chinese demand and Europe's financial future are keeping the bears at bay.
Strong earnings results from manufacturers in the US have buoyed investor sentiment and enabled market players to shrug off some weaker-than-expected economic data this week, including a fall in existing home sales. That buoyancy has in part been reflected in the copper market. Yet growing anxiety about Europe, this time regarding Spain's financial situation, is putting a damper on copper demand, as are continued worries about China's growth prospects. European copper giant Aurubis (OTC Pink: AIAGF) is nevertheless upbeat about copper's outlook. The German group stated that a rise in US demand as well as a fall in European inventories will likely drive up prices moving forward. "The improved mood regarding the US economy is also seen as a cause, as it could lead to higher copper demand," the company stated in a market report. "Although demand for spot cathodes (newly-produced copper) in North America is currently moderate, the start-up of the inventory reduction has secured quantities for later deliveries." Further, the company said that a delay in South American cathode shipments has led to a fall in European warehouses and driven up prices. However, according to research group Thomson Reuters GFMS, copper is expected to average $8,475 per metric ton in 2012 amid sluggish demand. “There is a continued negative impact on sentiment and consumption from the ongoing euro-zone crisis,” stated Sanjay Saraf, research director for base metals, in Thomson Reuters' latest outlook report. “Recent data and reports from China indicate a cooling economy and subdued demand conditions.” In late afternoon trade Thursday, COMEX copper for May delivery is slightly lower, down 0.1 percent at $3.63 a pound.