KITCO NEWS - After falling to its lowest level in two months, copper could see more pain in 2018, according to one commodity analyst.
In an interview with Kitco News, John LaForge, head of real asset strategy for Wells Fargo, sees the metal dropping to $2.50 per pound next year due to a slowdown in China's economy.
"China is 50% of all demand [of copper] in the world right now," LaForge says, "frankly, their GDP rates are slowing; we're not in that 11-12% number anymore, we're now in 5-6% and we're slowing coming down. China is now more than 48% of the world's demand for [base metals], so China's growth rate really matters"
His comments to Kitco News came as copper saw its worst single-day percentage decline in two years, pushing prices to a two-month low. High-grade copper settled Tuesday at $2.946 per pound.
According to reports, copper was under pressure due to renewed strengths in the U.S. dollar and rising inventory levels.
LaForge was not surprised by today's sharp drops in copper prices. "Because of these bearish super cycles [with commodities], we can get major price rallies because all of a sudden we can get demand to outstrip supply for a period of time, but this rise above $3 has brought on more supply, and we're going to start seeing [prices dropping] next year," he said.
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This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.