Can fundamentals catch up with prices?

摘要

The copper price held to an upward trajectory in October, with 3-month prices rising from a two-month low of 5,814 dollars/t on 5th October to a high of 6,765 dollars/t on 26th October before softening slightly to an official price of 6,505 dollars/t on 28th October. This is in the context of a global market that we estimate is heading for a surplus of almost 300,000t in Q4. On the face of it, the market appears to have moved further ahead of fundamentals, which poses several questions. On a pro-rata basis our estimate of the Q4 surplus in October is almost 100,000t. Exchange stocks have risen by only a little over 16,000t since the start of October to reach more than 500,000t currently. Where has the rest of the tonnage ended up? It is clear that investors are taking an interest in the market. What effect is investor interest having on prices, and at what point could investor money leave the market? Finally, if prices have indeed moved ahead of fundamentals, could fundamentals catch up, or will prices fall?