“We see signs that reduced supply and increased demand may be more than temporary and are likely to help keep industrial metals prices stable from here. Metals and mining firms have been improving their balance sheets by reducing debt and decreasing investment in additional production capacity. Ongoing supply-side reforms in China, meanwhile, are curtailing overproduction of certain metals,” according to BlackRock.
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A near-term issue for copper is the ability of the Trump Administration to get its ambitious infrastructure efforts off the ground, something many market observers believe will not happen until next year. Additionally, if that effort does not approach the $1 trillion in expenditures promised by the president on the campaign trail, markets could be disappointed.
“On the demand side, we see sustained global economic expansion and relatively healthy demand from China providing support. Our base case: Chinese demand growth should slow only gradually as the country rebalances its economy toward consumption,” notes BlackRock.
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