MARKET TALK: China Restocking Need To Drive LME Copper

The need at some point for China to restock its copper supply chain and strategic stockpile is price-supportive for prices going forward despite the recent sell-off, says Numis Securities analyst Simon Toyne. Notes the less attractive economics of scrap supply at lower prices and the less pronounced incentive for substitution away from copper at lower prices. "A combination of these factors plus still-low inventories, and the fact the first quarter is seasonally weak anyway, suggests some cushioning to the price," Toyne adds. But "major breakouts" to the upside seem unlikely. LME copper trades at $5,760 a metric ton, up from $5,730/ton overnight.