MTECHTIPS

MTECHTIPS:- 'Copper may have gone too far on demand hopes after QE'

The industrial commodities such as copper and Crude oil could consolidate in the near term, with both trading at prices typically consistent with tighter supply/demand fundamentals, said TD Securities in a commodity snippet.According to the firm, both may have risen too quickly on hopes for improved demand due to more quantitative easing around the world and the European Central Bank’s debt-backstop promise.In the case of copper, prices are now at a level that in the past meant the market was worried about chronic supply deficits, Chinese imports were surging and the Shanghai/LME price premia implied a material shortage in China.“Today, all we have is a hope that recent central-bank action will lift the economy and the hope the Chinese authorities will stimulate more,” TDS noted.“It seems to us that given the overhang of metal and metals goods inventories in China and in much of Asia, there needs to be a restocking process before copper can go higher on a sustained basis,” they added.