Copper: price drops ahead of Fed meeting

Copper prices fell on Monday under pressure from risk-off sentiment in global markets. Asian equities also fell as investors prepared for a Federal Reserve meeting at which it is expected to confirm the start of a massive liquidity drain that has supercharged growth stocks in recent years.

Goldman Sachs remains firmly in the bull camp, pointing to copper reaching $12,000 per tonne on a 12-month basis. The bank expects a supply-utilization deficit of 197,000 tons this year.

Citi, however, thinks copper should undergo a significant price correction, targeting an 8% decline over the next one to two months. Central to the bank’s view is the expectation that Russian copper shipments will accelerate after the expiration of a temporary 10% export tax.

Citi estimates that Russia has accumulated about 150,000 tons of copper stocks in the four months since the tax was introduced in August. This metal is expected to hit the market in the first quarter of this year, lifting depleted LME inventories and simultaneously depressing market sentiment, the bank says.