Copper prices are unlikely to fall much from current levels as prices have corrected significantly from April this year and at lower levels demand support is expected while some new mining investments are being differed which are also expected to limit supplies in medium term.

In the last three months, prices on the LME have declined by 13.28% dragged by the Eurozone crisis and the slowing growth in China. On March 13, three month copper on the LME was trading at USD 8,530 per tonne declining to trade at USD 7,397.50 per tonne on June 13th 2012.

Mr Gayle Berry base metal analyst from Barclays Research said that prices are already near their base level of USD 7,000 per tonne. A further fall is unlikely and the downside risk is limited unless the Eurozone crisis worsens significantly. At lower levels some demand support from China has already come in, containing the fall.

While China's macroeconomic story also fails to impress as its industrial output and retail sales trailed estimates but demand for copper tells has gone up. In May 2012, the country imported 419,740 tones of copper though it went mostly for inventory build up.

In a development that could change medium to long term supply scenario, some investments in mining internationally are being differed. Codelco, the Chilean state copper producer said that some mining companies are differing investment which is likely to eradicate expectations of copper market surplus in 2015 too. Hence, the deficit copper market situation is likely to continue, proving to be bullish for prices.

The International Copper Study Group also expects the world to be in a deficit for the third consecutive year. The deficit is likely to be 240,000 tonne this year. This would limit the fall in copper prices despite the macroeconomic concerns looming markets.

In very near future, investors are cautious as they await Greece to go to the polls on June 17th 2012 in a vote that may determine whether the country stays in the Eurozone. If the Left government, lead by Mr Alex Tsipras, comes into power then his agenda starts with cancelling the bailout terms and pass laws to implement austerity, which may put the country at logger heads with the European Union and up its changes of being kicked out of the single currency unit.

Source - Business Standard

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