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As LME copper prices tumbled to lows of $7000/tonne, uncertainty is the trend of the market. On the supply-demand side, copper market may be in a deficit of 200,000 tonnes in 2012 and prices could average $9850/tonne ..

03 Oct 2011

NEW YORK (Commodity Online): As LME copper prices tumbled to lows of $7000/tonne, uncertainty is the trend of the market.

On the supply-demand side, copper market may be in a deficit of 200,000 tonnes in 2012 and prices could average $9850/tonne next year.

Supply

-Mines face prospects of increased worker’s strikes which could severely curtail production. This has been evident in recent strikes at Escondida and Freeport mines. Output has also suffered from snowstorms and other bad weather.

-Lack of investment has caused deterioration in Ore grades in Chile. Mining companies are therefore contemplating on significant investments in order to sustain, if not increase the output in coming years. Codelco plans to invest around $17 billion over 2011-2015.

-In Peru, tension between mining companies and workers has been growing. So has the relationship between the miners and the community. President Olanta Humalla has also imposed an additional $1 billion levies on mining companies.

Demand

-US copper demand has been relatively unchanged for the year as compared to 2010.

-Demand from EU is expected to deteriorate during second half of the year. However, for the year as a whole, demand will be relatively flat.

-Japanese copper demand may continue to remain high as reconstruction drive post the March earthquake continues.

-Chinese demand picture is uncertain at the moment. Chinese base metal industry has undergone a significant destocking this year, particularly due to increasing monetary tightening combined with an uncertain economic outlook. Imports of copper in August increased to their highest level this year, and are expected to rise further in the coming months.

Price Forecast

Copper prices may hit $10,000/ tonne next year. However, prices are expected to average $9850/tonne for the year

 

Source: NCM metals Review


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