Taken from Copper Company Review
Exploration, Development & Production
October 2010- RCR..
Copper price outlook
The spot LME copper price hit a 27 month high of US$3.81/lb (13 Oct),
and is up 28% over the past 3 months. About a third of the gain (10%)
occurred over the past month. The copper price is up 34% over the past
12 months. The gains are driven by a strong demand outlook,
constrained new supply and declining LME stocks.
The copper market is forecast to move from small surplus in 2010 to a
deficit of 400kt 2011 (ICSG), reflecting a continuing surge in Chinese
demand and tight supply. The copper price is expected to remain
strong, at around current levels and above, for at least several years.
Global copper demand is forecast to grow to 18.9mt in 2010, up from
18.2mt (+3.8% or +692kt) in 2009, and is expected to grow a further
4.5% (+847kt) in 2011 to 19.7mt. The global demand growth in copper
is expected to be in the range of 3-5%pa, representing an incremental
annual consumption increase of 600kt to 900kt, prompting RIO to
comment that the copper market is expected to remain tight till 2020.
The main market growth is expected from China, which now accounts
for 36% of global copper consumption, compared to North America
which accounts for only 10%. China?s continuing urbanisation and
forecast GDP growth of ~10%pa is expected to drive per capita copper
consumption in China from ~5kg/capita currently to 10kg/capita 2020
In comparison to the scale of market demand growth, the largest
project expected to come online in the next few years is Oyu Tolgoi
(Mongolia), starting 2013 and forecast to produce 436ktpa copper.
There are many smaller and mid size projects that are moving towards
production, though against a general industry background of declining
head grades, projects of increased technical difficulty and cost, and
higher sovereign risk jurisdictions. This suggests the trend of long
development lead times and project delays will continue to hamper a
timely supply response to global demand growth.
Add to My Watchlist
What is My Watchlist?
