Friday, 6 March 2009

Copper Prices Set to Rise?

With copper prices at half the level they were in the first part of 2008, 2009 looks like being a tough year for most in the copper supply chain. But, according to Metal Bulletin, the general consensus is the year will be one of two halves, with demand and prices recovering as we head into the second half. Just how quickly the industry can move back towards balance will be a key discussion point at Metal Bulletin Events' 22nd International Copper Conference – a timely meeting place for those in the copper business who want to get a handle on where the challenges – and increasingly the opportunities – lies.

Having outperformed many other commodities in the last three or four years, when copper’s fall came it was always likely to be heavy. But the downside may well be overdone, given the metal’s singular failure to keep production plans on track in recent years. High prices and substitution may have eaten into the demand side, a factor now compounded by the credit squeeze and consumer conservatism. But on the opposite side of the coin, a combination of technical problems, falling ore grades, labour unrest, re-estimated mine economics and financing restraints could equally keep a rein on supply growth. ICSG figures show a less than 2% rise in mine output in 2008, with most of the growth feeding SX-EW production, and while a 10% increase is forecast for 2009, past experience shows us that actual output tends to fall short of expectations.

By June 2009, the current gloom and doom should be starting to lift, allowing the copper industry experts on Metal Bulletin’s conference programme to provide a clearer view of the mid to longer-term marketplace – especially in terms of both primary and secondary supply growth, and demand dynamics in the key consuming markets.

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