GFMS Forecasts $11,000 per Tonne Copper by 2013

James West

By Liezel Hill
Mining Weekly
November 30, 2010

Copper prices will likely peak “well above” $11 000/t in 2013, supported by tight market conditions forecast for the next three years, metals consultancy GFMS said on Monday.

GFMS, which published the prediction in its quarterly three-year copper forecast report, expects an overall copper market deficit for 2010, and believes copper prices will rally through a series of all-time highs in the coming years.

The $11 000/t forecast would mean an increase of about one-third from the current price of around $8 200/t on Monday.

GFMS expects that an economic slowdown in the first half of 2011 will lower demand for copper, pushing the market briefly into a small surplus.

“Thereafter, the consultancy projects deficit conditions to re-emerge in the second half of 2011 and for these to remain in place over the following two years, as supply struggles to keep up with consumption,” a statement said.

The deficits are being forecast despite marked increases in production that are expected over the next couple of years, GFMS noted.

The high prices mean that miners will likely look at increasing output where possible and supply from secondary sources will also continue to increase.

But the trend towards increased supply will be partly offset by issues like political risks, declining grades at major copper mines and labour disputes.

Overall, GFMS expects refined copper production will increase by an average of 3,4% a year between 2011 and 2013.

At the same time, demand for the industrial metal will continue to rise, fuelled mainly by growth in emerging markets, GFMS said.

Chinese demand growth may slow compared with recent years, but, at an average of 6% a year, is expected to remain strong and will account for a little less than two-thirds of the global rise in annual consumption over 2010 to 2013, the consultancy predicted.

Copper prices will also likely be supported by ongoing investor interest, which will probably also result in high levels of price volatility, GFMS said.

“GFMS argues that the metal’s bullish fundamentals coupled with their expectation that the investor base for the wider commodities’ sector will continue to grow, will result in further inflows into the red metal over much of the foreseeable future,” the group said.

James West

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
More Info...

[email protected] | |

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.