Copper market in deficit for 06, prices high – Macquarie
Source: Dow Jones
Books
Find books on Copper ? See also
Copper Board
Copper CatalogThe copper market will be in deficit during 2006 due to continuing supply disruptions with "chronically" tight stocks set to keep copper prices close to current levels through 2006, Macquarie said in a report late Friday.
The bank now forecasts a refined copper shortfall of 50,000 metric tons, down from an expected surplus of just over 200,000 tons at the beginning of the year, Macquarie's analyst Adam Rowley said.
Copper is currently trading close to record highs at $5,445/ton for three-month delivery on the London Metal Exchange.
Supply disruptions at mines have swung Macquarie's mine production forecast from surplus to deficit for 2006, moving from a 150,000 tons surplus to 150,000 tons deficit since the beginning of the year.
A lower mining rate at Freeport McMoRan's Grasberg mine in Indonesia accounts for 100,000 tons of loss, while problems with pit instability at the Batu Hijau mine will cut 45,000 tons of production.
Lower ore grades at Antofagasta's mine, a strike at Grupo Mexico's La Caridad mine and slow ramp up at Birla Australia also add to the supply shortfall, Rowley said.
The copper concentrate market will be in a 180,000-ton deficit and is likely to tighten, already reflected in falling spot treatment and refining charges, Rowley said.
For 2007, the copper market may move into a small surplus of 100,000 tons.
"With supply just not arriving quickly enough, it is increasingly looking as though it will take a severe downturn in economic growth and copper demand growth to tip the market into surplus," Rowley said. |
