Chinese Copper Elephant

Richard (Rick) Mills

Ahead of the Herd

Page 1 of 2

 

As a general rule, the most successful man in life is the man who has the best information

 

Wood MacKenzie sees stronger prices for copper.

 

“Over the last 10 years, copper’s annual average growth rate in demand has been 13% for China. The annual growth rate over the next five years is going to be 5%. Over the last 10 years, average annual copper consumption has been 600,000 tonnes, and going forward it’s going to be 500,000 tonnes…” Northern Miner

 

 

 Rio Tinto

 

An October update to the Thomson Reuters GFMS 2014 Copper Survey predicts global demand will have grown by 859,000 tonnes in 2014.

 

Again from the Northern Miner interview with Julian Kettle head of metals and mining research at Wood Mackenzie in London:

 

“Copper is always the most interesting metal, and the issue with copper is that we get disruptions to supply on an ongoing basis. Mine disruptions will typically vary from 3–8% of global copper supply, but this year we think it’s going to be above trend at 5–5.5%. So this year, we’ll see about 1 million tonnes of copper supply taken out of the market.

 

TNM: Why are disruptions so typical of copper?

 

JK: There are a whole range of factors. You’ve got pit-wall failures, strike action, technical issues, slow ramp-ups, weather-related issues and grade. If you were to look at what’s happened so far this year, the major contributor to disruption has been lower ore grades, slow project ramp-ups and a disruption to supply out of Indonesia because of the concentrate export ban. You had Grasberg reduce production levels to 60% of capacity and you also had a short-term stoppage of production at Batu Hijau.”

 

The International Copper Study Group forecast the copper market, after five straight years of deficits, should swing into a 2015production surplus of roughly 390,000 tonnes – less than a month of current daily demand. It’s obvious that even short lived disruptions would will have a huge impact on copper’s price.


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