Tuesday, October 27, 2009

Copper price uncertainty in the short term but looming shortage?

A financial analysis of the global copper market predicts uncertainty in the short term but the possibility of "severe shortages and much higher prices" in the longer term.

The BNP Paribas Fortis/VM Group Metals monthly analysis for October, as reported in Mineweb.com today, proposed that

the lack of investment in new mines and expansions in the recent past, coupled with the current capital raising difficulties being experienced by the mining industry, are paving the way for severe shortages, and much higher prices, ahead. Even if all current major planned and proposed projects come on stream, and that is a very big if, at current projected growth rates it is possible the industry could move to a small surplus in 10 years time. But with the new developments, as noted above, often in areas of far higher risk there remains the likelihood that the supply/demand situation will remain tight leading to a robust price scenario for much of the foreseeable future.
In the near term, the industry is uncertain about the rate of the U.S. economic recovery and there are concerns whether some of the Chinese demand for copper and other metals is driven by speculators. Freeport McMoRan earlier this week said it is premature for them to re-open all the mines shut down or return operating mines to full production, given so many unknowns in the marketplace.

Part of the equation on future U.S. supplies also has to hinge on whether the Arizona-based Rosemont and Resolution copper mines get approval to go into operation.

No comments:

Post a Comment