BME's Quarterly Report on Copper

The Quarterly Report on Copper

The Quarterly Report on Copper is comprised of two sections. Firstly, the Executive Summary and the Database Section. The Executive Summary contains price and price driver forecast out to 2010 as well as a summary of market trends during the last three months. The Database Section contains a mine-by-mine, plant-by-plant, and country-by-country breakdown of the global copper market.

The Executive Summary from Peter Hollands:

Overview of 2003 to 2012

For the five years from 2003 through 2007, the copper market was in deficit every year and prices soared from under $1,800 per tonne to around $7,000. Over the five years from 2008 through 2012, we expect to see alternating years with small surpluses and tiny deficits, with a very slight upwards trend to stocks overall. Exchange stocks are predicted to rise from 250 kt recently to 350 kt during much of 2010-2012. Modest rebuilding of strategic stockpiles is also possible. We expect cash prices to average just below $7,000 per tonne in 2008 and 2009, then for a downtrend to set in over 2010-2012, taking prices to $5,500 by the end of the period (a pattern similar to recent forward curves).
The spot market for concentrates is predicted to remain very tight in 2008 then gradually to ease over 2009-2012. Benchmark TC/RCs on Japanese annual contracts for 2008 are around $45/dmt and 4.5 c/lb. We expect that benchmark to be rolled over unchanged in mid-year and calendar 2009 contracts.

The recent past reviewed

In 2006 and 2007, the copper market was dominated by constraints on mine production: falls in ore grade at many ageing mines, strikes, shortages of equipment and of skilled personnel, by large rises in capital costs, by increasingly stringent environmental requirements and by the re-emergence of resource politics. Despite large draw-downs of stocks of copper-in-concentrates (by 245 kt in 2006 and 205 kt in 2007), primary refined production was quite inadequate. Normally, a market in deficit is balanced by a draw-down of exchange stocks. In the past two years that has not been the case.

Prospects for 2008

US home-building has already slumped from over two million units per year in 2005 to one million (seasonally adjusted and annualised) by December 2007, while global refined copper consumption continued to grow on trend by around 625 ktpy. History has already showed that in commodities, the USA and developing countries have de-coupled. While US homebuilding may weaken further (indeed new home sales fell to an annualised 600,000 in December, which is ominous), home building will not repeat the fall to date. That is, it will not fall from one million units per year to zero.
The offset that US home-building weakness has had on growth elsewhere will now diminish. Even allowing for further slight weakening of consumption in the USA and parts of Western Europe, unlike most other analysts, we expect global refined copper consumption growth to quicken in 2008, to just over 4%, driven by China, India, the UAE and a host of small consuming countries.

Sample from the Database Section

Click on the link below to see a sample from the database section of the Quarterly Report.

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