Tuesday, November 30, 2010

Copper Demand to Exceed Supply Through 2013 Says GFMS

A report from the GFMS entitled Quarterly Three-Year Copper Forecast, says the supply of copper won't be able to keep up with demand through 2013.

The report concludes copper prices will rise as the copper market continues to be tight throughout that period, although an expected slowdown in the first half of 2011 could result in a temporarily copper surplus.

While production would be expected to meet that growing demand because of plans to increase output, secondary factors such as labor problems, low-quality grades, political effects and other operational risks associated with the industry in general will probably temper the production growth and not allow it to reach desired levels.

Over the next three years refined production is estimated to increase by about 3.4 percent annually through 2013.

The result of all of this in relationship to copper price should be a continual rise in price, which could easily reach above $11,000 a ton in 2013, according to the report.

Even though China may cut back on commodity imports in general and copper imports specifically, they will still account for just under 66 percent of the increase in global copper consumption annually during the time period we're talking about.

Add to this this the growing interest by investors in copper and commodities, and there is sure to be an increased flow of money into the metal.

Bottom line is it seems copper producers and investors are in for a volatile but profitable ride over the next three years.

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