Market - - Feb 21,2017
Owing to the growing copper demand in China and output failing to keep pace, global copper prices set to rise above $8000 a ton before the end of the decade.
Copper, which is essentially used for power generation, transmission, and production of industrial machinery and transportation vehicles is expected to be in high demand in China.
The supply-side deficit will prompt global copper prices to rise above $6,000 a ton in the latter half of 2017, with highs of about $7,000 a ton before the end of the year, and above $8,000 a ton before the end of the decade.
After the extraordinary high in February 2011 of about $10,000 a metric ton, copper prices went on a continuous downward slide, reaching seven-year lows around $4,330 a ton in January 2015 owing to slowdown in Chinese demand and increase in supply as producers ramped up the copper production in expectations to match with the demand growth experienced during 2006-2011.
In 2016, China's copper consumption rose 5.7 percent. For 2017, the growth of copper demand in China is expected to rest somewhere between 3 to 4 percent.
With frequent supply disruptions like workers' strike at BHP Billiton's mine in Chile and a permit dispute at Freeport-McMoRan's mine in Indonesia. Copper supply side is all set to underperform demand for the remaining half of the decade. Demand is expected to exceed the supply by about 52,000 tons in 2017 after a surplus of 110,000 tons in 2016.
These shortfalls will increase the prices throughout the remaining part of the decade. The price of copper on the London Metal Exchange was 0.4 percent higher at $5,996.50 a metric ton in the last week, it attained a 21-month high of about $6,200 a ton on February 13.
Some of the world’s biggest copper mining companies like Anglo American, BHP Billiton and Glencore, are now set to reap the rewards.
Global Copper prices to surge more than 30 percent by end of 2020.