|
|
| |
|
|
Analyst says copper deficit is set to deepen-2018 China(Guangzhou)Int’l Non-Ferrous Metal（Copper）Exhibition
4/4/2018 有色金属展-Copper exhibition -non-ferrous metals expo |
--------------------------------------------------------------------------------------------------------------- |
|
Investor Intel reported that copper market this year seems a long way off the red-hot streak of 2011. Prices have slumped year to date. For sure, there have been declines in all asset classes as the world stares aghast at the prospect of a trade tariff war. But official warehouse inventories have climbed from 543,786 metric tonnes to 755,847 tonnes in the first quarter. Prices have historically shown a close correlation with official warehouse numbers, regardless of the fact that copper can be hoarded in unofficial locations. Add to the fact that the market is in contango the term used for an adequately supplied market when copper is more expensive for future delivery than spot prices reflecting the cost of storage. So, should you be selling those copper-backed equities?
When looking at the underlying fundamentals, not much has changed in the copper market. Before Bloomberg, I worked at the London-based mining consultancy CRU, the industry go-to independent research house. CRU consistently forecasted less bullish prices for copper during the commodities super-cycle, calling the market environment that led to the slump of the last 5 years. CRU, last week, gave a new forecast, and it is incredibly bullish.
The copper market will move out of a three-year surplus in 2018 to a deficit market starting next year, spurred by a lack of investment in new mine capacity. A slew of labor negotiations up for negotiation this year at Chilean mines might bring that deficit scenario forward. As such, CRU predicts prices will hover in the USD 3/lb-USD 3.25/lb range for now, before climbing higher.
CRU copper analyst Vanessa Davidson predicts an average 1% growth in new supply, trailing well behind world industrial production growth at 3% this year and 2.5% in 2019. New supply will arrive in 2019 through the expansion of the massive Grasberg mine in Indonesia and the start-up of a new mine by First Quantum Minerals Ltd. in Panama. However, these new sources of copper will not be enough to replace lost tonnage due to depleting ore grades and capacity closure. The market deficit is set to deepen through 2022, CRU said.
In addition to that, new demand sources for copper will increase at that point from wind turbines and solar panels to electrical vehicles. EVs will require 83 kilograms of copper, versus only 23kg in an internal combustion engine, according to producer Antofagasta PLC. Even with Chinese demand growing at a slower rate compared with the phenomenal double digit growth seen in the last decade, the increments in tonnage terms are much higher.
Ultimately, the financial drought that has decimated junior mining since 2012 is the reason why commodity industries stagger through boom-to-bust cycles. The market desperately needs new major orebodies unearthed, and in new locations. Collahuasi, the world’s second biggest mine in 2017, was first tapped in 1880. Another three of the Top 10 mines started their productive life in the 19th century, and another two started up in 1910. That said, the potential exists to find major new orebodies along well-known geological fault lines.
有色金属展-铜材展-2018年广州国际有色金属工业（铜业）展览会
-2018 China(Guangzhou)Int’l Non-Ferrous Metal（Copper）Exhibition
-Non-Ferrous Metal exhibition, 2018
Non-Ferrous Metal exhibition, Non-Ferrous Metal expo, 2018 Non-Ferrous Metal
expo, Copper exhibition, Copper expo, 2018 Copper exhibition, 2018 Copper expo,
China Copper exhibition, China Copper expo
|
|
|
|
|
