In the first of a series of exclusive outlooks for the global metals markets in 2010, MINING DAILY and IBISWorld forecast what is in store for copper prices.
The outlook for the copper ore mining industry points to only a marginal increase in revenue for the five year period to 2013-14, as higher output and a rising US dollar copper price is largely offset by the firming of the Australian dollar.
The re-emergence of stronger global growth in 2009-10 is expected to underpin solid growth in the demand for copper.
US copper consumption has declined in recent years as a result of weakness in the US construction and manufacturing sectors.
In the short term, US Government policies such as the recently announced US$787 billion economic stimulus package are expected to provide support for copper consumption in the short term.
Over the medium term, economic growth and increases in construction activity in the US will lead to increased copper demand.
In addition, demand from China will continue to rise strongly due to ongoing spending on that country’s electricity infrastructure as the Chinese Government lifts spending on power plants in an effort to overcome electricity shortages.
Copper prices are expected to fall in 2009-10, before rising over the remaining years of the outlook period in response to increased demand and falling copper stocks.
Expected increases in copper output worldwide, including in Australia, will help to keep the prices rises relatively modest.
Ord Minnett’s Peter Arden echoed this view, saying the copper price would have firm support over the course of 2010.
“Overall, we think there will be a pretty firm copper market with pretty reasonable prices,” he told MINING DAILY.
“There could be a modest drift off over the course of next year, but that is a lot better than we see for many other base metals.”