Copper prices are expected to remain firm throughout 2003, with an expected price rise towards the end of the year. It is expected that reduced supplies will drive the metal prices upwards.
The International Copper Study group has forecast a slight deficit of copper supplies for this year, after a surplus of 146,000 tonnes for 2002. Prices are forecasted at stagnated levels for the earlier part of the year and likely upward price movement in the latter half of 2003.
Copper prices are dependent not just on recovery in the economies across the globe but also the supply tightness which will come about since most producers have cut their production targets.
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BHP Billiton announced output reduction of about 170,000 tonnes per year in late 2001. These cuts remained in place through 2002, mostly on account of prevalent woeful demand conditions. It still remains to be seen whether these cuts continue through 2003. Codelco, the Chilean mining company tempered down its outputs in late 2002.
Supplies will be crucial in the coming year for international copper prices. With supplies being so tight, any unplanned movement in the stocks, will have a immediate effect on the copper prices.
Chinese demand is also expected to play a major role in the price trends of not only copper , but most base metals, as industrial demand is expected to be on the brighter side in China.
Last week Asian physical copper premiums at the London Metal Exchange(LME) cash price were mostly flat for the three week period ending last monday with low volumes. LME three month copper prices have gone up with an expected increase in the demand in the construction and manufacturing activity in the US.
In South Korea, copper premiums including cost, insurance and freight (CIF)were slightly down at $ 45-$ 50 per tonne, against $45 -$48 per tonne before Christmas. In China, where the demand for copper continues to remain strong, premiums were steady at $60-$65 a tonne including CIF.
The International Copper Study Group (ICSG) released preliminary October 2002 data for world copper supply and demand in its January 2003 Copper Bulletin.
According to ICSG data, the apparent refined copper surplus for the first ten months of this year amounted to 6,000 tonnes. This nearly balanced market compares with a surplus of 431,000 tonnes in the January to October period of 2001.
Preliminary results for October 2002, however, show a deficit of 62,000 tonnes of refined copper. World copper usage for January to October of 2002 increased by 1.9 per cent compared with that of the same period in 2001. China