COPPER MINING INDUSTRY WILL NOT MEET GLOBAL DEMAND FOR 2011

THE COPPER MINING INDUSTRY WILL NOT MEET GLOBAL DEMAND FOR 2011 OR NEXT YEAR BECAUSE DEMAND IS GROWING FASTER THAN SUPPLY.

THE COPPER MARKET IS FACING A WIDENING DEFICIT UNTIL NEW SUPPLY COMES ON STREAM IN LATE 2013.

MEANWHILE, MINES MINISTER MAXWELL MWALE HAS SAID ZAMBIA’S COPPER PRODUCTION IS LIKELY TO RISE TO 850,000 TONNES THIS YEAR FROM JUST BELOW 750,000 TONNES LAST YEAR DUE TO EXPANSION OF SOME OF THE COUNTRY'S MINES.

MR MWALE WAS SPEAKING ON THE SIDELINES OF A MINING CONFERENCE IN CAPE TOWN IN SOUTH AFRICA.

BUT STANDARD BANK’S HEAD OF COMMODITY RESEARCH WALTER DE WET HAS PROJECTED THAT THE COPPER DEFICIT WILL GROW TO 382,000 METRIC TONNES FOR 2011 AND 562,000 FOR 2012 AS THE DEMAND WAS GROWING FASTER THAN SUPPLY AND IS EXPECTED TO REMAIN STRONG UNTIL 2013.

HE SAID THIS MAY RESULT IN GLOBAL REPORTED STOCKS DRAWING DOWN TO LESS THAN ONE WEEK OF CONSUMPTION BY END-2012.

CHINA AND OTHER EMERGING MARKETS ESPECIALLY IN ASIA ARE DRIVING THE INCREASING COPPER DEMANDS WHERE PRICING IS PROJECTED TO AVERAGE US$9,200 PER METRIC TONNES IN 2011 AND US$10,000 PER METRIC TONNE IN 2012.

DE WET SAID FUNDAMENTALS AND STRONG INVESTOR INTERESTS ARE LIKELY TO KEEP PRICES ON AN UPWARD PATH OVERALL, THOUGH EXPECT THAT THERE WILL BE STEEP CORRECTIONS AND PAUSES FOR CONSOLIDATION ALONG THE WAY.

SUPPLY REMAINS CONSTRAINED AS NEW COPPER PROJECTS ARE AT VARIOUS STAGES OF DEVELOPMENT, BUT CONSIDERING THEY TAKE 3-4 YEARS TO COME ON STREAM, THEY WILL NOT ALLEVIATE THE DEFICIT OF AFFECT THE COPPER PRICE DURING THE NEXT TWO YEARS.

THESE TWIN THEMES OF STRONG INFRASTRUCTURE DEVELOPMENT IN EMERGING MARKETS AND A RESUMPTION IN MANUFACTURING GROWTH IN DEVELOPED GROWTH IN DEVELOPED MARKETS ARE STRONGLY SUPPORTIVE OF COPPER CONSUMPTION AND RISING COPPER PRICE.

ALTHOUGH AUSTERITY RATHER THAN STIMULUS WILL BE THE MAIN THEME IN EUROPE THIS YEAR, MODEST GROWTH WILL NONETHELESS BE DRIVEN BY GERMANY IN ADDITION THE U.S ECONOMY IS ALSO CARRYING GOOD MOMENTUM INTO 2011.

DE WET EXPLAINED THAT THE BIG SWING FACTOR WILL BE CHINA, WHICH IS BELIEVED TO BE FAIRLY DESTOCKED OF COPPER.

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