The Price Of Copper Is Reaching Higher

As we can see from the news, Japan’s top producer said that the copper demand will outstrip supply for the next two years as the economy recovers, China sustains consumption and mine output drops.

The general manager of the marketing department at Pan Pacific Copper Co, Hidenori Kamoo said that demand would likely exceed supply by 635,000 metric tons in 2011, the biggest deficit since 2004, compared with 234,000 tons last year in an interview, and the shortage might be 91,000 tons in 2012.

The history data have shown us that the copper, used in wires and pipes, climbed to a record 9,781 U.S. dollars per ton on Wednesday after gaining 30% in 2010 as the world economy recovered from its worst recession since World War II. Goldman Sachs Group Inc says the price may climb 12% in the next year to 11,000 U.S. dollars per ton.

As the news reported that China last week told banks to set aside more deposits as reserves for the fourth time in two months, stepping up efforts to rein in liquidity and cool inflation after foreign-exchange holdings rose by a record and lending exceeded targets.

It is reported by Goldman in a report that stockpiles at Shanghai Futures Exchange warehouses rose to the highest level in seven months, adding 481 tons to 132,647 tons last week, according to the bourse. The copper supply is adequate in China and a “price spike” is unlikely before the Chinese Lunar New Year.

Australia ≠w Zealand Banking Group Ltd expects copper to average 4.57 U.S. dollars a pound this year, up 12.5% from a previous estimate, the bank’s analysts Mark Pervan and Natalie Robertson wrote in a report. Morgan Stanley projects copper prices will average 4.45 U.S. dollars a pound in 2011, up 24% from an earlier estimate.

It is reported that the world production may increase 3% to 19.08 million tons this year after growing 1% to 18.52 million tons, he said. In 2012, output may expand 6.2% to 20.26 million tons.

According to the National Bureau of Statistics’ data on Thursday.Chinese smelters produced 444,000 tons in December, 7% higher than a year ago, output in 2010 gained 12% to 4.79 million tons, the data showed. That is a record, according to Wang Ning, an analyst at Xiangyu Futures Co.

Kamoo said that until we saw a significant increase in mine supplies from 2013, the market would remain in supply deficits. Tight supplies may push copper prices up as high as 11,000 U.S. dollars per ton this year.

It is also said by Kamoo that copper output may decline in Japan by 6.5% to 1.44 million tons in 2011 following production cuts by two major smelters, while demand is expected to fall 1.9% to 1.04 million tons. The country’s exports of refined copper may total 450,000 tons in 2011, down 15.4% from last year.

Pan Pacific Copper said Sept 15 that it would reduce production by about 13 percent of capacity in the six months after Oct 1, from the current 7 percent. The company said it planned to cut output by 10 percent during October to December and by 15 percent during January to March.

“At the moment, we are considering maintaining the 15 percent output cut for the next fiscal year” starting from April 1, Kamoo said. The company will decide on the reduction by the end of March. SABUNG AYAM
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