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Brand new copper price forecasts for 2012, 2013 and 2014

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There’s good news and bad news for copper investors in the recent study released by the International Copper Study Group (ICSG). According to their copper forecasts, global demand will exceed supply by 240,000 tonnes in 2012. That should help copper prices in 2012, but the ICSG expects a copper production surplus of 350,000 tonnes in 2013.

The ICSG is careful to point out that the surplus of 350,000 tonnes is “relatively small” and “could vary from those projected.” But their numbers align with what other organizations expect.

A report from UBS shows global copper mine production grew less than 1 percent a year between 2009 and 2011. That was temporary, though, as production numbers are poised to surge to 8.5 percent a year through 2014 (per the Wall Street Journal).

“If China cannot absorb the copper flowing into it, then the outlook for copper is negative,” UBS said in the report.

Growth in China is key as the country consumes 40 percent of the world’s copper supplies. It makes sense then that copper investors grew nervous after disappointing growth numbers out of China during Q1. Still, there were signs in April that growth’s accelerating behind the Great Wall. China’s purchasing managers’ index (PMI) rose to a 13-month high of 53.3 in April (per Reuters).

“If we start to see China coming back more strongly in the second half, which is something that we expect, then we could see, you know, stocks starting to come down to really critically low levels and we could see prices sort of bouncing up,” Peter Ghilchik, multi-commodity manager with CRU in London, said recently (per Minyanville). In his words, that could push copper prices toward $10,000 per tonne by the second quarter of 2013 – a record level that we haven’t seen since early 2011.

Other copper price forecasts:

  • Copper will trade in a range between $8,300 and $8,800 per tonne in 2012 according to the Thomson Reuters GFMS Copper Survey (per Reuters).
  • CRU believes copper prices will average $3.85/pound for the year with a peak late in 2012 around $8,650 per tonne.

Our favorite copper price prediction comes from Citi Investment Research – a daring group of analysts who are willing to project prices far off in the future. They see copper hitting $3.80 in 2013, then falling to $3.61 per pound in 2014 (per the Wall Street Journal).

In the near-term, look for copper prices to get a temporary boost off news that copper inventories monitored by the LME have fallen to their lowest levels since 2008 at 241,550 tons (per Reuters).

Altogether in 2012, copper prices have risen about 10 percent. Let’s hope the red metal can keep that trend intact – at least until miners start flooding the market with new supply in 2013.

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