Early in December 2011, copper prices started rising, and they’ve shown little sign of slowing that climb since the start of the year. Over the past two months copper prices have risen 11 percent from 3.40 a pound to more than 3.80 a pound.
Since copper is so integral to the expansion the global economy, economic growth means higher copper prices. The numbers are skewed toward China, though. Last year, the PRC alone accounted for 40 percent of global refined copper demand. We can get an idea of just how much growth analysts expect to see in China and around the world in 2012 by taking a look at their copper price predictions for the year. Here are five of them:
1) Average of $3.85 a pound. Cochilco, the Chilean government’s copper commission, raised their copper forecasts last week from $3.50 a pound to a 2012 average of $3.85 a pound. Cochilco cited increased demand out of China as the driver for the move.
2) Up to $9,000/mt. Standard Bank is predicting global copper consumption will rise at a relatively mild 1.2 percent in 2012. That means “demand for copper is unlikely to be strong enough to support prices above $9,000/mt for most of the year.” That’s roughly $4.08 per pound. “We think copper will average $7,700 with good support when we go below $7,000,” Walter de Wet, head of commodities at Standard Bank, told ResourceInvestor.
3) Copper north of $9,000 a tonne. In contrast to predictions from Standard Bank, Barclays Capital analysts predict copper prices will trade “consistently above $9,000 a tonne by the second half of the year” (per ResourceInvestor).
4) $7,350/ton. Early in January 2012, Deutsche Bank AG reduced their 2012 forecast for copper by 18.8% to $7,350/ton. “We expect that near-term deflationary fears from the worsening economic picture in Europe and intensifying hard landing fears in China may continue to depress pricing for the base metals complex,” the bank said at the time.
5) $10,000-a-ton. Strong copper price performance at the start of 2012 had some investors speculating that the red metal could hit $10,000 a ton by the end of the year. “Six months from now the market may be genuinely tight, but it is definitely not genuinely tight today and so I would treat calls of $10,000 a ton with a pinch of salt,” BNP Paribas strategist Stephen Briggs told the Wall Street Journal.
Photo by cobrasoft.
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