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https://www.marketwatch.com/story/copper-surplus-forecast-cut-in-half-for-2009-gfms-2009-08-19?siteid=moren
Aug 19, 2009, 6:55 p.m. EST
Copper-surplus forecast cut in half
Consultancy now sees deficit for 2010 and price increases through 2012
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By Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Strong Chinese consumption and expectationsof an economic recovery later this year should help reduce the globalsurplus of copper to approximately 245,000 tons this year, nearly halfwhat was previously expected, London-based consultancy group GFMS Ltd.said Wednesday.
"Copper has been at the forefront of the rally in the base metals sector," GFMS wrote in a note.
The firm still sees a decline in copper prices in the short term, dueto a decline in inventories at the London Metals Exchange and someprofit-taking by investors.
"Nevertheless, as the trends in supply and demand are clearlysuggestive of a noteworthy improvement thereafter, this is expected tobe short-lived, with funds and end user front-running triggering a moveto deficit in 2010, setting a positive trend for the price from [thefourth quarter of] this year," according to GFMS.
Before this year ends, copper prices should top $6,500 a ton, averaging about $6,000 a ton in the fourth quarter.
For 2010, GFMS also expects a further recovery in consumption, whichalong with slower mine production should lead to a 88,000-ton deficitin 2010. It sees copper prices topping $7,500 a ton, and averaging$6,500 a ton in 2010.
The copper deficit is expected to grow to 176,000 tons in 2012, and thefirm also expects price increases to continue over the next three years.