Something to look forward to (hopefully):Copper to peak well above $11,000/T in 2013-GFMS
* Deficit conditions to remain in place after H1 2011
* China demand growth to average 6 percent per year
NEW YORK, Nov 29 (Reuters) - A growing production deficit
is expected to lift the price of copper through a series of
all-time highs and a peak well above $11,000 per tonne in 2013,
metals research and consulting firm GFMS said in its Quarterly
Three-Year Copper Forecast report.
"The noteworthy deficits the market has seen recently will
push the overall market balance for this year into negative
territory," GFMS said in a news release on Monday.
In the first half of 2011, GFMS sees slower economic
conditions briefly tipping the global copper market into a
modest surplus.
But deficit conditions are expected to reemerge in the
second half of 2011 and should remain over the following two
years, as supply struggles to keep up with consumption.
In its three-year outlook, GFMS expects a higher price
environment will lead miners to boost output, where possible,
and secondary supply sources will continue to expand.
This will be partly offset by persistent structural
constraints to mine supply growth, such as political and
operational risk, falling grades at major operations and labor
disputes.
"Overall, refined production is expected to grow by an
average 3.4 percent per annum over 2011-2013," GFMS said.
The upward move in price should also create renewed
substitution pressures on consumption, particularly in the
second half of the 2011-2013 period, the firm said.
Three-month copper on the London Metal Exchange CMCU3
traded near $8,200 a tonne on Monday, down from a record $8,966
hit earlier this month.
GFMS forecast healthy emerging-market demand growth in its
three-year outlook. Chinese consumption was expected to slow
compared to recent years, but nevertheless stay strong at an
average of 6 percent growth per year.
"Copper consumption growth in the country is expected to
remain strong and to account for a little less than two-thirds
of the global rise in annual consumption over 2010-2013," GFMS
said.
Ongoing investment demand is expected to compound the
metal's tightening supply-demand balance, boost prices, and
create higher levels of volatility.
The metal's bullish fundamentals coupled with greater
investment demand in the commodities sector will result in
further inflows into the red metal over much of the foreseeable
future, GFMS said.
(Reporting by Chris Kelly; Editing by Dale Hudson)