SocGen sees copper rising 10% this year

Analysts says copper will average $3.40/lb in 2009

by Tom Stundza -- Purchasing, 7/2/2008 9:03:00 AM

World copper price will average more than previously forecast this year and next as mine output growth slows, says Societe Générale analyst Stephen Briggs.  He says copper for immediate delivery will average $3.58/lb this year—up from $3.25 in 2007—and slip only slightly to $3.40 in 2009 as strikes and lower-quality ore limit supply growth.

Briggs's 2009 forecast is higher than the median of $3.14/lb for London Metal Exchange (LME) benchmark copper in a Bloomberg News survey of 15 analysts and the $3.37 forecast by Purchsasingdata.com—and closer to the $3.50 consensus estimate of analysts polled by Reuters News . Slower demand should reduce supply worries over the balance of the year and push. As reported last month, BNP Paribas analyst David Thurtell told a conference in Sydney, Australia, that his full-year forecast is even higher than Briggs at $3.63/lb.

 “Copper is in fundamental terms entirely a supply-side story,'' the London-based metals analyst says in the report reported by Bloomberg. “It might only take one big new supply disruption to push prices to fresh all-time highs.” The so-called cash price of copper has risen 31% this year, exceeding a 29% gain in the benchmark three-month contract. Higher front-month prices also reflect low availability of the metal, as stockpiles monitored by the London Metal Exchange have slumped 38%.

Briggs also revised down by 3% his copper-in-concentrate production projection to 12.6 million tons for this year. Supply will match demand this year, after a surplus of 20,000 tons in 2007, he says. Any oversupply in 2009 would be small, he projects.