Copper Metals Report Q2 2016
BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. Weexpect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported byproduction cuts and modest consumption growth.
Latest Developments And Structural Trends
We have lowered our average copper price forecast to USD4,900/tonne from USD5,400/tonne in 2016due to a global surplus hangover and cooling consumption. Following our downward revisions, our 2016forecast is in line with Bloomberg consensus, around USD4,863/tonne, while we are below consensusfor 2017-2020. This position reflects our broader view of commodities to stabilise rather than reboundafter bottoming out over 2016.
Global copper production will contract in 2016 due to the weak price environment. We forecast globaloutput to decline by 0.4% in 2016 and return to muted growth over 2017-2020.
China will drive the contraction in global supply in 2016, as key refiners cut production. Major stateownedfirms will target high-cost assets and those below environmental standards for closure.
Chile will remain the second largest global producer of refined copper, with output growth acceleratingover our forecast period to 2020, supported by major miners' plans to ramp up ore output. We forecastChile's refined copper output to average 2.5% annual growth over 2016-2020.
India and Zambia will emerge as bright spots in global copper production growth, supported bygovernment initiatives to increase metal output and low production costs.
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