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Plans to increase global copper output will ease tightness: Commerzbank

Wednesday, Feb 29, 2012

 The planned measures to expand copper production should ease the tight supply situation on the global copper market, according to Commerzbank Tuesday.

"The first major project worth mentioning that is set to commence production in the next few years is the Oyu Tolgoi mine in Mongolia, operated by Rio Tinto and Ivanhoe. The world's largest copper/gold deposit contains 81 billion lb of copper and 46 million oz of gold. Commercial production is due to begin in the first half of 2013, so 2012 may initially be the last year to see a supply deficit on the global copper market," the German bank said.
While the International Copper Study Group anticipates a deficit of 256,000 mt, research institute Brook Hunt offers a somewhat more optimistic prognosis of 117,000 mt, the bank added.
In the medium to long term, the ICSG expects 6.6% average growth in mine production, reaching 26.2 million mt by 2015, "the lion's share of the total volume is to hit the market in the last two years of the forecast period," Commerzbank said.
The bank is forecasting a 2012 full-year average copper price of $8,600/mt and a 2013 average of $8,950/mt.
"There have recently been signs of ample supply in China, by far the world's most important consumer of metals. Stocks of copper traded on the Shanghai Futures Exchange more than tripled in about the past three months to reach a good 216,000 mt," said Commerzbank analyst Eugen Weinberg.
"The high availability of supply would suggest that China has imported more metals than it needs in recent months, thus imports in the coming months could be reduced somewhat," he added.
In the case of copper, imports in January were already 18.7% below December's record figure, though this was due in part to the Chinese New Year festival which was celebrated unusually early this year, he noted.
Three-months copper was spot bid on LMEselect by 1105 GMT at $8,569/oz having closed the Monday kerb session at $8,536/mt.

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